Skechers Stock Has a Lot to Prove on Thursday

By Rick Munarriz Markets Fool.com

It isn't easy being aSkechers(NYSE: SKX)investor these days. Shares of the leading maker of walking shoes and a major player in athletic footwear have given up more than half of their value since peaking two summers ago.

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Growth has slowed, and with Skechers set to report quarterly results on Thursday afternoon we could be eyeing its first year-over-year decline in net sales since mid-2012according toS&P Global Market Intelligencedata. Wall Street's top-line guidance is calling for $710 million to $735 million, a range that implies a dip of 2.3% on the low end and a gain of 1.1% on the high end.

Analysts aren't holding out for much in the report. The consensus estimate is for $723.7 million in net sales, near the midpoint of Skechers' own range. Wall Street pros are also targeting a profit of $0.09 a share, roughly half of what it earned during the prior year's holiday quarter and its weakest quarterly net income showing in three years.

Image source: Skechers.

Your shoelaces are untied

Things can get worse than the market's seemingly ho-hum expectations. Skechers fell short of its own top-line guidancelast time out, and it has missed Wall Street's profit targets in four of the past five quarters.

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There's been lingering weakness at Skechers' domestic wholesale business, offset by growth at its retail stores -- for now. Margins should also come under pressure during the quarter as competitive pressures weigh on its markups.

Skechers stock has actually soared 19% since the day after posting its disappointing third-quarter results. As bad as the stock has been treating investors since peaking a year and a half ago, the market's been pumping some air into the shares in recent months. Skechers will have to live up to those gains.

It's not all gloom and doom at Skechers.CEO RobertGreenberg bought $11 million of the stockin late November, his first open-market purchase of Skechers stock in 15 years. Analysts have also started to warm up to the stock. Scott Krasik atBuckingham upgraded the stock in December, feeling upbeat about new shoe lines presented at a trade show that should roll out to retailers in a few months. Monness Crespi also upgraded the stock since its last earnings report, and Wells Fargo initiated coverage with a bullish Outperform rating.

We've already seen a couple of companies with footwear interests get smacked down in recent days after posting problematic quarterly results, and the recent trends of decelerating growth and falling short of expectations at Skechers suggest that Thursday afternoon can get ugly. However, with Wall Street pros hopping on the bandwagon and the company's own CEO putting his money where his mouth is it's clear that some folks are pulling at the other end of this tug-of-war rope. Skechers has a lot to prove on Thursday, and only one side can win.

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Rick Munarriz has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Skechers. The Motley Fool has a disclosure policy.