This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Can Skechers Recover From Missteps?

NEW YORK ( TheStreet) -- Sometimes net/nets are able to turn things around.

Net/nets are stocks that trade for less than their net current asset values. Sometimes stocks end up in this predicament because of bad business moves, a rough economy, intense competition or even obsolescence.

Some of these companies never recover. But others are able to right the ship. If you can correctly identify the latter stocks, and have the stomach to endure the roller-coaster ride often involved with owning such names, you could be richly rewarded.

Footwear company Skechers (SKX - Get Report) is a great example, but it's still a work in progress.

Skechers was a victim of the insane markets we experienced in early 2009. It traded below net current asset value for a while before it embarked on an incredible run between April of 2009 and June of 2010 that saw shares soar from $6 to $44.

But following that amazing recovery, the company's missteps brought the stock crashing back to earth. By early January 2012, much of the earlier gain had vanished, and shares traded for less than $12. The fall from grace was primarily due to Skechers' "Shape-ups" line of sneakers, an unmitigated disaster that led to lawsuits and growing inventories.

Demand for the shoes, which promised health benefits to those wearing them, was weak, and the company was left with a boatload of unwanted product. Ultimately, Skechers dumped the inventory, while investors dumped their positions in Skechers.

Although the company has not yet returned to profitability, the markets have warmed up to the stock, and shares are now back near the $20 level -- up more than 60% year to date. Despite negative bottom lines for the first two quarters of 2012, the losses have been much lower than analysts' consensus estimates.

Inventories have fallen. Second-quarter inventory was down more than 20% vs. the same period last year. Consensus estimates for the third quarter are calling for revenue of $435.3 million, and earnings of 32 cents a share. We'll know more on Oct. 24, when the company is scheduled to report third-quarter earnings.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SKX $71.69 0.00%
AAPL $123.25 0.00%
FB $83.30 0.00%
GOOG $548.34 0.00%
TSLA $185.00 0.00%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs