SKECHERS Announces Second Quarter 2013 Financial Results

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SKECHERS Announces Second Quarter 2013 Financial Results

  • Net Sales Increase 11.5 Percent to $428.2 Million
  • Earnings from Operations of $17.2 Million
  • Net Earnings of $7.1 Million
  • Diluted Earnings Per Share of $0.14

MANHATTAN BEACH, Calif.--(BUSINESS WIRE)-- SKECHERS USA, Inc. (NYS: SKX) , a global leader in lifestyle footwear, today announced financial results for the second quarter ended June 30, 2013.

Second quarter 2013 net sales were $428.2 million compared to $384.0 million for the second quarter of 2012. Gross profit for the second quarter of 2013 was $194.9 million or 45.5 percent of net sales compared to $171.3 million or 44.6 percent of net sales for the second quarter of last year. Earnings from operations for the second quarter of 2013 were $17.2 million versus a loss from operations of $1.5 million for the second quarter of 2012.


"The strong increase in second quarter sales is the result of double-digit gains in both our international wholesale and company-owned retail businesses as well as the single-digit improvements in our domestic wholesale division. Our 45.5 percent gross margins are the result of improvements in our company-owned retail stores and international subsidiary businesses combined with the expected decrease in international distributor sales, which carry lower gross margins," began David Weinberg, chief operating officer and chief financial officer. "Further, the demand for our fresh product also resulted in a 16.5 percent increase in domestic and international comp store sales, a leading indicator of the underlying strength of our product offerings. We are particularly pleased with the growth given that Easter fell into the first quarter this year as opposed to the second quarter last year, and that we achieved gains despite the unseasonably cooler Spring temperatures in the United States and many other regions."

Net earnings in the second quarter of 2013 were $7.1 million compared to a net loss of $1.8 million for the second quarter of 2012. Diluted net earnings per share were $0.14 based on 50,497,000 weighted average shares outstanding compared to diluted net loss per share of $0.04 based on 49,296,000 weighted average shares outstanding for the same period last year.

For the six months ended June 30, 2013, net sales were $879.9 million compared to net sales of $735.3 million in the first six months of 2012. Gross profit for the first six months of 2013 was $387.6 million or 44.1 percent of net sales, compared to $327.0 million or 44.5 percent of net sales for the first six months of 2012. Earnings from operations for the first six months of 2013 were $32.5 million, compared to a loss from operations of $5.9 million for the same period last year.

Net earnings in the first six months of 2013 were $13.8 million compared to net a loss of $5.4 million in the same period last year. Diluted net earnings per share were $0.27 based on 50,494,000 weighted average common shares outstanding compared to a net loss of $0.11 based on 49,281,000 weighted average common shares outstanding for the first six months of 2012.

Robert Greenberg, SKECHERS chief executive officer, commented: "In June, we hosted our 21st annual Global Sales Conference for our domestic, international and retail teams to review our products, and we have spent much of this month in key account meetings at our corporate offices doing the same. The positive feedback we have received in these meetings is unlike any we have previously experienced. We believe this is due to a more diversified product balance. With strong offerings throughout our footwear lines, we now have many key product successes, including Skechers Relaxed Fit, which crosses into our lifestyle athletic and casual divisions. This increased product balance has allowed us to redefine many of our lines and grow our divisions through new offerings, including the year-round extension of our charitable line BOBS, which reached the five million pair donation mark in June, and the expansion of our award-winning SKECHERS Performance Division, which has grown into a solid business. We continue to support our brands with numerous men's, women's and kids television campaigns, and for Back to School, many of the same commercials will be shown around the world to support our global business. We are now seeing the impact of our key product initiatives and marketing support taking hold around the world. Based on the reaction at our recent key account meetings and current performance in the market, we believe the momentum we are experiencing will continue through this year and into next year."

Mr. Weinberg added: "We believe the first six months of 2013 with improved sales, gross margins and earnings are an indication of the financial performance we will achieve in the back half of the year. Our return to profitability, cash balance of $333.0 million, and in-line inventory levels are indicators of our determination to efficiently manage our business. We are experiencing exceptional sell-throughs on the broadest assortment of key product in our company's history. We are looking forward to delivering the remainder of our fall product offerings, and launching the next phase of our development for a successful holiday and Spring 2014."

ABOUT SKECHERS USA, INC.

SKECHERS USA, Inc., based in Manhattan Beach, California, designs, develops and markets a diverse range of footwear for men, women and children under the SKECHERS name. SKECHERS footwear is available in the United States through department and specialty stores, Company-owned SKECHERS retail stores and its e-commerce website, as well as in over 100 countries and territories through the Company's global network of distributors and subsidiaries in Canada, Brazil, Chile, Japan, and across Europe, as well as through joint ventures in Asia. For more information, please visit www.skechers.com, and follow us on Facebook (www.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 financial results and operations, future demand for its products and its planned 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 the resignation of the Company's former independent registered public accounting firm, and its withdrawal of its audit reports with respect to certain of the Company's historical financial statements; 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, 2012, and its Form 10-Q for the quarter ended March 31, 2013. 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)
   

(Unaudited)

June 30,

2013

  December 31,

2012

ASSETS
Current Assets:
Cash and cash equivalents$333,006$325,826
Trade accounts receivable, net252,095213,697
Other receivables 6,048   7,491
Total receivables258,143221,188
Inventories285,489339,012
Prepaid expenses and other current assets24,09527,755
Deferred tax assets 26,532   26,531
Total current assets927,265940,312
Property, plant and equipment, at cost, less accumulated depreciation and amortization

359,053

362,446

Goodwill and other intangible assets, less applicable amortization2,7503,242
Deferred tax assets13,08916,387
Other assets, at cost 19,733   17,833
Total non-current assets 394,625   399,908
TOTAL ASSETS$1,321,890  $1,340,220
LIABILITIES AND EQUITY
Current Liabilities:
Current installments of long-term borrowings$11,842$11,668
Short-term borrowings1,3452,425
Accounts payable221,949241,525
Accrued expenses 29,088   36,923
Total current liabilities264,224292,541
Long-term borrowings, excluding current installments122,549128,517
Other long-term liabilities 111   73
Total non-current liabilities 122,660   128,590
Total liabilities386,884421,131
Stockholders' equity:
Skechers U.S.A., Inc. equity887,758875,969
Noncontrolling interests 47,248   43,120
Total equity 935,006   919,089
TOTAL LIABILITIES AND EQUITY$1,321,890  $1,340,220
 
SKECHERS U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
   
Three Months Ended June 30,Six Months Ended June 30,

2013

 

2012

2013

 

2012

Net sales$428,247$384,001$879,868$735,275
Cost of sales 233,353   212,659    492,242   408,237 
Gross profit194,894171,342387,626327,038
Royalty income, net 1,424   1,609    3,194   2,745 
 196,318   172,951    390,820   329,783 
Operating expenses:
Selling42,08839,10079,78469,449
General and administrative 137,066   135,382    278,534   266,259 
 179,154   174,482    358,318   335,708 
Earnings (loss) from operations17,164(1,531)32,502(5,925)
Other income (expense):
Interest, net(2,991)(3,256)(5,540)(5,977)
Other, net (695)  556    (3,618)  416 
 (3,686)  (2,700)   (9,158)  (5,561)
Earnings (loss) before income tax expense (benefit)13,478(4,231)23,344(11,486)
Income tax expense (benefit) 4,632   (2,887)   6,910   (6,732)
Net earnings (loss)8,846(1,344)16,434(4,754)
Less: Net earnings attributable to noncontrolling interests 1,752   438    2,660   694 
Net earnings (loss) attributable to Skechers U.S.A., Inc.$7,094  $(1,782)  $13,774  $(5,448)
 
 
Net earnings (loss) per share attributable to Skechers U.S.A., Inc.:
Basic$0.14  $(0.04)  $0.27  $(0.11)
Diluted$0.14  $(0.04)  $0.27  $(0.11)
 
Weighted average shares used in calculating earnings (loss) per share attributable to Skechers U.S.A., Inc.:
Basic 50,298   49,296    50,297   49,281 
Diluted 50,497   49,296    50,494   49,281 



Company Contact:
David Weinberg
Chief Operating Officer
Chief Financial Officer
SKECHERS USA, Inc.
(310) 318-3100
or
Investor Relations:
Andrew Greenebaum
Addo Communications
(310) 829-5400

KEYWORDS:   United States  North America  California

INDUSTRY KEYWORDS:

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