With Dad Shoes In Fashion, Is Skechers Set For A Big 2018?

With "dad shoes" dominating the fashion world, could the quintessential dad shoe brand — Skechers USA Inc SKX — be poised for a big 2018?

Skechers is known for latching onto current styles to its benefit. Luckily for Skechers, the next big look has come to them this time, with chunky shoes all the rage.

The brand has experienced a resurgence over the past few years, as a more affordable but less stylish alternative to the big footwear players.

Cowen analyst John Kernan recently named Skechers one of Cowen's best ideas for 2018. Cowen maintained an Outperform on the stock, raised the price target from $38 to $42 and lifted fiscal 2018 sales and EPS estimates.

With a strong 2018 product lineup, Kernan said Skechers is either misunderstood or just underappreciated.

“The breadth and depth of the Skechers assortment and the brand’s global reach, category expansion opportunities and consumer perception is underappreciated,” he said.

A Growing International Business

Argus analyst John Staszak also joined in on the bullishness, recently upgrading Skechers to a Buy rating with a $44 price target.

“In spite of a difficult retail environment, Skechers appears to have gained momentum in the U.S.,” Staszak said.

Skechers has a rapidly growing international business that's contributing an increasing percentage of total company revenues, according to Argus. International wholesale revenue grew nearly 26 percent in the third quarter and is expected to reach 50 percent of total sales by the end of fiscal 2017, up from 25 percent of total sales in 2009, the analyst said. 

“Longer term, we expect Skechers to continue to develop innovative products and to expand through new store openings and international distribution agreements. We also expect the company to benefit from rapid growth in emerging markets, especially China and India,” Staszak said.

Analyst: Trends Are In Skechers' Favor

Although Skecher’s sales in athletic categories are still down for the year, footwear analyst Matt Powell of NPD Group tells Benzinga the company would be on his watch list as a potential brand to heat up in 2018.

“I think the current fashion environment plays right into their favor, particularly the chunky outsole, although it is a relatively minor trend," Powell said. "The most important trend we are seeing are that performance shoes are not selling, but athletic-inspired shoes are what’s hot, and that’s absolutely in Skechers' wheelhouse."

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Photo by Brett Hershman.