Skechers USA Inc. (SKX), the designer, marketer and distributor of footwear, recently entered into a licensing deal with the luggage maker, Olivet International, whereby the latter will design, produce and distribute suitcases, wheeled totes, duffle bags and garment bags bearing the Skechers logo.
The new luggage collection, which is slated to be launched in the fall of 2011 in the U.S. and Canada, marks an addition of yet another product to Skechers’ brand portfolio.
In addition to the recent licensing agreement with Olivet International, one of the leading luggage and accessories companies in North America, Skechers has also signed deals with other licensees to produce children’s apparel, bags, sunglasses, legwear, medical scrubs and leather accessories.
Skechers is also seeking opportunities, both domestic and international, to expand its brand name to composite product segments. This multi-brand strategy enables the company to roll out new products without cannibalizing its existing brands and helps to expand the targeted demographic profile of customers.
The company recently delivered its second-quarter 2010 results that topped the Zacks expectation. The quarterly earnings of 82 cents a share breezed past the Zacks Consensus Estimate of 44 cents and improved substantially from a loss of 13 cents posted in the prior-year quarter.
Skechers, which competes with Deckers Outdoor Corporation (DECK), said that total net sales for the quarter soared 68.9% year over year to $504.9 million, and comfortably surpassed the Zacks Consensus Revenue Estimate of $426 million.
The company’s sustained focus on new line of products, opening of new retail stores and distribution channels, and the development of new international distribution agreements (in India and Mexico) should facilitate the increase in sales and profitability.
Moreover, with growing operations in Chile, Hong Kong and China, we believe that the international business will become a significant growth driver for the company’s sales, going forward. Skechers through its distribution networks, subsidiaries and joint ventures is poised to expand its global reach in the footwear market.
However, strong competition in the footwear market, the macroeconomic factors influencing consumer-spending pattern, and rising input costs still remain concerns.
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