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Skechers Lowers Its Outlook for Second Half

September 11, 2002|LESLIE EARNEST | TIMES STAFF WRITER

Amid disappointing shoe sales, Skechers USA Inc. warned Tuesday that earnings probably won't meet analysts expectations in the second half of the year, prompting investors to shave almost 16% off the value of the company's stock.

The share price, now about 48% lower than it was a year ago, had been dropping since Friday when two brokerage firms lowered their ratings on the Manhattan Beach-based shoe designer. The stock closed Tuesday at $10.25, down $1.93 on the New York Stock Exchange.

It was the lowest closing price since April 25, 2000, when the stock finished trading at $9. More than 4.2 million shares changed hands Tuesday, almost 10 times the average daily number of shares traded over the last three months.

"When the news came out today, it was worse than people were anticipating," said John Zolidis, an analyst with Buckingham Research Group, one of the firms that issued a lower rating on the stock.

Skechers is one of a number of companies with diminished hopes after a weak back-to-school shopping season, analysts say.

"A lot of [retailers] were pinning their hopes on this big second-half recovery," said Rozilyn Bryant, an analyst with Morningstar Inc. "You find a lot of these retail-associated companies are tempering their expectations slowly but surely."

Skechers said in a statement that it expects weakness in U.S. retail sales to continue into the holiday season.

For the third quarter ending Sept. 30, the company said it now anticipates earnings of 30 cents to 35 cents a share. A consensus of analysts from Thomson First Call was expecting profit of 41 cents a share. Sales for the quarter should be $245 million to $255 million, compared with $287.9 million in the third quarter of last year.

For the fourth quarter, Skechers anticipates earnings of 10 cents to 14 cents a share, well below the 26 cents First Call analysts were expecting. In the fourth quarter of last year, Skechers had earnings of 5 cents a share on sales of $214.1 million.

For the year, the company said per share earnings should be $1.45 to $1.54, compared with $1.24 last year. First Call analysts were expecting earnings for 2002 of $1.71. Sales for 2002 should range from $961 million to $971 million, compared with $960.4 million in 2001.

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