I think that SKX is seriously under-valued, however there is some reason to worry. A recent article in Business Week discusses some of the reasons.
There is an active discussion of SKX on the Yahoo message boards, but you have to wade through tons of obscene flame wars to get to the useful info, so you might not want to bother. Below is a copy of a message from that board that summarizes the negative arguments. Keep in mind, that I am long SKX & am thinking of buying more at the current <$5 price to average down.
***BEGIN QUOTE FROM YAHOO MESSAGE BOARD****
Read the current article in Business Week 9/27:
Excerpt:
"The skepticism partly reflects anxieties about the fickleness of youth fashions. The wave that Skechers is riding could end just as abruptly as it
started. But more than anything, Greenberg is being punished for his past. Many Skechers executives come from the old L.A. Gear, including
CFO David Weinberg and Greenberg's 36 year old son Michael who was L.A. Gear's national sales manager and is now Skechers' president.
Altogether, five Greenberg offspring sport executive titles, which worries some. "I wouldn't go near any company run by Robert Greenberg,"
says a private investor who followed L.A. Gear as an analyst. The parallels between the companies, he says are "frightening.""
Additionally:
Skechers' mainstay styles are going out of style, skater/baller "in", clunky/grundge/goth "out"
Broken IPO, it was a disaster and investors are pissed, you can tell by whaling and knashing of teeth on this board.
High inventory levels, major discounts, all will hit the bottom line when valuation of inventory is adjusted accordingly.
IPO proceeds squandered by the owners and siblings, no funds were used for R&D or acquisitions
Cash position terrible
Accounts receivable alarmingly high, turnover low
Rampant nepotism renders management ineffective
Basic financial fundamentals, balance sheet, is terrible.
*******END QUOTE FROM YAHOO MESSAGE BOARD********
Remember that the above info puts the most negative possible spin on all information. The individual who posted this info has been talking SKX down for some time, often in much less reasoned language.
I'll try to find something that summarizes the positive viewpoint and will post it at a later date. |
