5 World-Class Shoe Stocks to Buy Now

3. Skechers U.S.A., Inc. (NYSE:SKX)

Number of Hedge Fund Shareholders: 33

Skechers U.S.A., Inc. (NYSE:SKX) sells lifestyle and performance footwear for all ages through hundreds of retail stores across the U.S. and internationally. The company’s brands include various riffs on the Skechers name, including Skechers Sport, Skechers Work, and Skechers Kids.

Skechers had a strong 2021, but growth has slowed considerably this year, which has pushed the stock down by 28% year-to-date. After growing sales by 37% year-over-year to $6.29 billion in 2021, Q2 sales grew by just 12% year-over-year. Direct-to-consumer sales slowed even more, dropping to just 4.3% in Q2 from a 38% clip in 2021. Gross margin also fell by 3 percentage points to 46.7% during the first half of this year, pushing free cash flow down to a five-year low.

There was a slight rebound in hedge fund ownership of Skechers U.S.A., Inc. (NYSE:SKX) during Q2 after a 22% drop during the prior two quarters, which coincided with the stock beginning to slide from its all-time highs. SKX shares have lost 40% of their value since July 2021. Dmitry Balyasny’s Balyasny Asset Management built a new stake of 1.5 million shares of Skechers during Q2.

Fiduciary Management Small Cap Equity dug into Skechers U.S.A., Inc. (NYSE:SKX)’s background and prospects in its Q1 2022 investor letter:

“Skechers is the third largest footwear brand in the world. The company designs, manufactures, and distributes footwear for men, women, and children in U.S. and international markets. Its products cover a wide range of footwear categories including casuals, dress casuals, sandals, boots, work boots, performance footwear, and kids footwear. The company operates in three business segments: Domestic Wholesale (23% of sales), International Wholesale (48% of sales), and Direct-to-Consumer (29% of sales). In total, international sales account for approximately 60% of revenue…” (Click here to see the full text)