No change to our Best Idea Long thesis on the impressive 3Q print, which was spot-on with our model. Incredibly impressive SIGMA move as inventories are rightsized and margins are accelerating to the upside. We think the implied 4Q guide down (by keeping the year on a 3Q beat) is too conservative. SKX just set up for another sizable beat. The DTC model is ripping, both in the US and Internationally, and with the trade-down effect with a strapped consumer, we should see wholesale sales accelerate as SKX remains the last man standing selling shoes in the $60-$80 range. If we're right in our 2024 model, this stock could be up 80% in a year. At a minimum it's $100+ stock over a 2-year time period. Biggest risk is foray into performance. It worked in running, miraculously, but now we're seeing a push into soccer and basketball. Can we underwrite a few hundred million in sales in each of these sports? Yes. But for a company that has historically spent zero in R&D and spent 100% of discretionary SG&A on marketing after knocking off what's hot from other brands, this is is definitely a shift in its business model that we'll be watching closely. Still, our TREND and TAIL estimates are well above consensus. See Elevator Pitch, SIGMA, & Consensus Expectations below.
