What Happened?

Shares of footwear company Skechers (NYSE:SKX) fell 21.3% in the morning session after President Trump announced "reciprocal tariffs" on all US imports, set at a minimum rate of 10%.

From clothing brands and electronics makers to the e-commerce sites that move their goods, companies built on global supply chains took the biggest hit. Stocks with heavy exposure to Asia were especially hard-hit, as the new tariffs threatened the growth and profits of firms with factories in the region. Vietnam, central to many companies' production plans, faced a 46% tariff. Cambodia and Indonesia were also in the crosshairs, with tariff rates of 49% and 32%. These measures could significantly erode the competitiveness of goods produced in those regions. For example, reduced production volumes would negatively affect the sales growth of all companies benefiting from these manufacturing hubs.

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What The Market Is Telling Us

Skechers’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. Moves this big are rare for Skechers and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 11 months ago when the stock gained 17.4% on the news that the company reported a rare 'beat and raise' quarters. Skechers blew past analysts' constant currency revenue expectations. Its operating margin also outperformed Wall Street's estimates. Looking forward to the full year, the company raised its revenue and EPS guidance for 2024, and both were comfortably ahead of analysts' expectations. Overall, this quarter's results seemed fairly positive, and shareholders should feel optimistic.

Skechers is down 26.8% since the beginning of the year, and at $49.26 per share, it is trading 37% below its 52-week high of $78.24 from January 2025. Investors who bought $1,000 worth of Skechers’s shares 5 years ago would now be looking at an investment worth $2,276.

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