SKECHERS USA, Inc. (NYSE:SKX) released a short statement on the
state of its business in response to The Buckingham Research Group
(BRG) Industry Update report released on September 24, 2014,
respecting the imminent close of the third quarter and the
Company’s upcoming earnings announcement.
“We respect the SportScan data released every Wednesday on the
footwear business, but when not looked at in its entirety or
analyzed over periods of time, and understanding that some key
accounts—including Amazon, Zappos, Kohl’s and Finish Line/Macy’s,
are not currently reporting and are projected based on the balance
of the sector, the data can be misinterpreted or skewed,” began
David Weinberg, SKECHERS COO and CFO.
Mr. Weinberg continued: “As BRG reported, for the week ending
September 20, 2014, SKECHERS sales were down 3 percent, but
improved 19 percent for the trailing four weeks and 33 percent for
the trailing 13 weeks. What BRG didn’t report is that the week
ending September 30 is one of the three smallest weeks of the year,
according to SportScan, who also indicated to us that their
analysis of the data shows that we are continuing to take market
share and that footwear retailers remain confident in our
product.”
“With a deeper dive and channel checks conducted which is always
recommended, the results would be more conclusive. As indicated by
SportScan and our retail partners, we are continuing to take market
share. We have seen only one material decrease in our kids business
in one account in the South due to a significant planned decrease
in the number of doors, though our business in the existing doors
remains strong,” Weinberg added. “This is already the biggest
booking third quarter in the history of the Company with an over 50
percent increase from third quarter of last year, and the SKECHERS
retail stores continue to show positive comp store increases on top
of significant retail store comp increases last year. Given channel
checks, SKECHERS retail performance, our incoming order rate which
leads us to an increased backlog worldwide, we remain confident
that our domestic and international business is strong, that our
brand continues to be in demand, and that our product and marketing
resonate with consumers around the world.”
Additional reports issued on September 24, 2014 about SKECHERS
market position included the following statements:
Sterne AgeeBusiness is healthy as evidenced by high teens
ASP increase: The deceleration in the last week was largely
relegated to the mid-tier department store channel, where SKX sales
declined 20.5% in the last week versus +10.4% for the last 4 weeks.
We do not believe there is a brand/product issue here, as shown by
the 19% ASP increase within the channel. If there was a
product/brand issue, department stores would be promoting the
product in a very aggressive fashion. We believe that retailers
likely ran out of inventory after the strong start of back to
school. We remind investors that in recent quarters, SKX management
has put a great emphasis on lean inventory levels and "starving the
customer." The deceleration in the mid-tier department store
channel was even greater for the EPS overall footwear category,
where sales declined 23% in the last week versus +2% for the last 4
weeks.
Susquehanna Financial Group, LLLPSkechers Demand is
Outstripping Supply. With the devil in the details, we noticed
overall units were down -20.2% while ASPs were up +21.1% this week.
We believe this signals that retailers are short inventory
following a strong back-to-school season (BTS). Recall BTS
(7/20-9/13) saw stronger than expected growth (+36.5%) and given
the likely lack of product thereafter, this likely accentuated the
historically normal fall-off in sales post-BTS that the brand
usually experiences. Importantly, this is supported by our
conversations with key retailers, SportScan and SKX. As a reminder,
we note that SportScan only tracks ~25% of SKX global sales, in
which we believe the other 75% is trending very well, particularly
international. Overall, we believe the story is very much on
track.
Citi ResearchBy category, SportScan data indicates
that Skechers continued to post positive growth in the
walking, work/utility, training/fitness, boots, and sandal
categories, while casual athletic posted a -5% decline and
dress/comfort casual was also weaker. By channel, SKX
continued to post positive growth in all major channels
ex-Mid-Tier Department Stores, with Family Footwear up +6%,
Discount/Mass +66%, and Athletic Specialty/Sporting Goods up
+15% y/y.
While Wunderlich did not issue a report, the firm’s
analyst Danielle McCoy was quoted in Investor’s Business Daily on
September 24, 2014 as follows: “'We don't think this is worrisome.
I believe Skechers is still a very solid brand — one of the key
winners this back-to-school season.' McCoy said that comparing the
most recent week to the trailing four weeks ‘is not comparable,’
since August is the largest back-to-school selling month.”
About SKECHERS USA, Inc.
SKECHERS USA, Inc., based in Manhattan Beach, California,
designs, develops and markets a diverse range of lifestyle footwear
for men, women and children, as well as performance footwear for
men and women. SKECHERS footwear is available in the United States
via department and specialty stores, Company-owned SKECHERS retail
stores and its e-commerce website, and in over 100 countries and
territories through the Company’s international network of
subsidiaries in Canada, Brazil, Chile, Japan, and across Europe, as
well as through joint ventures in Asia and distributors around the
world. For more information, please visit www.skechers.com, and
follow us on Facebook (www.facebook.com/SKECHERS) and Twitter
(twitter.com/SKECHERSUSA).
This announcement contains forward-looking statements that are
made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements include, without limitation, the Company’s future
growth, financial results and operations, its development of new
products, future demand for its products and growth opportunities,
its planned opening of new stores, advertising and marketing
initiatives, and the expansion and automation plans for the
Company’s European Distribution Center. Forward-looking statements
can be identified by the use of forward looking language such as
“believe,” “anticipate,” “expect,” “estimate,” “intend,” “plan,”
“project,” “will be,” “will continue,” “will result,” “could,”
“may,” “might,” or any variations of such words with similar
meanings. Any such statements are subject to risks and
uncertainties that could cause actual results to differ materially
from those projected in forward-looking statements. Factors that
might cause or contribute to such differences include the
resignation of the Company’s former independent registered public
accounting firm, and its withdrawal of its audit reports with
respect to certain of the Company’s historical financial
statements; international, national and local general economic,
political and market conditions including the ongoing global
economic slowdown and market instability; entry into the highly
competitive performance footwear market; sustaining, managing and
forecasting costs and proper inventory levels; losing any
significant customers, decreased demand by industry retailers and
cancellation of order commitments due to the lack of popularity of
particular designs and/or categories of products; maintaining brand
image and intense competition among sellers of footwear for
consumers; anticipating, identifying, interpreting or forecasting
changes in fashion trends, consumer demand for the products and the
various market factors described above; sales levels during the
spring, back-to-school and holiday selling seasons; and other
factors referenced or incorporated by reference in the Company’s
annual report on Form 10-K for the year ended December 31, 2013,
and its Form 10-Q for the quarter ended March 31, 2014. The risks
included here are not exhaustive. The Company operates in a very
competitive and rapidly changing environment. New risks emerge from
time to time and the companies cannot predict all such risk
factors, nor can the companies assess the impact of all such risk
factors on their respective businesses or the extent to which any
factor, or combination of factors, may cause actual results to
differ materially from those contained in any forward-looking
statements. Given these risks and uncertainties, you should not
place undue reliance on forward-looking statements as a prediction
of actual results. Moreover, reported results should not be
considered an indication of future performance.
SKECHERS USA, Inc.Company Contact:Jenn Clay,
310-318-3100orInvestor Relations:Andrew Greenebaum,
310-829-5400
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