23 Apr Skechers Q1 Revenues Catapult 41 Percent
Skechers USA Inc. reported sales rose 40.5 percent in its first quarter, to $546.5 million in the first quarter from $546.5 million in the first quarter of 2014.
Gross profit for the first quarter of 2015 was $332.5 million, or 43.3 percent of net sales, compared to $240.4 million, or 44.0 percent of net sales in the first quarter of 2014. Earnings from operations for the first quarter of 2015 were $88.2 million, or 11.5 percent of net sales, compared to net earnings from operations of $48.2 million, or 8.8 percent of net sales, for the first quarter of 2014.
“Skechers’ first quarter net sales of $768.0 million mark the highest quarterly revenues in the company’s history. The net sales growth of 40.5 percent, which was against a previous record first quarter net sales in 2014, is attributable to the continued strong demand for our lifestyle, performance and kids’ footwear from both our customers and consumers around the world,” began David Weinberg, chief operating officer and chief financial officer. “The sales results are attributable to double-digit increases in our domestic and international wholesale businesses, and our worldwide company-owned retail business, as well as single-digit increases in our ecommerce business. Additionally, for the quarter, our total company-owned retail store comps were up over nine percent and our domestic wholesale business saw an average price per pair increase of $1.27 or 5.9 percent.”
Weinberg continued: “We achieved this growth despite significant headwinds, which included the strengthening U.S. dollar, unseasonably cold weather in many markets, and the slowdown at the West Coast ports. Further, our European Distribution Center was operating less efficiently than we had originally anticipated due to the transition to a new automation system combined with stronger than expected sales in the region. Additionally, to manage the increased demand and shipments, we are expanding our European Distribution Center by over 500,000 square feet, increasing it to more than one million square feet by the first quarter 2016.”
Net earnings in the first quarter of 2015 were $56.1 million compared to net earnings of $31.0 million for the first quarter of 2014. Net earnings per diluted share in the first quarter 2015 were $1.10 based on 51.1 million weighted average shares outstanding compared to a diluted net earnings per share of $0.61 based on 50.8 million weighted average shares outstanding for the same period in the prior year.
Robert Greenberg, Skechers chief executive officer, commented: “Having just achieved a new annual sales record of $2.4 billion in 2014, we expected the momentum to continue into 2015. We attribute this success to our constant development of fresh and innovative products that are appealing to a widening audience around the world, the continued marketing support we provide for every key product category, the diverse global distribution strategy, and, finally, our tremendous logistical support and inventory management. Our expanding product line and marketing focus is broadening our demographic reach, including Demi Lovato to tweens and teens as she supports our Skechers Sport line, to avid golfers as Matt Kuchar plays in Skechers GO Golf, and to tech savvy kids with Game Kicks, the shoe with a memory game built in. Along with marketing campaigns for these collections, we ran a Relaxed Fit Footwear commercial starring Pete Rose during the Super Bowl, and introduced many new commercials in support of our Spring collection, including Stretch Fit with Brooke Burke-Charvet and Skechers Memory Foam with British actress and model Kelly Brook, who is now appearing on the NBC comedy One Big Happy. Already this month, we debuted our new Ringo Starr Relaxed Fit Footwear campaign and Meb, winner of the 2014 Boston Marathon, appeared in Skechers GOmeb Speed 3 on the cover of Runner’s World. We are also airing many of our product and lifestyle focused campaigns around the world, creating global synergy between product and marketing. Now, more than ever, we are seeing many of the same products resonating across six continents, and quickly leveraging the success we are experiencing in the United States to global markets. This resulted in international sales growth of 59 percent in the first quarter, which comprised 37 percent of our total sales for the quarter, bringing us closer to our goal of international sales representing 50 percent of our business. Our Skechers stores, at 1,063 at quarter-end—including 610 international locations owned by distributors or franchisees, continue to be an important part of our brand building and growth strategy, and we expect to grow the total Skechers store base to approximately 1,250 by year-end 2015. With the demand for our key product initiatives in the United States, Asia, Europe, the Middle East and South America remaining very high, we believe the growth that we experienced in the first quarter will continue in 2015.”
Weinberg added: “Our record 2015 first quarter and a strong start to April in terms of revenues and backlogs, including double-digit domestic and international retail comps, leads us to believe that our accelerated growth trend will continue through the second quarter and into the back half of 2015. We believe we are well positioned to maintain this growth with the combination of $396.7 million in cash, in-line inventory levels, and the expectation of an additional 155 to 175 Skechers distributor-, joint venture-, franchisee- and company-owned stores opening later this year in addition to the 39 opened in the first quarter. We are looking forward to what we believe will be record sales for a second quarter, delivering our back-to-school product, and a new annual sales record. We are comfortable with analysts’ estimates for the second quarter, and we see upside opportunity in the third quarter.”