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Up 40% ytd, is Skechers off to the races?

Controversy had put shares of Skechers in the penalty box. But it seems the footwear maker is back in the game.

"I find this is an incredible story," Jim Cramer said, "because just a few years ago the Skechers brand was horribly tarnished when the FTC sanctioned the company for overly aggressive marketing about the health benefits of its shoes."



Source: Skechers | Facebook

As you may remember, the FTC sued Skechers alleging the company deceived consumers by making unfounded claims which suggested the shoes would help people lose weight, and strengthen and tone the buttocks, legs and abdominal muscles.

The company agreed to pay $40 million to settle charges.

At the time shares languished, with investors preferring the stocks of other footwear makers. However, that may no longer be the case.

Now, it appears the Street is willing to forgive and forget, in part because when Skechers reported earnings at the end of April, "Skechers blew away the numbers," Cramer noted. Net income jumped to $30.9 million, or 61 cents per share, in the first quarter ended March 31 from $6.6 million, or 13 cents per share, a year earlier. Sales rose 21 percent to $546.5 million.

Those results suggest that Skechers are selling. CEO Robert Greenberg believes part of the company's success may be due to its pricing strategy. "Nike sells at $140 a pair and we have the same type of footwear at $80. That's a big difference," he noted. on "Mad Money." Also Cramer said products were fashionable and comfortable. "They sell athletic shoes that use memory foam!"

In addition, Cramer thinks the company's shrewd marketing campaigns are driving sales.

"Just yesterday we learned that Skechers is sponsoring California Chrome, the horse that could potentially be the first triple crown winner in 36 years if it scores a victory at the Belmont Stakes on Saturday. Horse racing is a terrific way to connect with older consumers."

"We're not only trying to connect with younger people. We also want baby boomers," Greenberg added, further explaining the strategy.

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Given the execution and the marketing, "Skechers is, once again, looking like a high quality, very long-term growth story," Cramer said.

"In an environment where retail has become incredibly inconsistent, it only makes sense to keep a close eye on hot brands and Skechers is hot."

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