In late April Dad-Shoe brand Skechers reported decent earnings and pulled all guidance.
We talked about it at the time in my video update. To refresh, Skechers had cash, patience and a good management team with a strong track record. They also source 40% of their product from China. As a results SKX management rather candidly said "we don't know" and yanked guidance for the rest of the year.
At the time my question was whether or not the stock could hold its lows:
The stock held, which was bullish but it would seem Skechers thought the certainty of cash in hand from 3G was better than rolling the dice of adjusting the supply chain on the fly. Today Skechers announced an agreement to be bought for $63/ share. A 30% premium over the price on Friday but below where SKX was trading in February.
It's important that A) Skechers was worried enough to take the cash and B) Private Equity was there to offer a bid. Skechers was looking at reporting for the next 9 months having no idea what the numbers would be. After a quarter century of printing solid returns for shareholders the certainty of an offer beat the chaos of the moment.
Skechers went public in 1999 and is selling out fairly close to all-time highs. It was smart to book the trade.
This won't be the last buyout in the consumer space over the next few months. Now that the game is afoot I'll be looking for more companies that might decide hitting the bid and going private beats slogging it out through another economic cycle.
Congrats to Skechers management and (recent) shareholders!
