SKECHERS U.S.A., Inc. (“Skechers” or the “Company”) (NYSE:SKX),
The Comfort Technology Company™ and a global footwear leader, today
announced financial results for the second quarter ended June 30,
2022.
Second Quarter Highlights
- Record quarterly sales of $1.87 billion, a year-over-year
increase of 12.4%
- Wholesale sales grew 18.3%
- Direct-to-Consumer sales grew 4.3%
- Diluted earnings per share of $0.58
- Repurchased $24.2 million of common stock
“Skechers achieved a new quarterly sales record of $1.87
billion, a significant accomplishment especially given the
macroeconomic headwinds, supply chain issues and COVID-related
restrictions in China during the period,” said David Weinberg,
Chief Operating Officer of Skechers. “The growth was the result of
increases in sales of 15% in our domestic and 10% in our
international businesses. Growth was driven by sales increases of
21% in the Americas and 8% in EMEA. In APAC, where sales were flat
due to COVID-related restrictions in China, we saw strong growth in
most other markets, particularly in India, South Korea and
Malaysia. During the quarter, we focused on delivering our
in-demand footwear direct to consumers and through our wholesale
partners globally. While we remain cautious given the challenges
across the globe, we believe our comfort technology footwear,
impactful marketing and the strength of our brand will drive
continued sales growth in the back half of the year.”
“2022 is shaping up to be another remarkable year for Skechers
with two consecutive record sales quarters, the result of our
talented team’s passion, determination and execution to evolve our
product offering, inform the world of our exceptional comfort
technologies, and effectively navigate the supply chain
constraints,” began Robert Greenberg, Chief Executive Officer of
Skechers. “In the second quarter, we delivered hands-free comfort
footwear to a world now desiring more ease in their lives, expanded
our Skechers Arch Fit offering, and designed more fashion-focused
styles as comfort at work and play is the new norm. Further, we
elevated our performance game with the launch of Skechers Viper
Court, a collection designed specifically for the fastest growing
sport in America, pickleball, and saw major championship wins on
the golf course with Brooke Henderson at this past weekend’s Amundi
Evian Championship in France and Matt Fitzpatrick at the U.S. Open
at Brookline last month. We also signed several new
ambassadors—specific to Europe and Asia, as well as a rising Latin
music artist and a global pop sensation, all to further strengthen
brand awareness in key markets. This, our 30th year in business, is
our strongest year yet from a sales, marketing and product
perspective. We are in a unique position as a brand that delivers
on comfort technology, style, innovation and quality with a global
reach that includes 4,355 Skechers stores. As a company, we are
determined to outdo ourselves and reach further heights as we
strive to meet our customers’ needs.”
Second Quarter 2022 Financial Results
Three Months Ended June
30,
Change
(in millions, except per share data)
2022
2021
$
%
Sales
$
1,867.8
$
1,661.9
205.9
12.4
Gross profit
897.6
853.6
44.0
5.2
Gross margin
48.1
%
51.4
%
(330
) bps
Operating expenses
743.4
652.4
91.0
14.0
As a % of sales
39.8
%
39.3
%
50
bps
Earnings from operations
154.2
201.2
(47.0
)
(23.4
)
Operating margin
8.3
%
12.1
%
(390
) bps
Net earnings
$
90.4
$
137.4
(47.0
)
(34.2
)
Diluted earnings per share
$
0.58
$
0.88
(0.30
)
(34.1
)
Second quarter sales increased 12.4% as a result of a 15.4%
increase in domestic sales and a 10.0% increase in international
sales, primarily driven by strength in wholesale sales. All
segments experienced growth, with Wholesale increasing 18.3% and
Direct-to-Consumer increasing 4.3%. On a constant currency basis,
sales increased 16.4%.
Wholesale sales growth of $176.1 million, or 18.3%, was led by
increases in AMER of 34.9%. Wholesale volume increased 14.8% and
average selling price increased 3.1%.
Direct-to-Consumer sales growth of $29.8 million, or 4.3%, was
led by increases in AMER of 3.7%, EMEA of 13.5%, and APAC of 2.7%.
Direct-to-Consumer average selling price increased 5.3% and volume
was essentially flat.
Gross margin was 48.1%, a decrease of 330 basis points,
primarily driven by higher per unit freight costs partially offset
by average selling price increases.
Operating expenses increased $91.0 million, or 14.0%, and as a
percentage of sales, increased 50 basis points to 39.8% from 39.3%
in the prior year. Selling expenses increased $25.1 million, or
17.8%, due to higher global demand creation expenditures. General
and administrative expenses increased $65.9 million, or 12.9%,
primarily due to volume-driven increases in labor and warehouse and
distribution expenses, as well as higher rent.
Earnings from operations decreased $47.0 million, or 23.4%, to
$154.2 million.
Net earnings were $90.4 million and diluted earnings per share
were $0.58, a decrease of 34.1% over the prior year. Diluted
earnings per share include an unfavorable impact of $0.11 due to
declines in foreign exchange rates, primarily in EMEA.
In the second quarter, the Company’s effective income tax rate
was 21.3%.
“Skechers continued the diligent execution of our long-term
global growth strategy, achieving record quarterly sales primarily
from continued strength in our Wholesale segment,” stated John
Vandemore, Chief Financial Officer of Skechers. “Despite
pandemic-related lockdowns, disruptions in our global supply chain
and macroeconomic volatility, we remain focused on our
direct-to-consumer capabilities, distribution infrastructure and
deepening connections with our consumers in order to drive
long-term growth and shareholder value.”
Six Months 2022 Financial Results
Six Months Ended June
30,
Change
(in millions, except per share data)
2022
2021
$
%
Sales
$
3,687.4
$
3,096.3
591.1
19.1
Gross profit
1,721.7
1,539.3
182.4
11.9
Gross margin
46.7
%
49.7
%
(300
) bps
Operating expenses
1,391.7
1,180.4
211.3
17.9
As a % of sales
37.7
%
38.1
%
(40
) bps
Earnings from operations
330.1
358.9
(28.8
)
(8.0
)
Operating margin
9.0
%
11.6
%
(260
) bps
Net earnings
$
211.6
$
235.9
(24.3
)
(10.3
)
Diluted earnings per share
$
1.35
$
1.51
(0.16
)
(10.6
)
Year-to-date sales increased 19.1% reflecting a 21.4% increase
in domestic sales and a 17.3% increase in international sales with
the largest contribution derived from wholesale sales. Both
segments experienced increases, with Wholesale increasing 25.4% and
Direct-to-Consumer increasing 9.0%. On a constant currency basis,
the Company’s total sales increased 22.1%.
Wholesale sales growth of $484.3 million, or 25.4%, was led by
increases in AMER of 38.2% and EMEA of 24.0%. Wholesale volume
increased 18.8% and average selling price increased 5.9%.
Direct-to-Consumer sales growth of $106.8 million, or 9.0%, was
led by increases in AMER of 6.8%, EMEA of 44.2%, which experienced
COVID restrictions in the prior year, and APAC of 5.3%.
Direct-to-Consumer average selling price increased 9.4% resulting
from reduced promotions and higher prices.
Gross margin was 46.7%, a decrease of 300 basis points,
primarily driven by higher per unit freight costs partially offset
by average selling price increases.
Operating expenses increased $211.3 million or 17.9%. As a
percentage of sales, operating expenses improved 40 basis points to
37.7%. Selling expenses increased $42.0 million or 18.1%, primarily
due to higher global demand creation expenditures. General and
administrative expenses increased $169.3 million or 17.9%,
primarily due to higher compensation costs, rent, and volume-driven
global warehouse and distribution expenses.
Earnings from operations decreased $28.8 million to $330.1
million.
Net earnings were $211.6 million and diluted earnings per share
were $1.35, a decrease of 10.6% over the prior year. Diluted
earnings per share include an unfavorable impact of $0.14 due to
declines in foreign exchange rates, primarily in EMEA.
The Company’s effective income tax rate was essentially flat
year-over-year at 20.6%.
Balance Sheet
Cash, cash equivalents and investments totaled $946.4 million, a
decrease of $94.0 million, or 9.0% from December 31, 2021,
primarily as a result of changes in working capital and completing
$49.2 million of share repurchases year-to-date.
Inventory was $1.56 billion, an increase of $92.9 million or
6.3% from December 31, 2021. Increased inventory levels primarily
reflect growth in AMER.
Share Repurchase
During the second quarter, the Company repurchased nearly
636,000 shares of its Class A common stock for $24.2 million.
Year-to-date 2022, the Company has repurchased almost 1.3 million
shares of its Class A common stock at a cost of $49.2 million. At
June 30, 2022, approximately $450.8 million remained available
under the Company’s share repurchase program.
Outlook
For the third quarter of 2022, the Company believes it will
achieve sales between $1.80 billion and $1.85 billion and diluted
earnings per share of between $0.70 and $0.75. 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 $2.60 and $2.70.
Store Count
Number of Stores
December 31, 2021
Opened
Closed(1)
June 30, 2022
Domestic stores
515
28
(17
)
526
International stores
845
49
(58
)
836
Distributor, licensee and franchise
stores
2,946
202
(155
)
2,993
Total Skechers stores
4,306
279
(230
)
4,355
(1)
Does not reflect temporary closures due to
the COVID-19 pandemic.
Second 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 second 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 July 26, 2022 at 7:30 p.m. ET, through August 9, 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: 13731127.
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 4,355
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 effects of inflation
around the world, the challenging consumer retail markets in the
United States and the impact of Russia’s 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 and its quarterly reports on Form 10-Q in
2022. 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
As of
(in thousands)
June 30, 2022
December 31, 2021
ASSETS
Current assets
Cash and cash equivalents
$
751,904
$
796,283
Short-term investments
105,099
98,580
Trade accounts receivable, net
916,784
732,793
Other receivables
55,039
80,043
Inventory
1,563,907
1,470,994
Prepaid expenses and other
177,236
193,547
Total current assets
3,569,969
3,372,240
Property, plant and equipment, net
1,225,529
1,128,909
Operating lease right-of-use assets
1,168,385
1,224,580
Deferred tax assets
452,747
451,355
Long-term investments
89,423
145,590
Goodwill
93,497
93,497
Other assets, net
77,046
75,109
Total non-current assets
3,106,627
3,119,040
TOTAL ASSETS
$
6,676,596
$
6,491,280
LIABILITIES AND EQUITY
Current liabilities
Accounts payable
$
972,399
$
876,342
Accrued expenses
258,640
265,420
Operating lease liabilities
223,230
225,658
Current installments of long-term
borrowings
73,414
76,967
Short-term borrowings
—
1,195
Total current liabilities
1,527,683
1,445,582
Long-term operating lease liabilities
1,049,330
1,094,748
Long-term borrowings
253,260
263,445
Deferred tax liabilities
9,712
11,820
Other long-term liabilities
118,507
133,613
Total non-current liabilities
1,430,809
1,503,626
Total liabilities
2,958,492
2,949,208
Stockholders’ equity
Preferred Stock
—
—
Class A Common Stock
135
135
Class B Common Stock
21
21
Additional paid-in capital
402,360
429,608
Accumulated other comprehensive loss
(75,784
)
(48,323
)
Retained earnings
3,089,530
2,877,903
Skechers U.S.A., Inc. equity
3,416,262
3,259,344
Noncontrolling interests
301,842
282,728
Total stockholders' equity
3,718,104
3,542,072
TOTAL LIABILITIES AND EQUITY
$
6,676,596
$
6,491,280
SKECHERS U.S.A., INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
(in thousands, except per share data)
2022
2021
2022
2021
Sales
$
1,867,804
$
1,661,871
$
3,687,398
$
3,096,326
Cost of sales
970,225
808,279
1,965,656
1,557,075
Gross profit
897,579
853,592
1,721,742
1,539,251
Operating expenses
Selling
166,609
141,470
274,818
232,795
General and administrative
576,812
510,912
1,116,862
947,578
Total operating expenses
743,421
652,382
1,391,680
1,180,373
Earnings from operations
154,158
201,210
330,062
358,878
Other income (expense)
(19,259
)
2,158
(25,005
)
(12,016
)
Earnings before income taxes
134,899
203,368
305,057
346,862
Income tax expense
28,739
41,545
62,731
70,530
Net earnings
106,160
161,823
242,326
276,332
Less: Net earnings attributable to
noncontrolling interests
15,756
24,454
30,699
40,390
Net earnings attributable to Skechers
U.S.A., Inc.
$
90,404
$
137,369
$
211,627
$
235,942
Net earnings per share attributable to
Skechers U.S.A., Inc.
Basic
$
0.58
$
0.88
$
1.36
$
1.52
Diluted
$
0.58
$
0.88
$
1.35
$
1.51
Weighted-average shares used in
calculating net earnings per share attributable to Skechers U.S.A.,
Inc.
Basic
155,941
155,561
155,969
155,196
Diluted
156,748
156,674
157,074
156,321
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 was no impact to the consolidated financial results of the
Company as a result of this change.
Segment Information
Three Months Ended June
30,
Change
(in millions)
2022
2021
$
%
Wholesale sales
$
1,140.3
$
964.2
176.1
18.3
Gross profit
414.5
379.4
35.1
9.2
Gross margin
36.3
%
39.4
%
(300
) bps
Direct-to-Consumer sales
$
727.5
$
697.7
29.8
4.3
Gross profit
483.1
474.2
8.9
1.9
Gross margin
66.4
%
68.0
%
(160
) bps
Total sales
$
1,867.8
$
1,661.9
205.9
12.4
Gross profit
897.6
853.6
44.0
5.2
Gross margin
48.1
%
51.4
%
(330
) bps
Six Months Ended June
30,
Change
(in millions)
2022
2021
$
%
Wholesale sales
$
2,391.6
$
1,907.3
484.3
25.4
Gross profit
869.4
749.0
120.4
16.1
Gross margin
36.4
%
39.3
%
(290
) bps
Direct-to-Consumer sales
$
1,295.8
$
1,189.0
106.8
9.0
Gross profit
852.3
790.3
62.0
7.9
Gross margin
65.8
%
66.5
%
(70
) bps
Total sales
$
3,687.4
$
3,096.3
591.1
19.1
Gross profit
1,721.7
1,539.3
182.4
11.9
Gross margin
46.7
%
49.7
%
(300
) bps
Additional Sales Information
Three Months Ended June
30,
Change
(in millions)
2022
2021
$
%
Geographic sales
Domestic
Wholesale
$
521.0
$
401.3
119.7
29.8
Direct-to-Consumer
319.5
327.0
(7.5
)
(2.3
)
Total domestic sales
840.5
728.3
112.2
15.4
International
Wholesale
619.3
562.9
56.4
10.0
Direct-to-Consumer
408.0
370.7
37.3
10.1
Total international sales
1,027.3
933.6
93.7
10.0
Total sales
$
1,867.8
$
1,661.9
205.9
12.4
Regional sales
Americas (AMER)
$
1,033.9
$
855.2
178.7
20.9
Europe, Middle East & Africa
(EMEA)
374.5
348.1
26.4
7.6
Asia Pacific (APAC)
459.4
458.6
0.8
0.2
Total sales
$
1,867.8
$
1,661.9
205.9
12.4
China sales
$
254.9
$
316.9
(62.0
)
(19.6
)
Distributor sales
$
128.4
$
96.7
31.7
32.8
Six Months Ended June
30,
Change
(in millions)
2022
2021
$
%
Geographic sales
Domestic
Wholesale
$
1,059.6
$
778.5
281.1
36.1
Direct-to-Consumer
559.0
554.4
4.6
0.8
Total domestic sales
1,618.6
1,332.9
285.7
21.4
International
Wholesale
1,332.0
1,128.8
203.2
18.0
Direct-to-Consumer
736.8
634.6
102.2
16.1
Total international sales
2,068.8
1,763.4
305.4
17.3
Total sales
$
3,687.4
$
3,096.3
591.1
19.1
Regional sales
Americas (AMER)
$
1,980.8
$
1,580.9
399.9
25.3
Europe, Middle East & Africa
(EMEA)
815.7
643.5
172.2
26.8
Asia Pacific (APAC)
890.9
871.9
19.0
2.2
Total sales
$
3,687.4
$
3,096.3
591.1
19.1
China sales
$
527.9
$
567.5
(39.6
)
(7.0
)
Distributor sales
$
225.4
$
176.9
48.5
27.4
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 June
30,
2022
2021
Change
(in millions, except per share data)
Reported GAAP
Measure
Constant Currency
Adjustment
Adjusted for Non-
GAAP Measures
Reported GAAP
Measure
$
%
Sales
$
1,867.8
$
65.9
$
1,933.7
$
1,661.9
271.8
16.4
Cost of sales
970.2
38.5
1,008.7
808.3
200.4
24.8
Gross profit
897.6
27.4
925.0
853.6
71.4
8.4
Operating expenses
743.4
23.3
766.7
652.4
114.3
17.5
Earnings from operations
154.2
4.1
158.3
201.2
(42.9
)
(21.3
)
Other income (expense)
(19.3
)
16.2
(3.1
)
2.2
(5.3
)
n/m
Income tax expense
28.7
1.3
30.0
41.5
(11.5
)
(27.7
)
Less: Noncontrolling interests
15.8
0.5
16.3
24.5
(8.2
)
(33.5
)
Net earnings
$
90.4
$
18.5
$
108.9
$
137.4
(28.5
)
(20.7
)
Diluted earnings per share
$
0.58
$
0.11
$
0.69
$
0.88
(0.19
)
(21.6
)
Six Months Ended June
30,
2022
2021
Change
(in millions, except per share data)
Reported GAAP
Measure
Constant Currency
Adjustment
Adjusted for Non-
GAAP Measures
Reported GAAP
Measure
$
%
Sales
$
3,687.4
$
93.0
$
3,780.4
$
3,096.3
684.1
22.1
Cost of sales
1,965.7
57.0
2,022.7
1,557.0
465.7
29.9
Gross profit
1,721.7
36.0
1,757.7
1,539.3
218.4
14.2
Operating expenses
1,391.7
30.0
1,421.7
1,180.4
241.3
20.4
Earnings from operations
330.1
6.0
336.0
358.9
(22.9
)
(6.4
)
Other income (expense)
(25.1
)
18.7
(6.4
)
(12.1
)
5.7
(47.1
)
Income tax expense
62.7
1.3
64.0
70.5
(6.5
)
(9.2
)
Less: Noncontrolling interests
30.7
0.2
30.9
40.4
(9.5
)
(23.5
)
Net earnings
$
211.6
$
23.2
$
234.7
$
235.9
(1.2
)
(0.5
)
Diluted earnings per share
$
1.35
$
0.14
$
1.49
$
1.51
(0.02
)
(1.3
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220726005339/en/
Investor Relations Eunice Han investors@skechers.com
Press Jennifer Clay jennc@skechers.com
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