L.A.’s entertainment industry sure faces problems – digitized consumers, stagnant ticket sales in North America and Europe, and now California’s so-called Fair Pay law that stands to whack Hollywood particularly hard.
Thankfully, China’s big and still-burgeoning movie market has dependably rescued the film business year after year, kind of like the arrival of the cavalry in a Western.
But wait. Suddenly, China’s appetite for American movies seems to be dwindling.
At least seven Chinese-made movies this year will gross the equivalent of $150 million in ticket sales in that country while only three or four American films will hit that level – the inverse of what we have seen in recent years. “This year, imports from America will tally their lowest market share ever in China’s modern cinema history,” Rob Cain, an expert on Chinese and Indian movie markets, wrote in Forbes last week. He said American movies likely will account for less than 35 percent of the Chinese market, way down from 63 percent in the first half of 2012.
Consider this: The movie that’s likely to be the most profitable in the world this year is one you may never hear of, Cain said. It’s a Chinese spoof whose title translates to “Pancake Man.” It’s reportedly about a street vendor whose food somehow transforms him into a superhero, and if that makes no sense it doesn’t matter because you’ll never see it.
Why is this happening? The quality of Chinese movies has gradually improved and seems to have hit a tipping point. The public there now appears to prefer them, “and that is indeed happening at a faster rate than most in Hollywood expected,” wrote Cain.
Hollywood might be tempted to look to India as its next big growth opportunity. But there again, the movie industry in that country is pretty good.
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Four years ago, I wrote about how badly Skechers had stumbled. Its earnings were sorry, its stock was down at the heels and it had woefully misjudged the market, betting heavily on its ill-fated rocker-soled Shape-Ups. It seemed to be coming untied.
“Let’s see if Skechers’ management can successfully walk this company back,” I wrote at the time, not hiding my doubt or my overuse of bad puns.
OK, so it’s time to stop stomping on the Manhattan Beach shoemaker. If you look on page 31 of this issue, you’ll see Skechers’ stock has appreciated almost 129 percent so far this year and 142 percent over the past 52 weeks. No other Los Angeles County stock has done as well, not counting penny stocks.
What happened? For one thing, Skechers is simply running a sound business. A note last week from Zacks Equity Research (a Skechers bull) pointed out that the company has focused on cost containment and inventory management as well as more store openings and international sales.
But for another thing, it has developed stylish kicks that are right in the wheelhouse of the so-called athleisure trend. “Also, the growing preference for cheaper shoes in the nation has been helping the company to enhance its market share,” wrote Zacks.
So it’s making stylish, inexpensive and popular shoes while running a humming back office. Somebody’s got to say it, bad pun and all: Skechers is kicking it.
Charles Crumpley is editor of the Business Journal. He can be reached at [email protected].
