SKECHERS USA, Inc. (NYSE:SKX) today announced financial results for the
fourth quarter and fiscal year ended December 31, 2013.
Net sales for the fourth quarter of 2013 were $450.7 million compared to
$395.6 million in the fourth quarter of 2012. Gross profit for the
fourth quarter of 2013 was $200.6 million or 44.5 percent of net sales
compared to $168.5 million or 42.6 percent of net sales in the fourth
quarter of 2012. Earnings from operations in the fourth quarter of 2013
were $17.1 million compared to earnings from operations of $8.0 million
in the fourth quarter of 2012. The Company’s effective tax rate for the
year-ended December 31, 2013, was 26.0 percent, which was down from the
forecasted rate of 31.9 percent at the close of the third quarter 2013.
This was due to increased international and slightly decreased domestic
profitability. The Company expects improved international sales and
profitability to continue to have a positive impact on its 2014
effective tax rate, which is expected to be between 25 percent and 30
percent.
“The momentum we experienced in the first nine months of 2013 continued
in the fourth quarter, which resulted in the second highest fourth
quarter sales in the Company’s history and a 13.9 percent net sales
increase for the period on top of last year’s fourth quarter net sales
gain of 39.7 percent,” began David Weinberg, SKECHERS chief operating
officer and chief financial officer. “The growth is related to the
strong product successes we are experiencing across our men’s, women’s,
and kids’ categories, which resulted in double-digit increases in our
Company-owned retail and domestic wholesale businesses, and single-digit
increases in our international and e-commerce businesses. Further
indication of the strength of our product is the 12.8 percent comp store
sales increases in our worldwide Company-owned retail stores during the
fourth quarter.”
Net earnings for the fourth quarter of 2013 were $14.2 million compared
to net earnings of $4.0 million in the fourth quarter of 2012. Net
earnings per diluted share in the fourth quarter of 2013 were $0.28
based on 50.7 million weighted average shares outstanding compared to
$0.08 based on 50.3 million weighted average shares outstanding in the
fourth quarter of 2012.
Fiscal year 2013 net sales were $1.846 billion compared to net sales of
$1.560 billion in 2012. Gross profit for 2013 was $818.8 million or 44.4
percent of net sales compared to $683.3 million or 43.8 percent of net
sales in 2012. Earnings from operations for 2013 were $93.6 million
compared to $22.3 million in 2012.
Net earnings for 2013 were $54.8 million compared to $9.5 million in
2012. Net earnings per diluted share for fiscal year 2013 were $1.08
based on 50.6 million weighted average shares outstanding versus $0.19
based on 49.9 million weighted average shares outstanding in the prior
year.
Robert Greenberg, SKECHERS chief executive officer, commented: “Skechers
has always been a product focused company, but in 2013, we challenged
ourselves to deliver key styles from every one of our divisions. This
more diversified product approach resulted in strong sales across our
distribution channels. With our broad assortment of products, we
weathered the unseasonably cold winter in the Midwest and Northeast
thanks to one of our strongest boot collections, and the unseasonably
warm weather in the West thanks to one of our strongest Sport
collections. We were also honored as Brand of the Year for Skechers GO
from Footwear News, and received the 2013 Excellence in Design
Awards for Running and Kids footwear from Footwear Plus—two
significant recognitions from leading trade magazines. The momentum we
have been experiencing in the United States reached multiple markets
around the world, resulting in sales improvements in Europe, Asia, the
Middle East, Australia and South America. We supported our many
divisions with a multi-level marketing campaign centered around
television advertising. In the fourth quarter, these included campaigns
with Brooke Burke-Charvet for both Relaxed Fit from Skechers and Bobs
from Skechers campaigns, and two spots featuring sports icons Joe
Montana and Mark Cuban for our men’s Relaxed Fit by Skechers footwear.
This quarter, we launched a new commercial for Skechers GOrun Ride 3
featuring elite runner and Olympic medalist Meb, who won the Houston
Half Marathon last month. Our focus is to continue to deliver
innovative, in-demand footwear that consumers around the globe will seek
out, and support our product with impactful marketing. We are confident
we can achieve this efficiently and continue to profitably grow our
business through 2014.”
David Weinberg continued: “We believe 2013, with our second highest
annual net sales ever, was the beginning of a growth trend for SKECHERS
that we see continuing through 2014. Key performance indicators of this
momentum are the approximately 30 percent increase in our combined
worldwide backlogs at year-end, and our healthy January 2014 sales,
including mid-single-digit comp store sales increases in our worldwide
retail stores—in spite of the weather impacting a large portion of the
United States. We are committed to maintaining this positive trend
through product development, growth in our emerging and established
international markets, deeper penetration in key domestic accounts, and
the planned opening of 60 to 70 new Company-owned stores this year. With
$372.0 million in cash as of year-end, in-line inventory and strong
double-digit backlogs, we believe the momentum we experienced since the
end of 2012 will continue through 2014, and we are comfortable with the
consensus numbers currently reported for the first quarter and full
year.”
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 via department and
specialty stores, Company-owned SKECHERS retail stores and its
e-commerce website, and in over 100 countries and territories through
the Company’s international network of subsidiaries in Canada, Brazil,
Chile, Japan, and across Europe, as well as through joint ventures in
Asia and distributors around the world. 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 growth, financial results and
operations, its development of new products, future demand for its
products and growth opportunities, and its planned opening of new
stores, 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, as amended, on Forms 10-K and
Form 10-K/A for the year ended December 31, 2012 and its quarterly
report on Form 10-Q for the three months and nine months ended September
30, 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.
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SKECHERS U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
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December 31,
2013
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December 31,
2012
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ASSETS
|
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Current Assets:
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|
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|
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|
Cash and cash equivalents
|
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$
|
372,011
|
|
|
|
|
|
|
|
|
|
|
$
|
325,826
|
Trade accounts receivable, net
|
|
|
|
|
|
|
225,941
|
|
|
|
|
|
|
|
|
|
|
|
213,697
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Other receivables
|
|
|
|
|
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|
10,599
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|
|
|
|
|
|
|
|
|
|
|
7,491
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Total receivables
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236,540
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|
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|
|
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221,188
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Inventories
|
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358,168
|
|
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|
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|
|
|
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|
339,012
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Prepaid expenses and other current assets
|
|
|
|
|
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|
26,094
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|
|
|
|
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|
|
|
|
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|
27,755
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Deferred tax assets
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|
22,115
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|
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|
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|
|
|
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|
26,531
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Total current assets
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|
1,014,928
|
|
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|
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|
|
|
|
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|
940,312
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Property, plant and equipment, at cost, less accumulated
depreciation and amortization
|
|
|
|
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|
|
361,755
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|
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|
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|
|
|
|
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|
362,446
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Goodwill and other intangible assets, less applicable amortization
|
|
|
|
|
|
|
2,377
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|
|
|
|
|
|
|
|
|
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|
3,242
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Deferred tax assets
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|
|
|
|
|
|
9,950
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|
|
|
|
|
|
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|
16,387
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Other assets, at cost
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|
|
|
|
|
|
19,560
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|
|
|
|
|
|
|
|
|
|
|
17,833
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Total non-current assets
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|
|
|
|
|
393,642
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|
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|
|
|
|
|
|
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|
399,908
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TOTAL ASSETS
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|
|
|
$
|
1,408,570
|
|
|
|
|
|
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|
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|
$
|
1,340,220
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LIABILITIES AND EQUITY
|
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Current Liabilities:
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Current installments of long-term borrowings
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|
$
|
12,028
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|
|
|
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|
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$
|
11,668
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Short-term borrowings
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|
87
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|
|
|
|
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|
|
|
|
|
|
2,425
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Accounts payable
|
|
|
|
|
|
|
258,183
|
|
|
|
|
|
|
|
|
|
|
|
241,525
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Accrued expenses
|
|
|
|
|
|
|
40,124
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|
|
|
|
|
|
|
|
|
|
|
36,923
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Total current liabilities
|
|
|
|
|
|
|
310,422
|
|
|
|
|
|
|
|
|
|
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|
292,541
|
Long-term borrowings, excluding current installments
|
|
|
|
|
|
|
116,488
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|
|
|
|
|
|
|
|
|
|
|
128,517
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Other long-term liabilities
|
|
|
|
|
|
|
1,740
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|
|
|
|
|
|
|
|
|
|
|
73
|
Total non-current liabilities
|
|
|
|
|
|
|
118,228
|
|
|
|
|
|
|
|
|
|
|
|
128,590
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Total liabilities
|
|
|
|
|
|
|
428,650
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|
|
|
|
|
|
|
|
|
|
|
421,131
|
Stockholders’ equity:
|
|
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Skechers U.S.A., Inc. equity
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|
|
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|
930,322
|
|
|
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|
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|
|
|
|
|
|
875,969
|
Noncontrolling interests
|
|
|
|
|
|
|
49,598
|
|
|
|
|
|
|
|
|
|
|
|
43,120
|
Total equity
|
|
|
|
|
|
|
979,920
|
|
|
|
|
|
|
|
|
|
|
|
919,089
|
TOTAL LIABILITIES AND EQUITY
|
|
|
|
|
|
$
|
1,408,570
|
|
|
|
|
|
|
|
|
|
|
$
|
1,340,220
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SKECHERS U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
|
|
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|
|
|
|
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|
Three Months Ended December 31,
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Twelve Months Ended December 31,
|
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|
2013
|
|
|
|
2012
|
|
|
|
2013
|
|
|
|
2012
|
Net sales
|
|
|
|
$
|
450,737
|
|
|
|
|
$
|
395,617
|
|
|
|
|
$
|
1,846,361
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|
|
|
|
$
|
1,560,321
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|
Cost of sales
|
|
|
|
|
250,092
|
|
|
|
|
|
227,153
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|
|
|
|
|
1,027,569
|
|
|
|
|
|
876,995
|
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Gross profit
|
|
|
|
|
200,645
|
|
|
|
|
|
168,464
|
|
|
|
|
|
818,792
|
|
|
|
|
|
683,326
|
|
Royalty income
|
|
|
|
|
2,890
|
|
|
|
|
|
2,601
|
|
|
|
|
|
7,734
|
|
|
|
|
|
7,104
|
|
|
|
|
|
|
203,535
|
|
|
|
|
|
171,065
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|
|
|
|
|
826,526
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|
|
|
|
|
690,430
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
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Selling
|
|
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|
|
33,496
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|
|
|
|
|
31,086
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|
|
|
|
|
153,491
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|
|
|
|
|
134,920
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General and administrative
|
|
|
|
|
151,699
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|
|
|
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|
132,142
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|
|
|
|
|
577,214
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|
|
|
|
|
532,373
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|
Legal settlements (recoveries)
|
|
|
|
|
1,278
|
|
|
|
|
|
(123
|
)
|
|
|
|
|
2,212
|
|
|
|
|
|
818
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|
|
|
|
|
|
186,473
|
|
|
|
|
|
163,105
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|
|
|
|
|
732,917
|
|
|
|
|
|
668,111
|
|
Income from operations
|
|
|
|
|
17,062
|
|
|
|
|
|
7,960
|
|
|
|
|
|
93,609
|
|
|
|
|
|
22,319
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Interest, net
|
|
|
|
|
(2,696
|
)
|
|
|
|
|
(3,450
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)
|
|
|
|
|
(11,049
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)
|
|
|
|
|
(12,765
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)
|
Gain (loss) on disposal of assets
|
|
|
|
|
602
|
|
|
|
|
|
(14
|
)
|
|
|
|
|
447
|
|
|
|
|
|
(216
|
)
|
Other, net
|
|
|
|
|
1,509
|
|
|
|
|
|
2,138
|
|
|
|
|
|
(792
|
)
|
|
|
|
|
1,135
|
|
|
|
|
|
|
(585
|
)
|
|
|
|
|
(1,326
|
)
|
|
|
|
|
(11,394
|
)
|
|
|
|
|
(11,846
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)
|
Earnings before income taxes
|
|
|
|
|
16,477
|
|
|
|
|
|
6,634
|
|
|
|
|
|
82,215
|
|
|
|
|
|
10,473
|
|
Income tax expense (benefit)
|
|
|
|
|
376
|
|
|
|
|
|
2,968
|
|
|
|
|
|
21,347
|
|
|
|
|
|
(39
|
)
|
Net earnings
|
|
|
|
|
16,101
|
|
|
|
|
|
3,666
|
|
|
|
|
|
60,868
|
|
|
|
|
|
10,512
|
|
Less: Net earnings (loss) attributable to noncontrolling interest
|
|
|
|
|
1,936
|
|
|
|
|
|
(290
|
)
|
|
|
|
|
6,080
|
|
|
|
|
|
1,000
|
|
Net earnings attributable to Skechers U.S.A., Inc.
|
|
|
|
$
|
14,165
|
|
|
|
|
$
|
3,956
|
|
|
|
|
$
|
54,788
|
|
|
|
|
$
|
9,512
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net earnings per share attributable to Skechers U.S.A., Inc.:
|
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Basic
|
|
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|
$
|
0.28
|
|
|
|
|
$
|
0.08
|
|
|
|
|
$
|
1.09
|
|
|
|
|
$
|
0.19
|
|
Diluted
|
|
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|
$
|
0.28
|
|
|
|
|
$
|
0.08
|
|
|
|
|
$
|
1.08
|
|
|
|
|
$
|
0.19
|
|
|
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Weighted average shares used in calculating earnings per share
attributable to Skechers U.S.A., Inc.:
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|
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|
Basic
|
|
|
|
|
50,463
|
|
|
|
|
|
49,980
|
|
|
|
|
|
50,363
|
|
|
|
|
|
49,495
|
|
Diluted
|
|
|
|
|
50,653
|
|
|
|
|
|
50,271
|
|
|
|
|
|
50,563
|
|
|
|
|
|
49,942
|
|
|
|
|
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Copyright Business Wire 2014