We recently compiled a list of the 10 Footwear Apparel Stocks Affected By China Tariffs. In this article, we are going to take a look at where Skechers U.S.A. Inc. (NYSE:SKX) stands against the other footwear apparel stocks.
Donald Trump’s sweeping tariffs on China, Mexico, and Canada have caused a lot of footwear and apparel stocks to crash. Even though the President paused tariffs on Canadian and Mexican goods for a month, the 10% tariffs on China are still in place.
Fashion brands provide an interesting investment opportunity. Due to their loyal following, they have the ability to raise prices to take care of tariffs. In a similar way, these brands have become quite agile in diversifying their supply chain since the pandemic, so sourcing products from outside China is also a possibility for many. More than these brands, it is the retailers that will get hurt as their value proposition to their customers may get hurt when brands raise prices. However, these retail stocks are not a part of our discussion for now.
In order to come up with our list of 10 stocks affected by Trump’s tariffs on China, we only considered stocks with a market cap of at least $1 billion and a product sourcing mix exposure to China of at least 5%.
A sportsperson running with style and grace, embodying the company’s performance footwear.
Skechers U.S.A. Inc. (NYSE:SKX)
Skechers U.S.A. Inc. is a footwear designer, manufacturer, seller, and marketer that operates through two segments; direct-to-consumer and wholesale. The company supplies its products through big box club stores, company-owned retail stores, factory outlets, websites and mobile apps, department stores, and other platforms. The company sources 40% of its products from China.
The stock has already run up 10.66% this year, despite losing 7.5% in a single day when the tariffs were announced. Despite announcing record 2024 revenue yesterday, the company lagged estimates. There’s good reason to be optimistic about the company though despite its exposure to China.
According to Jay Sole, who is an analyst at UBS, the company is on track to become the third-largest footwear maker in the world. It could deliver $10 billion in revenue by the end of next year. Even though Q4 earnings have disappointed with the stock plunging 12% after hours, it doesn’t negate the long-term bull thesis and could be seen as a buying opportunity.
Overall SKX ranks 2nd on our list of the footwear apparel stocks affected by China tariffs. While we acknowledge the potential of SKX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as SKX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
