Why Skechers’ Global Story Is Seen Rivaling Under Armour’s
(uj/Splash News/Newscom)
- ELAINE LOW
- 2:19 PM ET
Skechers USA (SKX) is a “lean, mean shoe business machine,” says one analyst, calling out its global growth potential in Asia and Europe, and comparing it to another growing sportswear brand: Under Armour (UA).
“We believe Skechers’ international story is just as intriguing as Under Armour’s international story,” wrote Macquarie Capital analyst Laurent Vasilescu in a Thursday initiation note.
Using Google Trends to evaluate brand recognition between the two labels in the U.K., “we show that Skechers is just as popular if not more in this particular geography.” The U.K. is Skechers’ second largest market globally, he said, with $155 million in 2015 revenue. Vasilescu projects that France and Germany will also each be significant European markets down the road.
And Asia represents a billion-dollar opportunity for the lifestyle brand, which makes popular walking shoes and sporty footwear.
“China is the biggest piece of the international pie for Skechers,” he wrote, estimating that Skechers can reach a cool billion in revenue in 2021, “representing approximately a third of Nike’s Greater China revenues today. With rapid triple-digit to high-double-digit growth, management anticipates this market can be a $1 billion market in 4-5 years.”
Last year, Skechers surpassed Adidas as the second most popular footwear brand by market share, according to the Wall Street Journal, citing NPD Group, though as of last May it only held 5% to Nike’s (NKE) hold over 62% of the athletic shoe market.
Macquarie, which started the stock at an outperform with a 45 price target, sounded bullish on the company’s overall prospects, highlighting Skechers’ improving gross margins and SG&A (selling, general and administrative) leverage in addition to the international growth story.