SKECHERS U.S.A., Inc. (“Skechers” or the “Company”) (NYSE:SKX),
The Comfort Technology CompanyTM and a global footwear leader,
today announced financial results for the first quarter ended March
31, 2022.
First Quarter Highlights
- Record quarterly sales of $1.82 billion, a year-over-year
increase of 26.8%
- Wholesale sales grew 32.7%
- Direct-to-Consumer sales grew 15.7%
- Diluted earnings per share of $0.77, a year-over-year
increase of 22.2%
- Repurchased $25 million of common stock
“First quarter sales of over $1.8 billion are a new quarterly
sales record for Skechers, and reflect our broad-based global
appeal and our team’s focus on successfully navigating supply chain
constraints,” began David Weinberg, Chief Operating Officer of
Skechers. “The sales achievement was driven by increases of 33% in
our Wholesale and 16% in our Direct-to-Consumer segments. By
region, the growth was the result of increases of 31% in the
Americas, driven by double-digit growth in the United States; 49%
in EMEA, driven by strong growth across Europe; and 4% in APAC, led
by 9% growth in China. Several key APAC markets faced increasing
COVID-related restrictions as the quarter evolved including China.
Despite the on-going pandemic and other macroeconomic headwinds, we
are especially encouraged by the phenomenal growth we experienced.
We believe this momentum will continue as we strive towards our
goal of $10 billion by 2026.”
“As we mark our third decade in business, we couldn’t be more
excited about our future. In the first quarter, we achieved a new
quarterly sales record, delivered the most innovative, stylish and
comfortable product yet, and supported it with impactful
marketing,” said Robert Greenberg, Chief Executive Officer of
Skechers. “Our position as the third largest footwear brand in the
world is the result of exceptional global partnerships and the
strong consumer demand for our products. To drive awareness, we
began the year with two Skechers commercials airing around the
Super Bowl featuring Willie Nelson, including one with his hit song
‘On the Road Again.’ We launched a new workout walking collection
with two campaigns starring Brooke Burke and former NFL star Cris
Carter, who joined our roster of legends, including Rusty Wallace,
Tony Romo and Howie Long. We also launched Skechers campaigns
featuring two powerful female brand ambassadors, Amanda Kloots and
Martha Stewart. With a talented team determined to ensure our
success, we believe our strategy of communicating the uniqueness of
Skechers’ comfort technology, style, innovation and quality
products globally will continue to deliver record sales in
2022.”
First Quarter 2022 Financial Results
Three Months Ended
March 31,
Change
(in millions, except per share data)
2022
2021
$
%
Sales
$
1,819.6
$
1,434.5
$
385.1
26.8
Gross profit
824.2
685.7
138.5
20.2
Gross margin
45.3
%
47.8
%
(250
)bps
Operating expenses
648.3
528.0
120.3
22.8
As a % of sales
35.6
%
36.8
%
(120
)bps
Earnings from operations
175.9
157.7
18.2
11.6
Operating margin
9.7
%
11.0
%
(130
)bps
Net earnings
$
121.2
$
98.6
$
22.6
23.0
Diluted earnings per share
$
0.77
$
0.63
$
0.14
22.2
First quarter sales increased 26.8% as a result of a 28.7%
increase in domestic sales and a 25.5% increase in international
sales, primarily driven by strength in wholesale sales. Both
segments experienced increases, with Wholesale increasing 32.7% and
Direct-to-Consumer increasing 15.7%. On a constant currency basis,
sales increased 28.7%.
Wholesale sales growth of $308.2 million, or 32.7%, was led by
increases in AMER of 41.6% and EMEA of 42.0%. Wholesale volume
increased 22.7% and average selling price increased 8.6%.
Direct-to-Consumer sales growth of $76.9 million, or 15.7%, was
led by increases in EMEA of 157.3%, which lapped COVID restrictions
in the prior year, AMER of 11.2% and APAC of 8.5%.
Direct-to-Consumer average selling price increased 15.1% resulting
from reduced promotions and higher prices.
Gross margin was 45.3%, a decrease of 250 basis points, driven
by higher per unit freight costs partially offset by average
selling price increases.
Operating expenses increased $120.3 million, or 22.8%, but as a
percentage of sales, improved 120 basis points to 35.6% from 36.8%
in the prior year. Selling expenses increased $16.9 million, or
18.5%, due to higher global demand creation expenditures. General
and administrative expenses increased $103.4 million, or 23.7%, due
to increased volume-driven labor, and warehouse and distribution
expenses.
Earnings from operations increased $18.2 million, or 11.6%, to
$175.9 million.
Net earnings were $121.2 million and diluted earnings per share
were $0.77, an increase of 22.2% over the prior year.
In the first quarter, the Company’s effective income tax rate
was essentially flat year-over-year at 20.0%.
“Skechers once again delivered exceptional results, with record
first quarter sales and earnings, despite continuing challenges
from the COVID pandemic,” stated John Vandemore, Chief Financial
Officer of Skechers. “The strength of our brand, coupled with our
continued focus on investing and executing against our global
growth strategy, gives us abundant confidence that achieving $10
billion in sales by 2026 remains both an achievable objective and
valuable means to drive shareholder value.”
Balance Sheet
Cash, cash equivalents and investments totaled $819.9 million, a
decrease of $220.6 million, or 21.2% from December 31, 2021,
primarily reflecting increased accounts receivable from wholesale
sales, particularly in the Americas.
Inventory was $1.45 billion, a decrease of $21.5 million or 1.5%
from December 31, 2021. The slight decrease in inventory reflects
lower merchandise in transit levels due to the improvement of some
supply chain constraints.
Share Repurchase
During the first quarter, the Company repurchased approximately
652,000 shares of its Class A common stock for $25.0 million. At
March 31, 2022, approximately $475.0 million remained available
under the Company’s share repurchase program.
Outlook
For the second quarter of 2022, the Company believes it will
achieve sales between $1.75 billion and $1.80 billion and diluted
earnings per share of between $0.50 and $0.55. Further, the Company
believes that for the fiscal year 2022, it will achieve sales
between $7.2 billion and $7.4 billion and diluted earnings per
share of between $2.75 and $2.95.
Store Count
Number of Stores
December 31, 2021
Opened
Closed(1)
March 31, 2022
Domestic stores
515
13
(12
)
516
International stores
845
18
(29
)
834
Distributor, licensee and franchise
stores
2,946
77
(65
)
2,958
Total Skechers stores
4,306
108
(106
)
4,308
(1)
Does not reflect temporary closures due to
the COVID-19 pandemic.
First Quarter 2022 Conference Call
The Company will host a conference call today at 4:30 p.m. ET /
1:30 p.m. PT to discuss its first quarter 2022 financial results.
The call can be accessed on the Investor Relations section of the
Company’s website at investors.skechers.com. For those unable to
participate during the live broadcast, a replay will be available
beginning April 26, 2022 at 7:30 p.m. ET, through May 10, 2022, at
11:59 p.m. ET. To access the replay, dial 844-512-2921 (U.S.) or
412-317-6671 (International) and use passcode: 13728410.
About SKECHERS U.S.A., Inc.
Skechers U.S.A., Inc., The Comfort Technology Company™ based in
Southern California, designs, develops and markets a diverse range
of lifestyle and performance footwear, apparel and accessories for
men, women and children. The Company’s collections are available in
over 180 countries and territories through department and specialty
stores, and direct to consumers through digital stores and 4,308
Company- and third-party-owned physical retail stores. The Company
manages its international business through a network of
wholly-owned subsidiaries, joint venture partners, and
distributors. For more information, please visit about.skechers.com
and follow us on Facebook, Instagram, Twitter and TikTok.
Reference in this press release to “Sales” refers to Skechers’
net sales reported under GAAP. This announcement contains
forward-looking statements that are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements may include, without limitation,
Skechers’ 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, opening of new
stores and additional expenditures, 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,” “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
disruption of business and operations due to the COVID-19 pandemic;
delays or disruptions in our supply chain; international economic,
political and market conditions including the challenging consumer
retail markets in the United States and the impact of Russia’s
recent invasion of Ukraine; 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,
especially in the highly competitive performance footwear market;
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 Skechers’ annual report
on Form 10-K for the year ended December 31, 2021. Taking these and
other risk factors associated with the COVID-19 pandemic into
consideration, the dynamic nature of these circumstances means that
what is stated in this press release could change at any time, and
as a result, actual results could differ materially from those
contemplated by such forward-looking statements. The risks included
here are not exhaustive. Skechers operates in a very competitive
and rapidly changing environment. New risks emerge from time to
time and we cannot predict all such risk factors, nor can we assess
the impact of all such risk factors on our business 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)
As of March 31,
As of December 31,
(in thousands)
2022
2021
ASSETS
Current assets
Cash and cash equivalents
$
589,908
$
796,283
Short-term investments
104,933
98,580
Trade accounts receivable, net
1,010,599
732,793
Other receivables
71,924
80,043
Inventory
1,449,513
1,470,994
Prepaid expenses and other
198,727
193,547
Total current assets
3,425,604
3,372,240
Property, plant and equipment, net
1,184,483
1,128,909
Operating lease right-of-use assets
1,191,885
1,224,580
Deferred tax assets
446,007
451,355
Long-term investments
125,051
145,590
Goodwill
93,497
93,497
Other assets, net
78,583
75,109
Total non-current assets
3,119,506
3,119,040
TOTAL ASSETS
$
6,545,110
$
6,491,280
LIABILITIES AND EQUITY
Current liabilities
Accounts payable
$
812,216
$
876,342
Accrued expenses
258,713
265,420
Operating lease liabilities
225,885
225,658
Current installments of long-term
borrowings
58,711
76,967
Short-term borrowings
50,245
1,195
Total current liabilities
1,405,770
1,445,582
Long-term operating lease liabilities
1,064,231
1,094,748
Long-term borrowings
265,305
263,445
Deferred tax liabilities
11,300
11,820
Other long-term liabilities
132,588
133,613
Total non-current liabilities
1,473,424
1,503,626
Total liabilities
2,879,194
2,949,208
Stockholders’ equity
Preferred Stock
—
—
Class A Common Stock
135
135
Class B Common Stock
21
21
Additional paid-in capital
415,357
429,608
Accumulated other comprehensive loss
(46,822
)
(48,323
)
Retained earnings
2,999,126
2,877,903
Skechers U.S.A., Inc. equity
3,367,817
3,259,344
Noncontrolling interests
298,099
282,728
Total stockholders' equity
3,665,916
3,542,072
TOTAL LIABILITIES AND EQUITY
$
6,545,110
$
6,491,280
SKECHERS U.S.A., INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS
(Unaudited)
Three Months Ended
March 31,
(in thousands, except per share data)
2022
2021
Sales
$
1,819,594
$
1,434,455
Cost of sales
995,431
748,796
Gross profit
824,163
685,659
Operating expenses
Selling
108,209
91,325
General and administrative
540,050
436,666
Total operating expenses
648,259
527,991
Earnings from operations
175,904
157,668
Other expense
(5,746
)
(14,174
)
Earnings before income taxes
170,158
143,494
Income tax expense
33,992
28,985
Net earnings
136,166
114,509
Less: Net earnings attributable to
noncontrolling interests
14,943
15,936
Net earnings attributable to Skechers
U.S.A., Inc.
$
121,223
$
98,573
Net earnings per share attributable to
Skechers U.S.A., Inc.
Basic
$
0.78
$
0.64
Diluted
$
0.77
$
0.63
Weighted-average shares used in
calculating net earnings per share attributable to Skechers U.S.A.,
Inc.
Basic
155,996
154,818
Diluted
157,448
155,936
SKECHERS U.S.A., INC. AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION (Unaudited)
As previously announced, during the first quarter of 2022
Skechers refined the way it views its business operations and
decision-making and now presents its reportable segment results as
Wholesale and Direct-to-Consumer. Prior period results have been
recast to reflect current reportable segments. There is no impact
to the consolidated financial results of the Company as a result of
this change.
Segment Information
Three Months Ended March
31,
Change
(in millions)
2022
2021
$
%
Wholesale sales
$
1,251.3
$
943.1
$
308.2
32.7
Gross profit
455.0
369.6
85.4
23.1
Gross margin
36.4
%
39.2
%
(280
)bps
Direct-to-Consumer sales
$
568.3
$
491.4
$
76.9
15.7
Gross profit
369.2
316.1
53.1
16.8
Gross margin
65.0
%
64.3
%
60
bps
Total sales
$
1,819.6
$
1,434.5
$
385.1
26.8
Gross profit
824.2
685.7
138.5
20.2
Gross margin
45.3
%
47.8
%
(250
)bps
Additional Sales Information
Three Months Ended March
31,
Change
(in millions)
2022
2021
$
%
Geographic sales
Domestic
Wholesale
$
538.6
$
377.2
$
161.4
42.8
Direct-to-Consumer
239.4
227.5
11.9
5.3
Total domestic sales
778.0
604.7
173.3
28.7
International
Wholesale
712.8
565.9
146.9
26.0
Direct-to-Consumer
328.8
263.9
64.9
24.6
Total international sales
1,041.6
829.8
211.8
25.5
Total sales
$
1,819.6
$
1,434.5
$
385.1
26.8
Regional sales
Americas (AMER)
$
946.9
$
725.6
$
221.3
30.5
Europe, Middle East & Africa
(EMEA)
441.2
295.5
145.7
49.3
Asia Pacific (APAC)
431.5
413.4
18.1
4.4
Total sales
$
1,819.6
$
1,434.5
$
385.1
26.8
China sales
$
273.0
$
250.6
$
22.4
9.0
Distributor sales
$
97.0
$
80.2
$
16.8
21.0
SKECHERS U.S.A., INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES (Unaudited)
Constant Currency Adjustment (Non-GAAP Financial Measure)
We evaluate our results of operations on both an as reported and a
constant currency basis. The constant currency presentation, which
is a non-GAAP measure, excludes the impact of period-over-period
fluctuations in foreign currency exchange rates. We believe
providing constant currency information provides valuable
supplemental information regarding our results of operations,
thereby facilitating period-to-period comparisons of our business
performance and is consistent with how management evaluates the
Company’s performance. We calculate constant currency percentages
by converting our current period local currency financial results
using the prior-period exchange rates and comparing these adjusted
amounts to our prior period reported results.
Three Months Ended March
31,
2022
2021
Change
(in millions,
except per share data)
Reported GAAP Measure
Constant Currency
Adjustment
Adjusted for Non-GAAP
Measures
Reported GAAP Measure
$
%
Sales
$
1,819.6
$
27.1
$
1,846.7
$
1,434.5
412.2
28.7
Cost of sales
995.4
18.7
1,014.1
748.8
265.3
35.4
Gross profit
824.2
8.4
832.6
685.7
146.9
21.4
Operating expenses
648.3
6.6
654.9
528.0
126.9
24.0
Earnings from operations
175.9
1.8
177.7
157.7
20.0
12.7
Other income (expense)
(5.8
)
2.4
(3.4
)
(14.2
)
10.8
76.1
Income tax expense
34.0
-
34.0
29.0
5.0
17.1
Less: Noncontrolling interests
14.9
(0.3
)
14.6
15.9
(1.3
)
(8.3
)
Net earnings
$
121.2
$
4.5
$
125.7
$
98.6
27.1
27.6
Diluted earnings per share
$
0.77
$
0.03
$
0.80
$
0.63
0.17
27.0
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220426006055/en/
Investor Relations: Andrew Greenebaum Addo Investor Relations
investors@skechers.com
Press: Jennifer Clay Vice President, Corporate Communications
Skechers U.S.A., Inc. jennc@skechers.com
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