After more than a year of tepid momentum, Skechers USA Inc.’s stock is having a good day.
As of 2:50 p.m. ET today, shares for Skechers were up more than 15 percent, to $26.20, on the heels of the firm’s announcement that its CEO, Robert Greenberg, snapped up $11 million worth of the faltering stock.
In a U.S. Securities and Exchange Commission filing Wednesday, Manhattan Beach, Calif.-based Skechers said its founder and top executive purchased 500,000 of its shares on the open market. The move has been largely interpreted as a signal that better days are brewing for the business and its stock, which had taken a substantial dive over the past 12 months since hitting a high of around $50 in August 2015.
According to Susquehanna Financial LLLP analyst Sam Poser, Greenberg’s decision to purchase the stock — which he bought via the Greenberg Family Trust — is especially telling since the CEO hasn’t made such a buy in a long time.
“For context, CEO Greenberg has not purchased Skechers’ stock in at least the last 10 years,” Poser wrote in a note today. “We believe that insider buying by CEO Greenberg is reflective of the strength of the new product offering and the company’s optimism about FY17 prospects.”
Skechers, which has had its share of ups and downs in its 24-year history, had been on a hot streak for much of 2015 as it capitalized on casual athletic trends and became a formidable competitor to other athletic up-and-comers such as Under Armour. Some experts even ranked the company as the No. 2 athletic label brand in the country at the time, but as NBA powerhouse Stephen Curry propelled Under Armour forward and Adidas and Puma both enjoyed a mega U.S. resurgence, investors began to question whether Skechers could sustain its double-digit growth pace.
Adding to the concern, the firm missed back-to-back earnings estimates in the most recent quarters (Q2 and Q3).
In the third quarter, reported in October, Skechers’ sales advanced 10 percent year-over-year, to $942.4 million, but missed analysts’ estimates for revenues of $954.4 million. Meanwhile, net income slipped 2.2 percent year-over-year, to $65.1 million, or 42 cents per diluted share — also missing market watchers’ forecasts for diluted EPS of 47 cents.