Shares of footwear company Skechers U.S.A Inc.
were down more than 5% in premarket trade on Wednesday after Susquehanna Financial Group downgraded the stock to negative from positive. Analysts at Susquehanna expect Skechers’ domestic wholesale to disappoint as the company faces ongoing challenges likely to result in less expense leverage than Wall Street anticipates. Skechers is also suffering from increased competition when it comes to retailers buying additional inventory. With Nike Inc.
holding its usual demand and brands such as Adidas AG
and Puma gaining traction, Skechers is being crowded out, writes lead Susquehanna analyst Sam Poser. Retailers are even planning incremental dollars to fund Under Armour Inc.
according to Poser. “While we continue to believe Skechers’ product suite has markedly improved, our proprietary checks indicate that initial sell-through and order-flow in the domestic wholesale business is trending short of expectations and will remain challenged.” Poser wrote in a note to clients. “We don’t believe upside will materialize. While we recognize international wholesale now encompasses about 40% of Skechers’ business, we believe sentiment remains closely tied to it domestic business.” Shares of Skechers are down 2.7% in the last 12 months, while the S&P 500 index
has gained nearly 15%.