Following a 40% freefall since the end of January, Hedgeye’s Retail team led by Brian McGough added Skechers (SKX) as a long recommendation in late March.
Today, the stock price is up over 24%.
“Initially added to Best Idea Long List in October 2023 at $48 with the driving factor being that competitors like Nike, Adidas, Hoka, and On were soaring, Skechers was left as the only low-priced offering at a time when consumers were looking for value”, said Ryan Wilson of SKX.
“We held Skechers as a Best Idea Long until January of this year until we removed it at $70 because expectations had risen and NKE was making a big push back into the channel that SKX operates in. However, we added it back to the Best Idea Long list in late March at $55 as the stock had been crushed by tariff news.”
The acquisition by 3G Capital was the catalyst to send Skechers soaring. The deal is priced at $63 per share — significantly below where the stock traded just a few months ago — and gives shareholders the option to convert their shares into units of the future privately held entity.
“The acquisition itself won't change the company's operating strategy, and it also leaves the Greenberg family, which owns approximately 60% of the outstanding shares, in charge of running the business.”
“It’ll insulate the value of the company from further tariff issues due to its significant sourcing exposure to China, assuming the deal does go through.” Wilson said.
The deal is expected to close in the third quarter of 2025.
We’ll take the win on yet another great call from the Retail team.
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