Certain shoe stocks right now are “smoking hot,” Cramer said Monday. He already put Deckers Outdoor on his conviction-buy list, and today he added another: Skechers.
The company’s most recent quarter was flawless, or, in Cramer parlance, “hairless.” There was nary a blemish on it. Earnings came in 6 cents ahead of the 52 cents a share consensus estimate, while sales were up 30% year-over-year. That’s what Cramer defines as a true beat, meaning revenues drove profits higher rather than cost cuts.
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In fact, Skechers’ sales were up across the board. Combined domestic and international same-store sales for the fourth quarter jumped 17%, domestic wholesale revenues soared 38%, and the retail businesses both here and abroad saw a 27% increase. Cramer called these numbers nothing short of “amazing.”
Skechers has done a great job of controlling its inventories as well. This is key because it marks the difference between also controlling prices or being forced to sell the overstock at fire-sale prices. Well, expect no jaw-dropping markdowns here. Inventories for the quarter dropped 14% year-over-year. Even better: The business backlog was up 40% at the end of 2009. So all the key metrics seem to be headed in the right direction.