Deep Dive: Ben Claremon Discusses Skechers Stock
This week we welcomed back Ben Claremon, a portfolio manager at Cove Street Capital, to talk Skechers stock. Skechers is a company many people likely are aware of, but few have thought about investing in the stock. Ben lays out his thesis for the investment in this week's episode. Here are some questions we asked him:
Can you explain Skechers’ business model?
DTC has higher gross margins, and likely could help the company expand its overall margins. What % of the business could this get to over time? How much do you think it can help with overall profit margins?
Overall, what sort of operating leverage do you see this business achieving over the next few years?
Management has a goal of hitting $10 billion in sales. How do you think they will do that?
Thoughts on the A/B shareholder structure and the Greenberg’s control of the company? You said management is a big part of the thesis here, why is that?
Valuation. What does the company need to do to make this a good investment?
Thoughts on the repurchase program and capital allocation?
Competition is fierce in apparel/footwear. How has Skechers been able to defend its position in the marketplace for so many years?
What do you think the shares should be worth today?
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Disclosure: The author and podcast guests are not your financial advisors. Ryan Henderson and Brett Schafer are general partners and portfolio managers at Arch Capital. Clients of Arch Capital may hold securities discussed on this show.