Hot Skechers a shoo-in for a bid
IN CASE you missed it, Skechers USA is on fire. Shares of the sneaker maker have doubled in just six months, giving it an almost $6 billion (R73bn) market value.
Its revenue gains – led by women’s sporty, slip-on shoes – have been beating every competitor. The company is now headed for record profit in the third quarter.
“I sure like the way the stock’s gone up,” said Gary Bradshaw, a Dallas-based fund manager for Hodges Capital Management, which owns Skechers shares among the $3bn it oversees. “They’ve kind of caught this fashion trend just right.”
Takeover
Just last month, Skechers surpassed sportswear giant Nike’s valuation relative to earnings before interest, taxes, depreciation and amortisation.
Before Skechers gets any more expensive, it might make sense for a competitor such as Nike to make an offer. The $91bn industry leader still dwarfs Skechers in size and has almost enough cash on its balance sheet to cover a takeover.
Adidas, the $17bn German athletic footwear maker that owns Reebok, is under pressure to take back market share from Nike. Skechers would give either company a way to get in on the growing market for fashionable walking shoes and reach different customers at a lower price point.
Skechers “is well run and could be on someone’s radar”, Barry James, the chief executive at James Investment Research in Ohio, said.
The biggest question is whether Skechers’ founder Robert Greenberg, who was 75 as of April, would be open to selling his company. Greenberg is the chairman and chief executive of Skechers. His son Michael, 52, is president, and his other son Jeffrey, 47, is in charge of active electronic media. They all serve on the board and, with the family estate trustee, control more than 70 percent of the voting power.
“It might be a little early to think that they would necessarily be wanting to sell the company,” Jeffrey Van Sinderen, an analyst at B Riley, said.
“But it could be attractive to private equity or a strategic buyer. They have a brand and have established it even more so over the past several years. They have a nice niche.”
Jennifer Clay, a spokeswoman for Skechers, declined to comment on whether the company had received takeover interest or had considered a sale. Representatives for Nike and Adidas did not respond to requests for comment.
While the stock has been rising since 2012, its biggest gains have come this year. The share price has already doubled in 2015, adding to last year’s 67 percent surge. Analysts forecast an additional 10 percent upside to the current stock price over the next 12 months. – Bloomberg