Q2 Earnings Preview

Skechers USA Inc.

The Manhattan Beach, Calif.-based firm will report second quarter results on Wednesday, and analysts will be looking for progress on the cleanup of first-generation Shape-up inventory.
 
“Although management indicated that first-generation inventory will remain an issue through the end of fiscal 2011, talks with industry contacts have led us to believe that inventory overhang could be eliminated as early as the third quarter,” wrote Scott Krasik, analyst at BB&T Capital Markets, in a research note.
 
“If a significant portion of the inventory is off the balance sheet at the end of the second quarter, this would be a positive catalyst for the stock,” he added.
 
Analysts will also look for details on the company’s cost-cutting plans and top-line catalysts going into fiscal 2012.
 
BB&T Capital Markets estimates Skechers will lose 39 cents a share in the quarter. Other analysts, as polled by Yahoo Finance, predicted a loss per share of 34 cents.
 
Deckers Outdoor Corp

Deckers crushed estimates in the first quarter, but forecasted a second-quarter loss, due to a weak revenue outlook caused by the company’s transition to a direct sales model in Europe.
 
But analysts are still looking for top line momentum when the Goleta, Calif.-based firm reports its results on Thursday.
 
“The anticipated negative earnings this quarter are likely to be driven by a dramatic planned increase in [expenses], which have been put in place to drive international businesses, open new stores and accelerate growth in the men’s Ugg business,” said Sam Poser, analyst at Sterne Agee, in a research note.
 
“Gross margin is expected to be … better due to improving business and product mix. Given the strong product from both Ugg and Teva, we expect that revenue guidance for 2011 will now call for at least a 24 percent increase, up from 21 percent,” he added.
 
Sterne Agee expects the company to report a loss of 18 cents a share, while The Street is looking for a loss of 23 cents a share.
 
Steven Madden Ltd.

Madden will report its second-quarter results next Tuesday, on Aug. 2, and analysts expect top-line trends to be good.
 
“Investors should focus on gross margin guidance and the moving parts from recent acquisitions,” noted Krasik. “The company has completed two acquisitions this year [so] we would be interested in whether there are still more deals to come.”
 
The firm is expected to report EPS of 54 cents, which would represent a year-on-year growth of 15 percent, according to analysts polled by Yahoo Finance.

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