Skechers down 4% as short-seller Spruce Point sees 30%-50% downside risk

Spruce Point Capital Management, which focuses on forensic research and short-selling, issued a report entitled “A Skechy Investment” that outlines why the firm believes shares of Skechers face up to 30% to 50% downside risk to $18.60-$26.00 per share. Spruce Point believes that Skechers’ revenue growth over the past five years has largely been the result of two transitory catalysts and it forecasts that the company will experience a “material” revenue growth slowdown. The firm believes Skechers is “just a moderate growth shoe company that will likely never be able to compete with the likes of Nike, Adidas or Puma,” adding that given its belief that Skechers’ growth rate will compress, its multiple will contract and its free cash flow generation will remain below average, “we find many reasons for Skechers to trade at a discount to its broader shoe peers.”