- Record Annual Sales of $2.378
Billion
- Fourth Quarter 2014 Net Sales
Increased 26.4 Percent to $569.7 Million
- Fourth Quarter 2014 Net Earnings of
$21.9 Million
- Fourth Quarter 2014 Diluted Earnings
Per Share of $0.43
SKECHERS USA, Inc. (NYSE:SKX) today announced financial results
for the fourth quarter and fiscal year ended December 31, 2014.
Net sales for the fourth quarter of 2014 were $569.7 million
compared to $450.7 million in the fourth quarter of 2013. Gross
profit for the fourth quarter of 2014 was $257.6 million or 45.2
percent of net sales compared to $200.6 million or 44.5 percent of
net sales in the fourth quarter of 2013. Earnings from operations
in the fourth quarter of 2014 were $33.0 million compared to
earnings from operations of $17.1 million in the fourth quarter of
2013.
“Skechers fourth quarter revenues of over $569 million set a new
record for the period, and followed a record third quarter 2014,
which was the highest quarterly sales in the Company’s history.
This momentum led to record annual revenues of $2.378 billion for
2014, an approximately 29 percent increase compared to 2013 sales
of $1.846 billion,” began David Weinberg, SKECHERS chief operating
officer and chief financial officer. “The outstanding fourth
quarter growth was the result of double-digit improvements in our
domestic and international wholesale and Skechers Company-owned
retail businesses, all of which benefited from our universally
appealing men’s, women’s and kids’ product. We are also pleased to
note that within our domestic wholesale business, our average price
per pair increased by 7.4 percent in the quarter, and within our
international wholesale business, we experienced double-digit
growth in many key countries that were negatively impacted by
currency issues, both further testaments to the strength of our
brand and product.”
Net earnings for the fourth quarter of 2014 were $21.9 million
compared to net earnings of $14.2 million in the fourth quarter of
2013. Net earnings per diluted share in the fourth quarter of 2014
were $0.43 based on 51.4 million weighted average shares
outstanding compared to $0.28 based on 50.7 million weighted
average shares outstanding in the fourth quarter of 2013. During
the fourth quarter of 2014, the Company’s net earnings were
negatively impacted by approximately $7.0 million, or $0.14 per
diluted share of which $4.7 million, or $0.09 per diluted share was
the result of negative foreign currency translations and
transactions and $2.3 million, or $0.05 per diluted share, was
the result of foreign and domestic bad debt write-offs. The
Company’s effective tax rate for the year-ended December 31, 2014,
was 20.5 percent, which was below the forecasted rate of 22.6
percent at the close of the third quarter 2014. The decrease in its
effective tax rate was due to increased international sales and
profitability combined with slightly decreased domestic
profitability. The Company expects improved international sales and
profitability to continue to have a positive impact on its 2015
effective tax rate, which is forecasted to be between 20 percent
and 25 percent.
Fiscal year 2014 net sales were $2.378 billion compared to net
sales of $1.846 billion in 2013. Gross profit for 2014 was $1.072
billion or 45.1 percent of net sales compared to $818.8 million or
44.4 percent of net sales in 2013. Earnings from operations for
2014 were $209.1 million compared to $93.6 million in 2013.
Net earnings for 2014 were $138.8 million compared to $54.8
million in 2013. Net earnings per diluted share for fiscal year
2014 were $2.72 based on 51.0 million weighted average shares
outstanding compared to $1.08 based on 50.6 million weighted
average shares outstanding in the prior year.
Robert Greenberg, SKECHERS chief executive officer, commented:
“Just a year ago, we were honored as the 2013 Brand of the Year for
GO (Footwear News) and 2013 Running Design Excellence and
Children’s Design Excellence (Footwear Plus), and now we are 2014
Company of the Year (Footwear News and Footwear Plus), and the No.
2 footwear brand and the No. 1 walking brand in America. This
speaks volumes to the product we have developed and delivered, the
global marketing support behind it, and the many other achievements
and milestones made throughout the year. In the fourth quarter
alone, we signed world renowned drummer Ringo Starr to a global
marketing agreement for our growing men’s footwear line, launched
our first Demi Lovato campaign — which spurred a flurry of social
media engagement around the world, and saw Meb cross the finish
line first among the Americans at the New York Marathon. We also
announced the opening of our 1,000th Skechers retail store,
completed the initial phase of the automation of our European
Distribution Center equipment and moved up our Fall 2015 buy
meetings with our key domestic accounts to October and November,
which allowed us to meet the increased order rate for our new
product. This in turn positively impacted our international
partners as they have been able to place orders for the coming
season earlier, which will allow us to deliver more product in a
timely manner. In the first quarter of 2015, we decided to convert
three distribution partners doing business in 14 Central Eastern
European countries to wholly-owned subsidiaries, enabling us to
leverage the success we are experiencing across Europe. With our
women’s footwear reaching an expanding audience thanks to both the
fresh styling and our advertising campaign featuring Demi Lovato,
our men’s footwear collectively achieving the highest percentage
gains, and new innovations in our children’s footwear — including
Game Kicks, the shoe with an electronic memory game built in — we
believe the demand for our footwear is at an all-time high. We are
looking forward to delivering new product in the Spring, expanding
the Skechers retail store base to an estimated 1,250 stores by the
end of 2015, and continuing to see strong double-digit and, in some
cases, triple-digit gains in Europe, the Americas, the Asia-Pacific
region and the Middle East. We believe there are still tremendous
growth opportunities for Skechers in 2015 and beyond.”
David Weinberg continued: “2014 was an excellent year for
Skechers, and we expect the momentum to continue in 2015 based on
domestic and international Skechers retail stores comps of 17
percent in January, year-over-year worldwide backlogs up 60 percent
at December 31, 2014, and the steady demand for our product
including expansion in new doors and existing doors. With continued
investments in our infrastructure for the coming years, including
equipment automation upgrades at our European Distribution Center
and establishment of a Company-operated distribution center in
Chile, $466.7 million in cash and inventories in-line with expected
sales, we believe we are prepared for growth in 2015. We believe
the best is yet to come, and are looking forward to the first
quarter of 2015, which we expect will be a new quarterly sales
record of $690 million to $710 million and earnings per share of
$0.95-$1.05.”
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 100 countries and territories worldwide via department and
specialty stores, more than 1,000 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 (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 and automation 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, national and local general economic, political and
market conditions including the ongoing global economic slowdown
and market instability; 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, 2013, and its
Form 10-Q for the quarter ended September 30, 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) December 31,
December 31, 2014
2013 ASSETS Current Assets: Cash and cash
equivalents $ 466,685 $ 372,011 Trade accounts receivable, net
272,103 225,941 Other receivables 16,510
10,599 Total receivables 288,613 236,540 Inventories
453,837 358,168 Prepaid expenses and other current assets 57,015
26,094 Deferred tax assets 18,864
22,115 Total current assets 1,285,014 1,014,928 Property,
plant and equipment, at cost, less accumulated depreciation and
amortization
373,183
361,755
Goodwill and other intangible assets, less accumulated amortization
1,630 2,377 Deferred tax assets 2,044 9,950 Other assets, at cost
13,047 19,560 Total non-current
assets 389,904 393,642 TOTAL
ASSETS
$ 1,674,918
$ 1,408,570 LIABILITIES AND EQUITY
Current Liabilities: Current installments of long-term borrowings $
101,407 $ 12,028 Accounts payable 352,815 258,183 Short-term
borrowings 1,810 87 Accrued expenses 49,705
40,124 Total current liabilities 505,737 310,422
Long-term borrowings, net of current installments 15,081 116,488
Other long-term liabilities 19,993
1,740 Total non-current liabilities 35,074
118,228 Total liabilities 540,811 428,650
Stockholders’ equity: Skechers U.S.A., Inc. equity 1,075,249
930,322 Noncontrolling interests 58,858
49,598 Total equity 1,134,107
979,920 TOTAL LIABILITIES AND EQUITY
$
1,674,918 $
1,408,570 SKECHERS U.S.A., INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited) (In thousands, except per
share data) Three Months
Ended Twelve Months Ended
December 31, December 31, 2014
2013
2014
2013 Net sales $ 569,722 $
450,737 $ 2,377,561 $ 1,846,361 Cost of sales
312,093 250,092
1,305,656
1,027,569 Gross profit 257,629 200,645 1,071,905
818,792 Royalty income 2,178
2,890 9,106
7,734 259,807
203,535
1,081,011 826,526
Operating expenses: Selling 40,198 33,496 181,018 153,491 General
and administrative 186,598
152,977 690,923
579,426 226,796
186,473
871,941 732,917
Income from operations 33,011 17,062 209,070 93,609 Other income
(expense): Interest, net (3,093 ) (2,696 ) (11,629 ) (11,049 )
Other, net (1,230 ) 2,111
(6,062 )
(345 ) (4,323 ) (585 )
(17,691 ) (11,394
) Earnings before income tax expense 28,688 16,477 191,379 82,215
Income tax expense 2,833
376 39,184
21,347 Net earnings 25,855 16,101 152,195
60,868 Less: Net earnings attributable to noncontrolling interests
3,935 1,936
13,385
6,080 Net earnings attributable to Skechers U.S.A., Inc. $
21,920 $ 14,165
$ 138,810 $ 54,788
Net earnings per share attributable to Skechers U.S.A.,
Inc.: Basic $ 0.43 $ 0.28
$ 2.74 $ 1.09
Diluted $ 0.43 $ 0.28
$ 2.72 $ 1.08
Weighted average shares used in calculating earnings per
share attributable to Skechers U.S.A., Inc.: Basic 50,697
50,463
50,613 50,363
Diluted 51,355
50,653 51,026
50,563
SKECHERS USA, Inc.David Weinberg, 310-318-3100Chief Operating
Officer,Chief Financial OfficerorInvestor Relations:Addo
CommunicationsAndrew Greenebaum, 310-829-5400
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