SKECHERS USA, Inc. (NYSE:SKX), a global leader in footwear, today
announced financial results for the second quarter ended June 30, 2014.
Second quarter 2014 net sales were $587.1 million compared to $428.2
million for the second quarter of 2013. Gross profit for the second
quarter of 2014 was $269.4 million or 45.9 percent of net sales compared
to $194.9 million or 45.5 percent of net sales for the second quarter of
last year. Earnings from operations for the second quarter of 2014 were
$53.8 million compared to net earnings from operations of $17.2 million
for the second quarter of 2013. Due to Easter falling later in Spring,
the Company shifted a portion of its advertising expenses to the second
quarter of 2014; even with the shift, advertising expenses on a
percentage basis were flat versus the second quarter of 2013.
“The strength of our new product combined with the power of our
marketing and diverse distribution resulted in a 37.1 percent sales
increase over last year’s second quarter and the highest quarterly
revenues in the Company’s 22-year history. These results followed a
record first quarter, resulting in a 28.8 percent net sales increase for
the first six months of 2014,” began David Weinberg, chief operating
officer and chief financial officer. “The strong sales are attributable
to fresh styles across our lifestyle, performance and kids’ categories,
and the demand for our product resulted in a positive shift of our
Back-to-School domestic wholesale and international subsidiary shipments
originally scheduled for July into June. We achieved double-digit
increases in our domestic wholesale business, which included a
four percent increase in average price per pair; double-digit increases
in our international wholesale business, with some markets up triple
digits; and double-digit growth in our Company-owned retail stores,
which achieved a 13.9 percent comparable quarter net sales increase. We
are pleased with our financial achievements in our businesses worldwide
as is evidenced by our operating margin of 9.2 percent for the second
quarter.”
Net earnings in the second quarter of 2014 were $34.8 million compared
to net earnings of $7.1 million for the second quarter of 2013. Diluted
net earnings per share in the second quarter of 2014 were $0.68 based on
50,914,000 weighted average shares outstanding compared to diluted net
earnings per share of $0.14 based on 50,497,000 weighted average shares
outstanding for the same period last year.
For the six months ended June 30, 2014, net sales were $1.134 billion
compared to net sales of $879.9 million in the first six months of 2013.
Gross profit for the first six months of 2014 was $509.8 million or 45.0
percent of net sales, compared to $387.6 million or 44.1 percent of net
sales for the first six months of 2013. Earnings from operations for the
first six months of 2014 were $101.9 million, compared to net earnings
from operations of $32.5 million for the same period last year.
Net earnings in the first six months of 2014 were $65.8 million compared
to net earnings of $13.8 million in the same period last year. Diluted
net earnings per share were $1.29 based on 50,879,000 weighted average
common shares outstanding compared to diluted net earnings per share of
$0.27 based on 50,494,000 weighted average common shares outstanding for
the first six months of 2013.
Robert Greenberg, SKECHERS chief executive officer, commented: “For the
months of both April and June, the Princeton Retail Analysis called
Skechers the ‘hottest major footwear brand,’ noting our overall sales
growth in several categories including casual and walking shoes. Many of
our key accounts visiting our corporate offices this month and our
international distribution partners who spent four days reviewing our
collections last month are echoing the same sentiment due to our
multiple new product initiatives for men, women and kids. The
innovations with our Spring 2014 product resulted in successes from
every division, including triple digit growth in some categories. As
always, we supported our extensive product offering with targeted
animated, lifestyle and celebrity focused television campaigns,
including a new commercial starring Joe Montana, and the continuation of
our Meb spot supporting the Olympian’s incredible win at the Boston
Marathon. We have expanded our team of Skechers ambassadors with the
addition of sports legends Pete Rose and Joe Namath for our Relaxed Fit
from Skechers line, professional golfer Matt Kuchar and Olympic runner
Kara Goucher for our Skechers Performance Division, and we recently
signed superstar singer and actress Demi Lovato and one of Britain’s top
models Kelly Brook for our women’s lines—all of whom will appear in
marketing campaigns this year and next. Looking for unique marketing
opportunities, we capitalized on the fame of California Chrome by
sponsoring the horse racing triple-crown hopeful, resulting in a
windfall of press. We believe our marketing and footwear is resonating
with consumers globally. We ended 2013 with our second highest annual
sales ever, started the year with record first quarter sales, and have
just achieved a new record sales quarter with growth across all our
distribution channels. In addition, in the second quarter we received
Best Lifestyle Brand of the Year from the Sports Trade Awards in the UK,
and two product awards from Competitor magazine. Given the broad product
acceptance we achieved through the first half of 2014, we believe the
momentum will continue through the second half of 2014. We are looking
forward to delivering the remainder of our Back-to-School footwear, and
continuing to introduce new innovative product.”
Mr. Weinberg continued: "From a product, marketing and distribution
standpoint, the Company has never been better positioned. The record
first half of 2014 along with continued increased backlogs at the end of
June, incoming order rate and revenues in July leads us to believe that
our record quarterly sales trend will continue for the balance of the
year. Further evidence is our position in the market as reported by
SportScanInfo: for the week of July 12, Skechers held the number two
position in Women’s Sport footwear sold in the United States. We believe
the demand for our product is universal based on our sales growth across
a number of continents. With $414.8 million in cash, 40 to 50
Company-owned Skechers stores planned to open later this year, in
addition to the 16 that opened in the second quarter and the two that
have already opened this month, and another 60 to 65 Skechers stores
planned to open through our distributors and franchise partners, as well
as the expansion and automation plans for our European Distribution
Center, we believe we are in a great position for continued growth. We
remain comfortable with the analysts’ current consensus estimates for
the third quarter even though we are up against a tougher comparison and
there was a pull forward of domestic and international wholesale volume
from the third quarter to the second quarter of 2014.”
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, 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 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, and its Form 10-Q for the quarter ended March 31,
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.
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SKECHERS U.S.A., INC. AND SUBSIDIARIES
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CONDENSED CONSOLIDATED BALANCE SHEETS
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(Unaudited)
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(In thousands)
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|
|
|
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|
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June 30,
2014
|
|
December 31,
2013
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ASSETS
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Current Assets:
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Cash and cash equivalents
|
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$
|
414,808
|
|
$
|
372,011
|
Trade accounts receivable, net
|
|
|
318,460
|
|
|
225,941
|
Other receivables
|
|
|
10,667
|
|
|
10,599
|
Total receivables
|
|
|
329,127
|
|
|
236,540
|
Inventories
|
|
|
360,491
|
|
|
358,168
|
Prepaid expenses and other current assets
|
|
|
37,094
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|
|
26,094
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Deferred tax assets
|
|
|
22,115
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|
|
22,115
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Total current assets
|
|
|
1,163,635
|
|
|
1,014,928
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Property, plant and equipment, at cost, less accumulated
depreciation and amortization
|
|
|
364,746
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|
|
361,755
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Goodwill and other intangible assets, less applicable amortization
|
|
|
1,910
|
|
|
2,377
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Deferred tax assets
|
|
|
1,624
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|
|
9,950
|
Other assets, at cost
|
|
|
19,420
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|
|
19,560
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Total non-current assets
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|
387,700
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|
|
393,642
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TOTAL ASSETS
|
|
$
|
1,551,335
|
|
$
|
1,408,570
|
|
|
|
|
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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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$
|
12,218
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$
|
12,028
|
Short-term borrowings
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|
|
184
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|
|
87
|
Accounts payable
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|
314,196
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|
258,183
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Accrued expenses
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|
|
44,283
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|
|
40,124
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Total current liabilities
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370,881
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|
|
310,422
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Long-term borrowings, excluding current installments
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|
110,331
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|
116,488
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Other long-term liabilities
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|
15,081
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|
|
1,740
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Total non-current liabilities
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|
125,412
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|
|
118,228
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Total liabilities
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|
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496,293
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|
|
428,650
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Stockholders’ equity:
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Skechers U.S.A., Inc. equity
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1,001,817
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930,322
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Noncontrolling interests
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53,225
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|
|
49,598
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Total equity
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|
1,055,042
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|
979,920
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TOTAL LIABILITIES AND EQUITY
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$
|
1,551,335
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|
$
|
1,408,570
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|
|
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|
|
|
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SKECHERS U.S.A., INC. AND SUBSIDIARIES
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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(Unaudited)
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(In thousands, except per share data)
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Three Months Ended June 30,
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Six Months Ended June 30,
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2014
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2013
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2014
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2013
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Net sales
|
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$
|
587,051
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$
|
428,247
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$
|
1,133,569
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$
|
879,868
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Cost of sales
|
|
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317,676
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|
|
233,353
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|
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623,791
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492,242
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Gross profit
|
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269,375
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194,894
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509,778
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387,626
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Royalty income
|
|
|
1,836
|
|
|
|
1,424
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|
|
|
4,858
|
|
|
|
3,194
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|
|
|
|
271,211
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|
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196,318
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514,636
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390,820
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Operating expenses:
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Selling
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53,839
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|
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42,088
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|
|
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90,581
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|
|
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79,784
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General and administrative
|
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|
163,616
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|
|
|
137,066
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|
|
|
322,139
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|
|
|
278,534
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|
|
|
|
217,455
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|
|
|
179,154
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|
|
|
412,720
|
|
|
|
358,318
|
|
Income from operations
|
|
|
53,756
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|
|
|
17,164
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|
|
|
101,916
|
|
|
|
32,502
|
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Other income (expense):
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|
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|
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Interest, net
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|
|
(3,459
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)
|
|
|
(2,991
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)
|
|
|
(6,052
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)
|
|
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(5,540
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)
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Other, net
|
|
|
148
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|
|
|
(695
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)
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|
|
(934
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)
|
|
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(3,618
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)
|
|
|
|
(3,311
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)
|
|
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(3,686
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)
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|
|
(6,986
|
)
|
|
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(9,158
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)
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Earnings before income taxes
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50,445
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|
|
|
13,478
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|
|
|
94,930
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|
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23,344
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Income tax expense
|
|
|
12,232
|
|
|
|
4,632
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|
|
|
23,669
|
|
|
|
6,910
|
|
Net earnings
|
|
|
38,213
|
|
|
|
8,846
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|
|
|
71,261
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|
|
|
16,434
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Less: Net earnings attributable to noncontrolling interests
|
|
|
3,411
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|
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|
1,752
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|
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5,494
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|
|
|
2,660
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Net earnings attributable to Skechers U.S.A., Inc.
|
|
$
|
34,802
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|
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$
|
7,094
|
|
|
$
|
65,767
|
|
|
$
|
13,774
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|
|
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|
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Net earnings per share attributable to Skechers U.S.A., Inc.:
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Basic
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$
|
0.69
|
|
|
$
|
0.14
|
|
|
$
|
1.30
|
|
|
$
|
0.27
|
|
Diluted
|
|
$
|
0.68
|
|
|
$
|
0.14
|
|
|
$
|
1.29
|
|
|
$
|
0.27
|
|
|
|
|
|
|
|
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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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|
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Basic
|
|
|
50,565
|
|
|
|
50,298
|
|
|
|
50,562
|
|
|
|
50,297
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|
Diluted
|
|
|
50,914
|
|
|
|
50,497
|
|
|
|
50,879
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|
|
|
50,494
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Copyright Business Wire 2014