- Shares of Skechers plunge after earnings come in short
- VF, the owner of North Face and Timberland, tempers forecast
Skechers USA Inc. and VF Corp. posted weaker second-quarter results than analysts predicted, a sign the shaky global economy prompted shoppers to put off purchases of sneakers and jeans.
Shares of Skechers plunged as much as 23 percent after it posted second-quarter earnings of 48 cents a share. Analysts estimated 53 cents. At VF, which owns the North Face, Lee and Wrangler brands, revenue missed estimates and management tempered the company’s annual forecast.
An economic slowdown in Asia and turmoil in Europe -- spurred in part by the U.K.’s vote to leave the European Union -- has taken a toll on U.S. apparel companies. They’re also coping with hesitant consumers in their home country, where a polarizing presidential election and lingering questions about the health of the economy may have made consumers less likely to spend. Retailers have had to rely more heavily on discounts to get customers in the door, weighing on profit.
Recent retail data raised optimism that American shoppers might be ready to open their wallets again. Retail receipts rose 0.6 percent last month, beating estimates, according to the Commerce Department. But many brands have yet to see a rebound.
In delivering VF’s results, Chief Executive Officer Eric Wiseman cited a “challenging environment with mixed economic and currency conditions around the world.” In addition to a decline in sales for Timberland in Asia and the Americas, the company faces currency headwinds. The strong U.S. dollar has cut the value of its sales generated overseas.
VF’s revenue rose just 0.8 percent to $2.45 billion last quarter, trailing the $2.53 billion average projection. It now expects sales to increase 3 percent to 4 percent this year. The Greensboro, North Carolina-based company previously predicted growth in the mid-single digits.
Skechers’ sales also missed projections last quarter. It posted $877.8 million in revenue, compared with an average analyst estimate of $890.6 million. Domestic wholesale sales were down 5.4 percent, with “significantly reduced shipments in April,” the sneaker maker said.
Its stock dropped as low as $24.76 in New York trading, the biggest intraday decline in nine months. Shares of VF slid 1 percent to $62.53.
Skechers CEO Robert Greenberg said the Manhattan Beach, California-based company is facing “economic and political uncertainty in both the United States and abroad, as well as challenges in the domestic retail space resulting in a promotional sales environment.”