Wedbush Securities Comments On Skechers USA

According to Wedbush, one of the few bright spots on Skechers SKX Q4 conference call was the relatively stronger international gross margin vs. the domestic gross margin. Management intimated that international margins were in the “high 40's,” however, upon review of the 10-K, total international gross margins for Q4 were 39.2%. Therefore, Wedbush has moderated its international margin assumptions for 2011 and 2012. It now anticipates international gross margins for this year to be 41.5% vs. 46% earlier. Separately, Wedbush raised its retail margins in 2H11 to 60% as its initial 55% estimate appeared too draconian. It remains Neutral on the shares until it sees evidence that a majority of Shape-ups clearance activity is behind SKX. Until then, Wedbush believes upside to the shares is limited. Wedbush has a $21 PT on SKX SKX closed Friday at $18.80