Record Second Quarter Net Sales of $877.8
Million
SKECHERS USA, Inc. (NYSE:SKX), a global leader in footwear,
today announced financial results for the second quarter ended June
30, 2016.
Second quarter 2016 net sales were $877.8 million compared to
$800.5 million for the second quarter of 2015. Gross profit for the
second quarter of 2016 was $416.3 million, or 47.4 percent of net
sales, compared to $374.6 million, or 46.8 percent of net sales,
for the second quarter of last year. Earnings from operations for
the second quarter of 2016 were $100.4 million, or 11.4 percent of
net sales, compared to earnings from operations of $112.3 million,
or 14.0 percent of net sales for the second quarter of 2015.
“Skechers achieved new record second quarter net sales of $877.8
million, which led to a $1.86 billion net sales record for the
first six months of 2016,” began David Weinberg, chief operating
officer and chief financial officer. “The growth in the quarter was
primarily attributable to a 34.6 percent increase in our
international subsidiary and joint venture businesses and a 40.5
percent increase in our international Company-owned Skechers retail
stores. This resulted in our international wholesale and retail
business comprising 41.9 percent of total sales for the second
quarter and 45.0 percent for the first six months of 2016.
Company-owned Skechers retail sales increased 15.4 percent for the
quarter. As expected, in our domestic wholesale business, shipments
were pulled forward from April into March, resulting in
significantly reduced shipments in April and a sales decrease of
5.4 percent in the second quarter, but an increase of 3.2 percent
for the first six-months. Our strong gross margins of 47.4 percent
for the quarter were primarily the result of higher sales increases
in our international subsidiary and joint venture businesses as
well as our Company-owned retail stores.”
Net earnings in the second quarter of 2016 were $74.1 million
compared to net earnings of $79.8 million for the second quarter of
2015. Diluted net earnings per share in the second quarter of 2016
were $0.48 based on 155.0 million weighted average shares
outstanding compared to diluted net earnings per share of $0.52
based on 154.0 million weighted average shares outstanding for the
same period last year. The Company’s diluted earnings per share for
the second quarter of 2016 were negatively impacted by several
factors including foreign currency translation and exchange losses
of $8.3 million, or $0.05 per diluted share. In addition, the
Company had G&A expenses for additional VAT taxes in Brazil of
$2.7 million and a fire in its Malaysia warehouse, which resulted
in a pre-tax loss of approximately $0.9 million. These factors
reduced diluted earnings per share by $0.02. In addition, the
Company’s annual effective tax rate for the second quarter was 12.7
percent, and 18.1 percent for the first six months, which increased
its net earnings and diluted earnings per share. The Company’s
annual effective tax rate is significantly lower than its previous
guidance, primarily due to reduced projected domestic earnings
combined with increased projected earnings from its China
operations, which has a lower tax rate than its U.S. effective tax
rate.
For the six months ended June 30, 2016, net sales were $1.86
billion compared to net sales of $1.57 billion in the first six
months of 2015. Gross profit for the first six months of 2016 was
$848.4 million, or 45.7 percent of net sales, compared to $707.1
million, or 45.1 percent of net sales, for the first six months of
2015. Earnings from operations for the first six months of 2016
were $238.9 million, or 12.9 percent of net sales, compared to
earnings from operations of $200.5 million, or 12.8 percent of net
sales, for the first six months of 2015.
Net earnings in the first six months of 2016 were $171.7 million
compared to net earnings of $135.9 million in the same period last
year. For the first six months of 2016, diluted net earnings per
share were $1.11 based on 154.9 million weighted average common
shares outstanding compared to diluted net earnings per share of
$0.88 based on 153.8 million weighted average common shares
outstanding for the first six months of 2015.
Robert Greenberg, SKECHERS chief executive officer, commented:
“In an environment that included economic and political uncertainty
in both the United States and abroad, as well as challenges in the
domestic retail space resulting in a promotional sales environment,
Skechers was a brand that customers and consumers could count
on—for delivering comfort, style and quality, as well as supporting
it with marketing. In the second quarter, we focused on designing
great new product, marketing our spring collections, previewing
upcoming seasons with our global accounts, and preparing for back
to school 2016. In the United States and in many markets around the
world, we continued to air our celebrity campaigns for the Spring
selling season—including Demi Lovato in Skechers Burst, Meghan
Trainor in Skechers Originals, Sugar Ray Leonard in Skechers Sport,
and Meb in Skechers GORun Ride 5, along with many other
commercials, including those for our growing kids business. Already
with multiple Skechers Kids commercials on air in the United
States, we are looking forward to the back-to-school selling
season, and the launch of our men’s and women’s campaigns in a
couple weeks along with new styles including GOwalk 4.
International is a key focus for Skechers as we expand our reach
and deliver more product into more channels of
distribution—including the expansion of our retail arm of the
Company with our first Skechers stores in Belgium, Norway and
Finland; another 42 Skechers stores in China—bringing the total
Skechers store count to 233 in that country; and double-digit sales
growth in many countries—from Germany to Canada and Scandinavia to
Russia. Together with our international partners, we opened a net
133 Skechers stores in the second quarter, bringing the total
number of Skechers retail stores to 1,548, of which 1,144 are
outside the United States. We expect to have more than 1,600
Skechers stores by year-end, including our first retail stores in
Uruguay, Paraguay, Botswana and Sri Lanka, as well as the opening
next month of our store at One World Trade Center in New York. We
believe that even with the political and economic challenges some
countries are facing—including the challenging retail environment
in the United States, Skechers remains relevant, reliable and
top-of-mind with consumers. We are looking forward to maintaining
our position as a brand leader in the United States, and growing
our market share around the world.”
Mr. Weinberg added: “As previously mentioned, over the first
half of 2016 we saw a shift in shipments between quarters in
comparison to the prior year period. 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 of 2016.
Looking at the first six months of 2016 together, net sales
increased 18.4 percent, a significant achievement over a previous
record period. In June 2016, we experienced our biggest shipping
month in our history from our North American Distribution Center,
and our European Distribution Center also exceeded its planned
shipping for June, which was the biggest month in the quarter.
Based on our June shipments as well as the strong start to July, we
believe this positive momentum will continue into the third
quarter. The shifting of shipments and changes in how our accounts
are ordering is also affecting our backlog, which is down low
single digits worldwide, excluding China. Total inventories
decreased $29.5 million or 4.8 percent from December 31, 2015, and
increased $120.1 million or 25.5 percent from June 30, 2015, and
are in line with our growth and higher Company-owned store count.
Our financial position is strong with $628.8 million in cash and
cash equivalents. As international becomes a larger piece of our
total business, we believe there is upside opportunity for the
third quarter of 2016, with net sales estimated between $950
million and $975 million.”
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 1,545 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 and its quarterly report on Form 10-Q for the quarter ended
March 31, 2016. 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) June 30,
2016
December 31,
2015
ASSETS Current Assets: Cash and cash equivalents $ 628,827 $
507,991 Trade accounts receivable, net 468,572 343,930 Other
receivables 20,545 18,661 Total receivables
489,117 362,591 Inventories 590,711 620,247 Prepaid expenses and
other current assets 57,283 57,363 Total
current assets 1,765,938 1,548,192 Property, plant and equipment,
net 464,403 435,907 Deferred tax assets 17,680 17,825 Other assets
43,411 37,954 Total non-current assets
525,494 491,686 TOTAL ASSETS
$
2,291,432 $ 2,039,878
LIABILITIES AND EQUITY Current Liabilities: Current
installments of long-term borrowings $ 1,775 $ 15,653 Accounts
payable 534,180 473,983 Short-term borrowings 3,274 59 Accrued
expenses 71,661 87,318 Total current
liabilities 610,890 577,013 Long-term borrowings, net of current
installments 68,053 68,942 Deferred tax liabilities 9,058 8,507
Other long-term liabilities 11,740 9,682 Total
non-current liabilities 88,851 87,131 Total
liabilities 699,741 664,144 Stockholders’ equity: Skechers U.S.A.,
Inc. equity 1,524,481 1,327,556 Noncontrolling interests
67,210 48,178 Total equity 1,591,691
1,375,734 TOTAL LIABILITIES AND EQUITY
$
2,291,432 $ 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 June 30, Six
Months Ended June 30,
2016
2015
2016
2015
Net sales $ 877,810 $ 800,464 $ 1,856,604 $ 1,568,461 Cost of sales
461,556 425,856
1,008,198 861,313 Gross profit
416,254 374,608 848,406 707,148 Royalty income 3,307
3,630 5,932
5,512 419,561 378,238
854,338 712,660
Operating expenses: Selling 75,966 64,875 129,844 113,967
General and administrative 243,240
201,021 485,589
398,162 319,206 265,896
615,433 512,129
Earnings from operations 100,355 112,342 238,905 200,531 Other
income (expense): Interest, net (1,542 ) (2,884 ) (2,664 ) (5,534 )
Other, net (2,604 ) 2,990
175 (1,771 ) (4,146 )
106 (2,489 )
(7,305 ) Earnings before income tax expense 96,209 112,448 236,416
193,226 Income tax expense 12,200
25,383 42,768
44,503 Net earnings 84,009 87,065 193,648 148,723 Less: Net
earnings attributable to noncontrolling interests 9,902
7,283 21,929
12,861 Net earnings attributable to
Skechers U.S.A., Inc. $ 74,107 $ 79,782
$ 171,719 $ 135,862 Net
earnings per share attributable to Skechers U.S.A., Inc.: Basic $
0.48 $ 0.52 $ 1.12
$ 0.89 Diluted $ 0.48 $ 0.52
$ 1.11 $ 0.88 Weighted average
shares used in calculating earnings per share attributable to
Skechers U.S.A., Inc.: Basic 154,049
152,712 153,901
152,565 Diluted 155,023 154,027
154,912 153,778
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version on businesswire.com: http://www.businesswire.com/news/home/20160721006215/en/
Company Contact:SKECHERS USA, Inc.David WeinbergChief Operating
Officer,Chief Financial Officer310-318-3100orInvestor
Relations:Addo CommunicationsAndrew Greenebaum310-829-5400
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