Skechers Just Lost Their Shoe Laces

Skechers announced quarterly earnings on Thursday and the stock price dropped more than 20% on Friday.

Earnings per share of 29 cents fell well short of the 41 cents a share expected by analysts for the second quarter.

Sales of $1.13 billion were up 10.6 percent from last year, but profit fell 23.9 percent, to $45 million.

The company expects third-quarter EPS of 50 cents to 55 cents a share, which is short of the 67 cents expected by analysts.

Source

Expenses were a concern to many analysts and they downgraded the stock immediately. Despite international revenue climbing by 24.9% and comparable-store sales rising 4.5% globally, Wall Street thinks this growth is unsustainable and expenses are not in alignment with the revenue. However, CEO Robert Greenberg said during the conference call, “

"The financial accomplishments in the second quarter are the result of our product and marketing, as well as our ongoing efforts to seek out global opportunities and with the resurgence of retro looks and Skechers D'Lites, we are the originator of one of the hottest trends in footwear."

Who do you believe, lets go to the charts because the charts never lie?

Monthly Chart (Curve Timeframe) – monthly supply is at $42 and monthly demand is at $21.

Weekly Chart (Trend Timeframe) – the trend is sideways, but price did bounce from the weekly supply zone at $24.50.

Price could make its way up and close the gap at the weekly supply zone at $33 or price could penetrate the monthly zone a bit more and makes it way to $20. The charts are suggesting to implement the three day rule. The three day rule entails waiting 3 trading days after an earnings announcement to get an indication of which direction price will head next.

Personally, too much trading occurred for me between $24 and $28 (yellow rectangle). In addition, the upside of $6, up to the weekly supply zone at $33 isn’t worth the risk. If I was to take a trade, I would wait until price penetrated the monthly zone down to $20 before considering to go long.

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.

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Published on

by rollandthomas

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