Jim Cramer has been a huge fan of Skechers for a long time, but it found a new place in his heart on Thursday when the company announced tremendous earnings and the stock hit an all-time high.
The company reported on Wednesday night after the close and stunned Wall Street by beating expectations in almost every category. It delivered a 9 cent earnings beat from a $1.01 basis and announced higher than expected revenues, up 40.5 percent year over year.
It also had strong guidance, as management predicted accelerated growth throughout the year.
And while Skechers did have an amazing quarter, management confirmed that it faced significant headwinds including a strengthening U.S. dollar, unseasonably cold weather in many markets, a slow-down in the West Coast ports and a distribution center in Europe that operated less efficiently.
Given these difficulties, could Skechers have obtained an even better number without them?
To find out, Cramer spoke with Skechers CFO and COO David Weinberg.
“The number could have been significantly higher just from the currency, and obviously if the port had been more efficient for us we could have had an extra turn. It seems we are very strong going into the back half of this year, and things are still looking pretty good,” Weinberg said.
Weinberg confirmed that one thing that is unique for Skechers is the universality of the product. Not only has technology helped in providing further innovations for its products, but it has also united taste preferences around the world.
Just look at the sales figures—the top shoes that sell in Europe andSoutheast Asia are also the top shoes in the United States.
“I think tastes are coming in common around the world. People look more alike than they have in the past. The Internet is a great place to see fashion and comfort and what other people are doing, and we have some universal looks,” he added.
Looking back over the quarter, Weinberg said that the company could have delivered an even more amazing quarter. He added that they could have shipped more if the West Coast had been more efficient. He also noted that currency issues in Europe skimmed at least $20 million from its top line.
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The exec also expects to see China emerge as one of the largest markets for Skechers when you take into account the size of the population there and how fast the shoes are selling. As the year progresses, he expects the Chinese market to accelerate as they continue to spread out with a much bigger franchise base.
Ultimately, Skechers expects to continue to fire on all cylinders as the year goes on. Weinberg elaborated on this: “You could say that the potential of the brand is significantly larger because we are so underpenetrated that even in difficult times we have significant growth. This means we have a long ways to go as business gets better around the world.”