SKX. [Reuters] Update 1-Skechers sees 2nd-half earns below Wall St views
September 10, 2002 12:32:00 PM ET
(Adds background, analyst comment, byline; updates market activity; changes dateline from MANHATTAN BEACH, Calif.)
By Michael Erman
NEW YORK, Sept 10 (Reuters) - Trendy shoemaker Skechers USA Inc. (SKX) on Tuesday warned that earnings will miss Wall Street estimates for the second half of the year due to soft back-to-school sales and expectations of a weak holiday season.
At midday, Skechers' stock was down nearly 16 percent, the worst percentage loser on the New York Stock Exchange.
Analysts said they were surprised by the extent of the warning, especially considering Skechers' strong performance in recent quarters.
"Business was going pretty well through the second quarter and even into July," said Wedbush Morgan Securities analyst Mitch Kummetz. "It seems like things really turned sour in August."
Skechers, which sells fashionable casual and athletic shoes at lower prices than most major brands, estimated third-quarter earnings at 30 cents to 35 cents a share. Analysts on average were expecting a profit of 41 cents, compared with 30 cents a year earlier, according to Thomson First Call.
Skechers said it expects to post revenue of $245 million to $255 million for the quarter, down from $287.9 million a year earlier.
The company, whose shoes have been endorsed by singer Britney Spears, actor Robert Downey Jr. and NBA player Rick Fox, attributed its third-quarter performance to a generally weak retail environment in footwear and apparel.
Skechers forecast fourth-quarter earnings of 10 cents to 14 cents per share. The First Call consensus estimate is 26 cents per share, up from 5 cents a year earlier.
Skechers said it expects sales to be roughly the same as the $214.1 million of fourth quarter 2001.
Shares of Skechers, which had beaten the second-quarter First Call estimate by 11 cents a share, were down $1.93 at $10.25, about one-fourth of their all-time high of $40.30 set in May 2001.
The stock has lost about one-third of its value since Thursday, the day before a downgrade by a Wachovia Securities analyst who expressed doubts about the company's ability to maintain rapid growth in the current challenging market.
Wedbush Morgan analyst Kummetz, who is maintaining his "buy" rating on the stock, said he believes investors are overreacting to the news.
"As the market turns around and new trends emerge," he said, "(Skechers will) be on top of that." REUTERS
