Market Watch: Skechers Kicks Off Earnings… Brown Shoe Celebrates

The Week Ahead

Tuesday, April 22:
Skechers USA Inc. Q1 results

Wednesday, April 23:
Brown Shoe Co. Chairman, President and CEO Diane Sullivan will ring the closing bell at the New York Stock Exchange to commemorate the company’s 100 years as a public company.
Rocky Brands Inc. Q1 results

Thursday, April 24:
Deckers Outdoor Corp. Q1 results
Under Armour Inc. Q1 results
Amazon.com Inc. Q1 results
Cabelas Inc. Q1 results
U.S. initial weekly jobless claims
U.S. continuing weekly jobless claims

Friday, April 25:
VF Corp. Q1 results
The University of Michigan consumer sentiment index for April

Stock Watch

On Tuesday, Skechers USA Inc. will be the first footwear company to deliver its first-quarter earnings results, with analysts looking for commentary on the impact of this year’s early Easter and unseasonably long winter in several U.S. markets.

Liked by analysts for its compelling product array, disciplined approach to inventory and tight cost controls, Skechers is expected to report strong sales for the period, driven by the strength of its retail and international businesses, and by robust sales of its women’s active and kids’ shoes, according to market watchers.

Sam Poser, an analyst at Sterne Agee, predicted Skechers will post retail sales growth of 17 percent and earnings per share of 35 cents, in line with estimates.

“On its fourth-quarter 2013 earnings call on Feb. 12, management said that they were very comfortable with the Street’s estimate of 35 cents, even if weather remains challenging,” Poser wrote in a note to clients. “We believe same-store sales at Skechers-owned stores are up mid- to high single digits, which we view as admirable given the cold weather and Easter [calendar] shift.”

Meanwhile, all eyes will be on Deckers Outdoor Corp. and Under Armour Inc. on Thursday, when both companies report first-quarter results.

Despite rough weather trends impacting industry sales, UBS analyst Michael Binetti is forecasting Under Armour will post EPS of 4 cents on revenue growth of 28 percent for the quarter, driven in part by the success of its SpeedForm sneakers.

“Our checks suggest that [Under Armour’s] new SpeedForm shoes sold out in the first-quarter launch,” Binetti wrote in a note to clients.

“Importantly, in the fourth quarter of 2013, Under Armour beat Street revenue growth forecasts by more than 10 basis points — boosted by improved [order] fulfillment rates while lapping supply chain [execution] issues from the fourth quarter of 2012,” he added.

Deckers is expected to report continued strong sales of its Ugg Australia brand, thanks to the persistent cool weather. Poser said he anticipates EPS of 10 cents, versus guidance of roughly 16 cents.

“We believe the cold weather likely precluded the need for retailers to write Teva and Sanuk fill-in orders,” Poser wrote in a note to clients.

When VF Corp. reports its earnings on Friday, market watchers will be looking for clues on the firm’s potential mergers-and-acquisitions activity. With its low debt levels, VF could likely make an acquisition this year, according to Binetti.

“Quicksilver is often discussed and seems plausible [given its] action-sport expertise [and the fact that the company is] digestible at [revenues of] $1.1 billion. We [also] believe management has incentive to sell,” Binetti wrote in a note to clients. “But VF could be looking bigger — potentially at brands like Puma.”

Separately, Brown Shoe Co. will celebrate 100 years of trading on the New York Stock Exchange on Wednesday, with Chairman, President and CEO Diane Sullivan ringing the closing bell. 
The occasion will be marked with a party for company executives, employees, bankers and retail partners in Manhattan the same day.

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