Investors were running away from the Skechers USA Inc (NYSE:SKX) stock on Friday after the company announced disappointing results for the third quarter, and lower guidance for the fourth.
Shares plunged 17.26% to close at $18.98 on volume of 24.65 million, over seven times the average volume of 3.41 million shares.
Adding to the gloom was a downgrade by Citigroup from Buy to Neutral.
Skechers USA Inc (NYSE:SKX) earnings miss and poor guidance
For the third quarter, Skechers reported EPS of $0.42, missing estimates by $0.04, and revenue of $942 million, while the street was looking for $954 million.
What put the wind up investors was the fourth quarter guidance from the company: sales of $710 million to $735 million, far below consensus of $800 million.
Yet, to be fair to the company, it did achieve some landmarks in the quarter that investors and analysts are punishing it for.
“Skechers achieved a new third quarter sales record for the period, and the second highest sales quarter in our 24-year history. This also resulted in a new nine-month sales record of $2.8 billion,” said David Weinberg, chief operating officer and chief financial officer. “The quarterly sales increase was primarily the result of 18.3 percent growth in our international wholesale business, which now comprises 40.1 percent of our total sales, or 47.9 percent including international retail.”
So what’s with the fourth quarter?
The problem is local, actually, and in sharp contrast to the international scenario.
“Impacting the Company’s domestic wholesale business was the sluggish retail environment in the United States, which resulted in several retailers either closing doors or ceasing operations, wide-spread discounting on other normally full-priced brands, as well as a shorter back-to-school period,” the company said.
Technically, the stock could fall further to near about $15, where it might find support.