SKECHERS USA, Inc. (NYSE:SKX), a global leader in footwear, today
announced financial results for the first quarter ended March 31, 2014.
First quarter 2014 net sales were $546.5 million compared to $451.6
million in the first quarter of 2013. Gross profit for the first
quarter of 2014 was $240.4 million, or 44.0 percent of net sales,
compared to $192.7 million, or 42.7 percent of net sales, in the first
quarter of 2013. Earnings from operations for the first quarter of 2014
were $48.2 million compared to earnings from operations of $15.3 million
for the first quarter of 2013. Due to Easter falling later in Spring,
the Company shifted a portion of its advertising expenses into the
second quarter 2014, reducing its media expenses in the first quarter
2014.
“The demand for Skechers footwear from both our customers and consumers
has been above and beyond our expectations. The result was net sales of
over $546 million, a 21 percent increase over last year’s first quarter
and a first quarter record as well as the second highest quarterly
revenues in the company’s 22-year history,” began David Weinberg, chief
operating officer and chief financial officer. "The improvements were
achieved despite Easter falling late in April and the extreme cold
weather experienced in most of the United States throughout the quarter.
The sales results are attributable to double-digit increases in our
domestic and international wholesale business, as well as increases in
our worldwide company-owned retail business, which achieved a 5.6
percent comparable quarter net sales increase. With multiple product
success stories in our lifestyle, performance and kids’ footwear, the
positive reaction to our current products resulted in a gross margin of
44.0 percent and an operating margin of 8.8 percent.”
Net earnings in the first quarter of 2014 were $31.0 million compared to
net earnings of $6.7 million for the first quarter of 2013. Net earnings
per diluted share in the first quarter 2014 were $0.61 based on 50.8
million weighted average shares outstanding compared to a diluted net
earnings per share of $0.13 based on 50.5 million weighted average
shares outstanding for the same period in the prior year. The Company’s
effective tax rate for the first quarter of 2014 was 25.7 percent as a
result of certain discrete items recorded in the first quarter. The
Company currently estimates its effective tax rate for 2014 to be 25
percent to 28 percent.
Robert Greenberg, SKECHERS chief executive officer, commented: “The
combination of the simultaneous success of multiple product categories
in the United States and the broad global acceptance of these same
initiatives allowed us to expand our assortment of styles and create a
unified product message around the world. We believe this is because
we’re on target for current trends with the most relevant and exciting
footwear offering in the company’s history, including our Spring 2014
collection which we began to deliver in February. The record first
quarter sales are evidence that our product initiatives are working and
our on-going efforts to elevate our product offering with fresh
innovative footwear styles is resonating with consumers. The innovation
has also lead to remarkable accomplishments in our Skechers Performance
Division with two editorial awards in the first quarter for our Skechers
GO running footwear, and yesterday’s incredible Boston Marathon win for
elite runner and Olympian Meb, who achieved a personal best in Skechers
GOmeb Speed 3 at the event. Meb continues to appear in SKECHERS
Performance Division marketing campaigns, while The Voice winner
Danielle Bradbery, television celebrity Brooke Burke-Charvet, and sport
icons Joe Montana, Mark Cuban and Tommy Lasorda appear in our campaigns
for our lifestyle division. In addition, print ads are running in
magazines and on billboards and kiosks, and we have a strong online and
in-store marketing presence. We are also running many of our product and
lifestyle focused campaigns around the world, further creating global
synergy between product and marketing. We have seen the benefits of
leveraging the strength of our brand, product and marketing across
international markets as first quarter sales achieved double-digits
growth in Europe, Canada, Asia, including China, and many other regions.
We believe this positive trend will continue as the demand for our brand
remains strong globally. We are looking forward to delivering the
remainder of our Spring footwear collection, and introducing new
innovative product for Back-to-School 2014.”
Mr. Weinberg continued: "April has started off very strong in terms of
order rates, revenues and backlogs, all which have accelerated since
year end. This was achieved without impacting our at-once business which
remains at the same levels as last year. We believe this positive trend
will continue through the second quarter and back half of the year as
the demand for our key product initiatives in the United States, Asia,
Europe, the Middle East and South America remains very high. We believe
we are well positioned to maintain this growth with the combination of
$329.4 million in cash, an additional 50 to 60 company-owned SKECHERS
stores opening later this year in addition to the 10 opened in the first
quarter, and more in-line product deliveries in the second quarter and
throughout 2014. Though we believe there may be some upside with the
second quarter sales numbers, we remain comfortable with the analysts’
consensus earnings estimates currently reported for the quarter even
with the shift of media expenses previously discussed.”
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 on Form 10-K for the year ended
December 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)
|
|
|
|
|
|
|
|
March 31,
2014
|
|
December 31,
2013
|
ASSETS
|
|
|
|
|
Current Assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
329,448
|
|
$
|
372,011
|
Trade accounts receivable, net
|
|
|
312,325
|
|
|
225,941
|
Other receivables
|
|
|
9,558
|
|
|
10,599
|
Total receivables
|
|
|
321,883
|
|
|
236,540
|
Inventories
|
|
|
312,201
|
|
|
358,168
|
Prepaid expenses and other current assets
|
|
|
27,447
|
|
|
26,094
|
Deferred tax assets
|
|
|
22,115
|
|
|
22,115
|
Total current assets
|
|
|
1,013,094
|
|
|
1,014,928
|
Property, plant and equipment, at cost, less accumulated
depreciation and amortization
|
|
|
362,575
|
|
|
361,755
|
Goodwill and other intangible assets, less applicable amortization
|
|
|
2,144
|
|
|
2,377
|
Deferred tax assets
|
|
|
1,492
|
|
|
9,950
|
Other assets, at cost
|
|
|
19,519
|
|
|
19,560
|
Total non-current assets
|
|
|
385,730
|
|
|
393,642
|
TOTAL ASSETS
|
|
$
|
1,398,824
|
|
$
|
1,408,570
|
LIABILITIES AND EQUITY
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
Current installments of long-term borrowings
|
|
$
|
12,123
|
|
$
|
12,028
|
Short-term borrowings
|
|
|
87
|
|
|
87
|
Accounts payable
|
|
|
215,428
|
|
|
258,183
|
Accrued expenses
|
|
|
42,105
|
|
|
40,124
|
Total current liabilities
|
|
|
269,743
|
|
|
310,422
|
Long-term borrowings, excluding current installments
|
|
|
113,422
|
|
|
116,488
|
Other long-term liabilities
|
|
|
2,386
|
|
|
1,740
|
Total non-current liabilities
|
|
|
115,808
|
|
|
118,228
|
Total liabilities
|
|
|
385,551
|
|
|
428,650
|
Stockholders’ equity:
|
|
|
|
|
Skechers U.S.A., Inc. equity
|
|
|
962,997
|
|
|
930,322
|
Noncontrolling interests
|
|
|
50,276
|
|
|
49,598
|
Total equity
|
|
|
1,013,273
|
|
|
979,920
|
TOTAL LIABILITIES AND EQUITY
|
|
$
|
1,398,824
|
|
$
|
1,408,570
|
|
|
|
|
|
|
|
|
SKECHERS U.S.A., INC. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
|
(Unaudited)
|
(In thousands, except per share data)
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2014
|
|
|
|
2013
|
|
Net sales
|
|
$
|
546,518
|
|
|
$
|
451,621
|
|
Cost of sales
|
|
|
306,115
|
|
|
|
258,889
|
|
Gross profit
|
|
|
240,403
|
|
|
|
192,732
|
|
Royalty income
|
|
|
3,022
|
|
|
|
1,770
|
|
|
|
|
243,425
|
|
|
|
194,502
|
|
Operating expenses:
|
|
|
|
|
Selling
|
|
|
36,742
|
|
|
|
37,696
|
|
General and administrative
|
|
|
158,523
|
|
|
|
141,468
|
|
|
|
|
195,265
|
|
|
|
179,164
|
|
Earnings from operations
|
|
|
48,160
|
|
|
|
15,338
|
|
Other expense:
|
|
|
|
|
Interest, net
|
|
|
(2,593
|
)
|
|
|
(2,549
|
)
|
Other, net
|
|
|
(1,082
|
)
|
|
|
(2,923
|
)
|
|
|
|
(3,675
|
)
|
|
|
(5,472
|
)
|
Earnings before income taxes
|
|
|
44,485
|
|
|
|
9,866
|
|
Income tax expense
|
|
|
11,437
|
|
|
|
2,278
|
|
Net earnings
|
|
|
33,048
|
|
|
|
7,588
|
|
Less: Net earnings attributable to noncontrolling interest
|
|
|
2,083
|
|
|
|
908
|
|
Net earnings attributable to Skechers U.S.A., Inc.
|
|
$
|
30,965
|
|
|
$
|
6,680
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share attributable to Skechers U.S.A., Inc.:
|
|
|
|
|
Basic
|
|
$
|
0.61
|
|
|
$
|
0.13
|
|
Diluted
|
|
$
|
0.61
|
|
|
$
|
0.13
|
|
|
|
|
|
|
Weighted average shares used in calculating net earnings per share
attributable to Skechers U.S.A., Inc.:
|
|
|
|
|
Basic
|
|
|
50,558
|
|
|
|
50,295
|
|
Diluted
|
|
|
50,844
|
|
|
|
50,492
|
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Copyright Business Wire 2014