Record Quarterly Sales of $978.8 Million, an
Increase of 27.4 Percent
Record Quarterly Earnings from Operations of
$138.6 Million
Record Quarterly Net Earnings of $97.6
Million
Record Quarterly Diluted Earnings Per Share
of $0.63
SKECHERS USA, Inc. (NYSE:SKX), a global footwear leader and the
second largest footwear brand in the United States, today announced
financial results for the first quarter ended March 31, 2016.
First quarter 2016 net sales were $978.8 million compared to
$768.0 million in the first quarter of 2015, an increase of 27.4
percent. Gross profit for the first quarter of 2016 was $432.2
million, or 44.2 percent of net sales, compared to $332.5 million,
or 43.3 percent of net sales in the first quarter of 2015. Earnings
from operations for the first quarter of 2016 were $138.6 million,
or 14.2 percent of net sales, compared to net earnings from
operations of $88.2 million, or 11.5 percent of net sales, for the
first quarter of 2015.
“At no other time in the Company’s history have we been stronger
across our many product categories, marketing initiatives and
multiple distribution channels. The growing demand for our brand
has resulted in record revenues of $978.8 million and earnings from
operations of $138.6 million for the first quarter of 2016,” began
David Weinberg, chief operating officer and chief financial
officer. “These significant achievements are primarily the result
of a 47.1 percent increase in our international wholesale business
over the first quarter 2015, and a shift forward of some domestic
and international orders into the first quarter due to the Easter
timing. In addition, domestic wholesale sales increased 12.1
percent and our Company-owned retail sales increased by 23.2
percent with a 9.8 percent comp store sales increase over the prior
year period. For the first time ever, our international business
has grown to be our largest segment—with international wholesale
representing 42.9 percent and international wholesale and retail
representing 47.7 percent of our total sales. To meet the increased
demand, we are investing in our infrastructure, including improved
efficiencies in our European Distribution Center, which allowed us
to achieve a record three million pairs shipped in a month during
February. With the completion of our European Distribution Center
expansion to one million square feet in the second quarter of 2016,
and with the automation to be fully completed later this year, we
expect to be even more efficient in our largest market outside of
the United States.”
Net earnings in the first quarter of 2016 were $97.6 million
compared to net earnings of $56.1 million for the first quarter of
2015. Net earnings per diluted share in the first quarter 2016
increased 72.5 percent to $0.63 based on 154.8 million weighted
average shares outstanding compared to a diluted net earnings per
share of $0.37 based on 153.4 million weighted average shares
outstanding for the same period in the prior year.
Robert Greenberg, SKECHERS chief executive officer, commented:
“2016 marks Skechers’ 24th year in business and we couldn’t be more
pleased to start 2016 with record quarterly revenues just shy of
the billion dollar mark. By remaining focused on our product,
building on our proven sellers—like our colorful and comfortable
Skechers Sport collection and our vast array of Skechers GOwalk
footwear—and introducing new designs, including a retro sport line
that global singing sensation Meghan Trainor is wearing in her new
Skechers campaign, we continue to innovate and further develop our
global brand. The sales growth that we achieved in the first
quarter in the United States is due to our expanding product range
that appeals both to our loyal shoppers and a widening demographic,
including tweens and teens, as well as those that first wore our
product in 1992. This is due to our advertising—which features
young superstars like Meghan and Demi Lovato, as well as icons such
as Sugar Ray Leonard, Ringo Starr and now Howie Long. Our consumer
base also includes serious athletes who have embraced our technical
product thanks in part to the recognition we’re receiving with our
elite runner Meb in the running for an Olympic medal, a team of top
ranked golfers, and the title sponsorship of the Skechers
Performance Los Angeles Marathon. With a strong sales increase in
the first quarter driven by substantial growth across Europe, Asia,
the Middle East and closer to home in Canada and Chile, we see our
international business as being a key driver of our continued
growth as we deliver a broader assortment of our footwear for men,
women and kids, expand into new accounts, and open more
international Skechers retail stores. In the first quarter,
together with our international partners, we opened 87 Skechers
retail stores, bringing the total to 1,397; with the opening of 17
stores in the second quarter already, we now have 1,414 Skechers
stores, of which 1,017 are in international markets. Given our
significant momentum and current product in the pipeline, we
believe our success will continue throughout the year.”
Mr. Weinberg added: “Last year’s second quarter was extremely
strong as shipments were pushed from the first quarter into the
second quarter of 2015, while this year shipments were pulled from
the second quarter into the first quarter. We believe this was in
part due to our European business strengthening and China
increasing its wholesale distribution strategy through a franchise
store model, both of which concentrated volume into the first
quarter. Total inventories, which decreased $118.4 million or 19.1
percent from December 31, 2015, and increased $109.7 million or
28.0 percent from March 31, 2015, are in line with our growth and
increased Company-owned store count. Our financial position is
strong with $443.8 million in cash and cash equivalents. We
currently believe second quarter 2016 net sales will be between
$875 million and $900 million; this guidance assumes no significant
shift or pull forward of orders from the third quarter into the
second quarter. Our first and third quarter net sales have the
potential to become larger relative to the net sales balance of the
other quarters as our international business becomes a greater
percentage of our total net sales. We therefore believe there could
be upside opportunity for the third quarter of 2016 and the balance
of the year.”
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 160 countries and territories worldwide via department and
specialty stores, more than 1,410 SKECHERS Company-owned and
third-party 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
wholly-owned subsidiaries in Brazil, Canada, Chile, Japan, Latin
America 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
domestic and international growth, financial results and operations
including expected net sales and earnings, its development of new
products, future demand for its products, its planned domestic and
international expansion and opening of new stores, the completion
of the expansion and upgrade of the Company’s European Distribution
Center, and advertising and marketing initiatives. 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,
2015. 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,
2016
December 31,
2015
ASSETS Current Assets: Cash and cash equivalents $ 443,828 $
507,991 Trade accounts receivable, net 542,396 343,930 Other
receivables 21,600 18,661 Total
receivables 563,996 362,591 Inventories 501,855 620,247 Prepaid
expenses and other current assets 44,080
57,363 Total current assets 1,553,759 1,548,192 Property,
plant and equipment, net 456,971 435,907 Deferred tax assets 16,164
17,825 Other assets 41,516 37,954 Total
non-current assets 514,651 491,686
TOTAL ASSETS
$ 2,068,410
$ 2,039,878 LIABILITIES AND EQUITY
Current Liabilities: Current installments of long-term borrowings $
14,420 $ 15,653 Accounts payable 405,324 473,983 Short-term
borrowings 58 59 Accrued expenses 62,103
87,318 Total current liabilities 481,905 577,013 Long-term
borrowings, net of current installments 68,498 68,942 Deferred tax
liabilities 8,760 8,507 Other long-term liabilities 10,424
9,682 Total non-current liabilities
87,682 87,131 Total liabilities 569,587
664,144 Stockholders’ equity: Skechers U.S.A., Inc. equity
1,438,756 1,327,556 Noncontrolling interests 60,067
48,178 Total equity 1,498,823
1,375,734 TOTAL LIABILITIES AND EQUITY
$
2,068,410 $
2,039,878
SKECHERS U.S.A., INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
EARNINGS
(Unaudited)
(In thousands, except per share
data)
Three Months Ended March 31,
2016
2015
Net sales $ 978,794 $ 767,997 Cost of sales 546,642
435,457 Gross profit 432,152 332,540 Royalty income
2,625 1,882 434,777
334,422 Operating expenses: Selling 53,878 49,092
General and administrative 242,349 197,141
296,227 246,233 Earnings from
operations 138,550 88,189 Other income (expense): Interest, net
(1,122 ) (2,650 ) Other, net 2,779 (4,761 )
1,657 (7,411 ) Earnings before income tax
expense 140,207 80,778 Income tax expense 30,568
19,120 Net earnings 109,639 61,658 Less: Net earnings
attributable to noncontrolling interests 12,027
5,578 Net earnings attributable to Skechers U.S.A.,
Inc. $ 97,612 $ 56,080 Net earnings per
share attributable to Skechers U.S.A., Inc.: Basic $ 0.63 $
0.37 Diluted $ 0.63 $ 0.37 Weighted
average shares used in calculating earnings per share attributable
to Skechers U.S.A., Inc.: Basic 153,745
152,413 Diluted 154,818 153,430
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version on businesswire.com: http://www.businesswire.com/news/home/20160421006529/en/
Company Contact:SKECHERS USA, Inc.David WeinbergChief Operating
Officer,Chief Financial Officer(310) 318-3100orInvestor
Relations:Addo CommunicationsAndrew Greenebaum(310) 829-5400
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