What Happened:
Shares of footwear company Skechers (NYSE:SKX) fell 12.8% in the afternoon session after the company warned investors of potential challenges in some markets in Asia, which could affect demand for its business. The worries include consumer discretionary pressures in China, which management categorized as "a bit worse than we had anticipated." The update rippled through the footwear segment, with brands like Deckers and Crocs also down on the news. The stock's reaction suggests that the market is struggling to parse how these challenges might impact Skechers' results ahead of the next earnings season.
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What is the market telling us:
Skechers’s shares are not very volatile than the market average and over the last year have had only 3 moves greater than 5%. Moves this big are very rare for Skechers and that is indicating to us that this news had a significant impact on the market’s perception of the business.
The biggest move we wrote about over the last year was 5 months ago, when the stock gained 17.4% on the news that the company reported a rare 'beat and raise' quarter. Skechers blew past analysts' constant currency revenue expectations. Its operating margin also outperformed Wall Street's estimates.
Looking forward to the full year, the company raised its revenue and EPS guidance for 2024, and both are comfortably ahead of analysts' expectations. Overall, this quarter's results seemed fairly positive, and shareholders should feel optimistic.
Skechers is down 0.6% since the beginning of the year, and at $61.75 per share it is trading 17.1% below its 52-week high of $74.50 from June 2024. Investors who bought $1,000 worth of Skechers’s shares 5 years ago would now be looking at an investment worth $1,743.
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