Consumer Goods | United States
WSD Target Price
Annualized Return Since Publication
Target Equity Value (Δ)
Source: Bloomberg end of day market data; not adjusted for dividends (December 8, 2017).
Returns assume a short investment position on the date that WSD Capital Management published its thesis, and an exit on the date that the WSD Target Price is realized.
Returns do not reflect any taxes, fees or dividend and interest expenses related to short sales.
The returns are hypothetical and do not reflect the actual results of WSD Capital Management’s investment activities, nor is it necessarily indicative of future results of WSD Capital Management’s investment activities.
Skechers USA (“Skechers”) is a designer and marketer of Skechers-branded lifestyle footwear for men, women and children, and performance footwear for men and women. The company operates through three segments: Domestic Wholesale, International Wholesale, and Retail.
WSD Capital Management announced its short position in Skechers in August 2016. We believe the company’s growth story is losing its footing while pressure on margins is expected to intensify as it continues to struggle with retail headwinds in the broader athleisure market.
In October 2016, the company’s stock hit a new 52-week low as the country's second-largest footwear brand reported weaker-than-expected results for the third quarter and issued soft fourth-quarter guidance. In November 2016, the company’s stock gained nearly 16 percent after the its CEO, Robert Greenberg, disclosed that he purchased $11 million worth of Skechers shares, the CEO’s first buy in more than 10 years.
While the insider buying has been largely interpreted as a strong signal for management’s confidence in a positive outlook, it does not negate the fact that both Robert Greenberg and the company’s President, Michael Greenberg, are net sellers, having collectively sold more than $140 million of the company’s stock since it peaked in 2015. We expect this trend to continue and insider selling to accelerate as growth continues to decelerate.