Skechers (SKX): A $10B Giant in the Making – Will China Risks Derail Momentum or Will Derisking Efforts Pay Off?

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Skechers delivered record Q3 2024 revenue of $2.35 billion (+16% YoY), beating estimates by $41.66 million, driven by balanced growth across wholesale (+21%) and direct-to-consumer (+9.6%) segments and strong international performance (+16%), particularly in EMEA (+30%) and India (+24%). Adjusted EPS of $1.26 (+35% YoY) exceeded expectations by $0.10, underscoring robust execution, operational efficiency, and growing demand for comfort-focused, value-driven footwear. While gross margin dipped slightly to 52.1% (-80 bps) due to promotions and China’s unfavorable product mix, operating margins remained solid at 9.9%, supported by disciplined cost management. Strategic moves, including athlete partnerships, diversification into performance footwear, and global store expansion (+68 in Q3), position Skechers for sustainable long-term growth, with FY24 revenue guidance of $8.925–$8.975 billion (+12% YoY). However, risks persist from macroeconomic softness in China (-5.7% sales YoY), inventory imbalances (+24%), and promotional overhangs, potentially pressuring near-term margins. While long-term tailwinds include EMEA growth, India’s recovery, and innovation in categories like pickleball and basketball, valuation at 14.24x NTM forward P/E suggests limited immediate upside. Strategic question: Can Skechers effectively navigate China’s macro challenges and inventory pressures while leveraging its global momentum and differentiated value proposition to achieve its $10 billion revenue goal?

Table of Contents :
• Stock Rating & Target Price
• Investment Thesis
• Fundamental Models Used
• Company Description
• Corporate Timeline
• Key Metrics (KPI ) and Recently Reported Earnings Review
• Business Highlights, Strategic Announcements & Outlook
• Quarter-over-Quarter (Q-o-Q) and Year-over-Year (Y-o-Y) Growth Analysis
• Key Catalysts Driving Growth
• Historical Financial Statement Analysis & CAGR Trends
• Quarterly Key Financial Ratios and Performance Metrics
• Annual Financial Performance Analysis: Horizontal and Vertical Financial Analysis, Trends
• Financial Forecasts
• Annual Forecasts: Income Statement
• Annual Forecasts: Cash Flow Statements
• Net Debt Levels
• A Closer Look at DCF: Our Assumptions and Methodology
• Terminal Value Calculation
• Target Price Analysis
• Valuation Multiples
• Supplementary Valuation Analysis: Multiples Approach
• Scenario/Sensitivity Analysis – Base Case , Bull Case ,Bear Case
• Holistic Peer Review & Trading Comps: Financial Data, Operational Metrics, and Valuation Multiples
• Implied Price Per Share
• Ownership Activity/ Insider Trades
• Ownership Summary
• An analysis of ESG Risk Rating
• Key Professionals
• Key Board Members
• Key Risks Considerations
• Analyst Ratings
• Analyst Industry Views
• Disclosures

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