- Record Quarterly Net Sales of $768.0
Million, an Increase of 40.5 Percent
- Earnings from Operations of $88.2
Million
- Diluted Earnings Per Share of
$1.10
SKECHERS USA, Inc. (NYSE:SKX), a global leader in footwear,
today announced financial results for the first quarter ended March
31, 2015.
First quarter 2015 net sales were $768.0 million compared to
$546.5 million in the first quarter of 2014, an increase of 40.5
percent. Gross profit for the first quarter of 2015 was $332.5
million, or 43.3 percent of net sales, compared to $240.4 million,
or 44.0 percent of net sales in the first quarter of 2014. Earnings
from operations for the first quarter of 2015 were $88.2 million,
or 11.5 percent of net sales, compared to net earnings from
operations of $48.2 million, or 8.8 percent of net sales, for the
first quarter of 2014.
“Skechers’ first quarter net sales of $768.0 million mark the
highest quarterly revenues in the Company’s history. The net sales
growth of 40.5 percent, which was against a previous record first
quarter net sales in 2014, is attributable to the continued strong
demand for our lifestyle, performance and kids’ footwear from both
our customers and consumers around the world,” began David
Weinberg, chief operating officer and chief financial officer. “The
sales results are attributable to double-digit increases in our
domestic and international wholesale businesses, and our worldwide
Company-owned retail business, as well as single-digit increases in
our ecommerce business. Additionally, for the quarter, our total
Company-owned retail store comps were up over nine percent and our
domestic wholesale business saw an average price per pair increase
of $1.27 or 5.9 percent.”
Weinberg continued: “We achieved this growth despite significant
headwinds, which included the strengthening U.S. dollar,
unseasonably cold weather in many markets, and the slowdown at the
West Coast ports. Further, our European Distribution Center was
operating less efficiently than we had originally anticipated due
to the transition to a new automation system combined with stronger
than expected sales in the region. Additionally, to manage the
increased demand and shipments, we are expanding our European
Distribution Center by over 500,000 square feet, increasing it to
more than one million square feet by the first quarter 2016.”
Net earnings in the first quarter of 2015 were $56.1 million
compared to net earnings of $31.0 million for the first quarter of
2014. Net earnings per diluted share in the first quarter 2015 were
$1.10 based on 51.1 million weighted average shares outstanding
compared to a diluted net earnings per share of $0.61 based on 50.8
million weighted average shares outstanding for the same period in
the prior year.
Robert Greenberg, SKECHERS chief executive officer, commented:
“Having just achieved a new annual sales record of $2.4 billion in
2014, we expected the momentum to continue into 2015. We attribute
this success to our constant development of fresh and innovative
products that are appealing to a widening audience around the
world, the continued marketing support we provide for every key
product category, the diverse global distribution strategy, and,
finally, our tremendous logistical support and inventory
management. Our expanding product line and marketing focus is
broadening our demographic reach, including Demi Lovato to tweens
and teens as she supports our Skechers Sport line, to avid golfers
as Matt Kuchar plays in Skechers GO Golf, and to tech savvy kids
with Game Kicks, the shoe with a memory game built in. Along with
marketing campaigns for these collections, we ran a Relaxed Fit
Footwear commercial starring Pete Rose during the Super Bowl, and
introduced many new commercials in support of our Spring
collection, including Stretch Fit with Brooke Burke-Charvet and
Skechers Memory Foam with British actress and model Kelly Brook,
who is now appearing on the NBC comedy One Big Happy. Already this
month, we debuted our new Ringo Starr Relaxed Fit Footwear campaign
and Meb, winner of the 2014 Boston Marathon, appeared in Skechers
GOmeb Speed 3 on the cover of Runner’s World. We are also airing
many of our product and lifestyle focused campaigns around the
world, creating global synergy between product and marketing. Now,
more than ever, we are seeing many of the same products resonating
across six continents, and quickly leveraging the success we are
experiencing in the United States to global markets. This resulted
in international sales growth of 59 percent in the first quarter,
which comprised 37 percent of our total sales for the quarter,
bringing us closer to our goal of international sales representing
50 percent of our business. Our Skechers stores, at 1,063 at
quarter-end—including 610 international locations owned by
distributors or franchisees, continue to be an important part of
our brand building and growth strategy, and we expect to grow the
total Skechers store base to approximately 1,250 by year-end 2015.
With the demand for our key product initiatives in the United
States, Asia, Europe, the Middle East and South America remaining
very high, we believe the growth that we experienced in the first
quarter will continue in 2015.”
Mr. Weinberg added: “Our record 2015 first quarter and a strong
start to April in terms of revenues and backlogs, including
double-digit domestic and international retail comps, leads us to
believe that our accelerated growth trend will continue through the
second quarter and into the back half of 2015. We believe we are
well positioned to maintain this growth with the combination of
$396.7 million in cash, in-line inventory levels, and the
expectation of an additional 155 to 175 SKECHERS distributor-,
joint venture-, franchisee- and Company-owned stores opening later
this year in addition to the 39 opened in the first quarter. We are
looking forward to what we believe will be record sales for a
second quarter, delivering our back-to-school product, and a new
annual sales record. We are comfortable with analysts’ estimates
for the second quarter, and we see upside opportunity in the third
quarter.”
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
and over 120 countries and territories worldwide via department and
specialty stores, more than 1,050 SKECHERS retail stores, and the
Company’s e-commerce website. The Company manages its international
business through a network of global distributors, joint venture
partners in Asia, and 12 wholly-owned subsidiaries in Brazil,
Canada, Chile, Japan and throughout Europe. For more information,
please visit skechers.com and follow us on Facebook
(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 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 international economic, political and
market conditions including the uncertainty of sustained recovery
in Europe; 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, 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 U.S.A., INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited) (In
thousands) March 31, December
31, 2015 2014 ASSETS Current
Assets: Cash and cash equivalents $ 396,710 $ 466,685 Trade
accounts receivable, net 442,688 272,103 Other receivables
13,440 16,510 Total receivables 456,128 288,613
Inventories 392,192 453,837 Prepaid expenses and other current
assets 51,401 57,015 Deferred tax assets 18,864 18,864 Total
current assets 1,315,295 1,285,014 Property, plant and equipment,
net 375,586 373,183 Other assets 22,702 16,721
Total non-current assets 398,288 389,904 TOTAL
ASSETS
$ 1,713,583 $
1,674,918 LIABILITIES AND EQUITY Current
Liabilities: Current installments of long-term borrowings $ 99,762
$ 101,407 Accounts payable 321,034 352,815 Short-term borrowings 87
1,810 Accrued expenses 61,467 49,705 Total
current liabilities 482,350 505,737 Long-term borrowings, excluding
current installments 13,660 15,081 Other long-term liabilities
21,040 19,993 Total non-current liabilities
34,700 35,074 Total liabilities 517,050
540,811 Stockholders’ Equity: Skechers U.S.A., Inc. equity
1,133,480 1,075,249 Noncontrolling interests 63,053
58,858 Total equity 1,196,533 1,134,107
TOTAL LIABILITIES AND EQUITY
$ 1,713,583
$ 1,674,918 SKECHERS
U.S.A., INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS (Unaudited) (In thousands,
except per share data) Three Months Ended
March 31,
2015
2014
Net sales $ 767,997 $ 546,518 Cost of sales 435,457
306,115 Gross profit 332,540 240,403 Royalty
income 1,882 3,022
334,422 243,425 Operating expenses:
Selling 49,092 36,742 General and administrative 197,141
158,523 246,233
195,265 Earnings from operations 88,189 48,160 Other
income (expense): Interest, net (2,650 ) (2,593 ) Other, net
(4,761 ) (1,082 ) (7,411 )
(3,675 ) Earnings before income tax expense 80,778 44,485 Income
tax expense 19,120 11,437 Net
earnings 61,658 33,048 Less: Net earnings attributable to
noncontrolling interests 5,578 2,083
Net earnings attributable to Skechers U.S.A., Inc. $ 56,080
$ 30,965 Net earnings per share
attributable to Skechers U.S.A., Inc.: Basic $ 1.10 $
0.61 Diluted $ 1.10 $ 0.61
Weighted average shares used in calculating earnings per share
attributable to Skechers U.S.A., Inc.: Basic 50,804
50,558 Diluted 51,143
50,844
SKECHERS USA, Inc.Company Contact:David WeinbergChief Operating
OfficerChief Financial Officer(310) 318-3100orInvestor
Relations:Andrew Greenebaum(310) 829-5400
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