Company Website:
http://www.skx.com
MANHATTAN BEACH, Calif. -- (Business Wire)
SKECHERS USA, Inc. (NYSE:SKX), a global footwear leader, today announced
financial results for the first quarter ended March 31, 2018.
First Quarter Highlights
- Record sales of $1.250 billion, an increase of 16.5 percent
- Earnings from operations of $148.8 million, a 19.6 percent increase
- Net earnings of $117.7 million, a 25.2 percent increase, and
diluted earnings per share of $0.75
- International wholesale sales increased 17.9 percent; total
international wholesale and retail sales combined represented 54.0
percent of total sales
- Domestic wholesale sales increased 8.5 percent
- Company-owned global retail sales increased 26.4 percent, with a
comparable same store sales increase of 9.5 percent worldwide
“What a way to start 2018,” began Robert Greenberg, Skechers chief
executive officer. “We truly felt 2017 was a banner year, but yet again
we surpassed our expectations and hit a new quarterly sales record. With
our men’s, women’s and kids’ product growing year-over-year and
resonating with consumers globally, we believe our moment is now. We are
experiencing the continued success of our men’s Skechers Sport, women’s
sandals and men’s and women’s On the Go collections. In addition, with
the global focus on the trend-right Skechers D’lites, we’re seeing this
product turn into a must-have item by accounts and the press, resulting
in new opportunities. From a marketing perspective, we have a new
commercial with chart-topping singer Camila Cabello in our D’lites,
legendary football great Tony Romo in our men’s Relaxed Fit slip on
shoes, and more than a dozen other commercials, including many featuring
our kids’ footwear. Our targeted marketing on air, in print, and
digitally continues to raise awareness of our vast product offering and
drive sales around the world. We’re looking forward to the remainder of
our Spring deliveries, and sharing our results as we move through the
rest of 2018.”
“We achieved yet another record sales quarter and continued to see
significant growth across all our business segments including comp store
sales increases of 9.5 percent worldwide,” stated David Weinberg, chief
operating officer of Skechers. “During the first quarter, our North
American Distribution Center experienced a record month for shipment
volume, a testament to the strength in our wholesale and retail
businesses in the United States and Canada. Further, our European
Distribution Center experienced a record quarter for shipment volume, an
indication of the strength of our operations in that region. Our
international subsidiary and joint venture businesses are driving our
growth with a combined quarterly increase of 25.7 percent, and there are
now 2,197 Company-owned or third-party Skechers stores outside the
United States. Now at 54.0 percent of our total business, we continue to
see international as our greatest growth opportunity.”
|
| |
| |
First Quarter 2018 Financial Results |
($ in millions, except per share data) |
| | | |
|
| | For the three-months ended |
|
|
| March 31, | Change |
| | |
| | | |
| |
| |
| 2018 |
| |
| 2017 |
| |
| $ | | % |
Sales
| |
$
|
1,250.1
| | |
$
|
1,072.8
| | |
$
|
177.3
| |
16.5
|
%
|
Gross Profit
| | |
583.1
| | | |
476.5
| | | |
106.6
| |
22.4
|
%
|
Gross Margin | | | 46.7 | % | | | 44.4 | % | | | | |
SG&A Expenses
| | |
439.8
| | | |
356.3
| | | |
83.5
| |
23.4
|
%
|
As a % of Sales | | | 35.2 | % | | | 33.2 | % | | | | |
Earnings from Operations
| | |
148.8
| | | |
124.4
| | | |
24.4
| |
19.6
|
%
|
Operating Margin | | | 11.9 | % | | | 11.6 | % | | | | |
Net Earnings
| | |
117.7
| | | |
94.0
| | | |
23.7
| |
25.2
|
%
|
Diluted Earnings per Share
| |
$
|
0.75
| | |
$
|
0.60
| | |
$
|
0.15
| |
25.0
|
%
|
| | | | | | | | | | | | | |
|
Sales grew 16.5 percent as a result of a 17.9 percent increase in the
Company’s international wholesale business, an 8.5 percent
increase in the Company’s domestic wholesale business, and a 26.4
percent increase in its Company-owned global retail business. Comparable
same store sales in Company-owned stores worldwide increased 9.5
percent, including 7.0 percent in the United States and 17.6 percent
internationally, as compared to the first quarter of 2017.
Gross margins increased due to strength in the Company’s
international subsidiary and Company-owned international retail
businesses.
SG&A expenses increased 23.4 percent. This increase was
due to an additional $72.9 million in general and administrative
expenses, including $37.4 million to support international growth in
the Company’s joint venture and subsidiary businesses, and $18.3 million
associated with operating 73 additional Company-owned Skechers stores,
of which 15 opened in the first quarter. Selling expenses increased
by $10.6 million primarily due to higher international advertising
expenses.
Earnings from operations increased $24.4 million, or 19.6 percent.
Net earnings were $117.7 million and diluted earnings per share
were $0.75. In the first quarter, the Company’s income tax rate was 9.6
percent, reflecting certain discrete tax benefits primarily associated
with a refinement in understanding of the various provisions of the Tax
Cuts & Jobs Act (“TCJA”). The benefit of these discrete tax items to the
Company’s diluted earnings per share was approximately $0.07 cents per
share.
Balance Sheet
At quarter-end, cash and cash equivalents were $700.1 million, a
decrease of $36.4 million, or 4.9 percent, from December 31, 2017, and
an increase of $92.3 million, or 15.2 percent, over March 31, 2017.
Total inventory, including inventory in transit, was $800.3
million, a $72.7 million decrease over December 31, 2017, and a $214.5
million increase over March 31, 2017.
Working capital was $1.6 billion at March 31, 2018, a $100
million increase over December 31, 2017, and a $300 million increase
over March 31, 2017.
“Our global growth strategy continues to yield positive results,” said
John Vandemore, chief financial officer of Skechers. “We continue to
invest in our global capabilities and remain poised to capitalize on
consumer trends. We also continue to execute our capital allocation
philosophy as evidenced by our on-going investment in our
direct-to-consumer offerings and our share repurchases in the quarter.”
Share Repurchase
During the three months ended March 31, 2018, the Company repurchased
approximately 76,000 shares of its Class A common stock at a cost of
$3.0 million under its existing share repurchase program. At March 31,
2018, approximately $147.0 million remained available under the
Company’s share repurchase program.
Outlook
For the second quarter of 2018, the Company believes it will achieve
sales in the range of $1.120 billion to $1.145 billion, and diluted
earnings per share of $0.38 to $0.43. The estimated quarterly sales
includes an expected shift in shipments from the second quarter to the
back half of the year for several key international distributors and
domestic accounts. Based on current expectations, the Company continues
to anticipate that its 2018 annual tax rate will be in the range of 12
percent to 17 percent.
First Quarter 2018 Conference Call
The Company will host a conference call today at 1:30 p.m. PT / 4:30
p.m. Eastern Time to discuss its first quarter 2018 financial results.
The call can be accessed on the Investor Relations section of the
Company’s website at www.skx.com.
For those unable to participate during the live broadcast, a replay will
be available beginning April 19, 2018, at 7:30 p.m. ET, through May 3,
2018, at 11:59 p.m. ET. To access the replay, dial 844-512-2921 (U.S.)
or 412-317-6671 (International) and use passcode: 13655455.
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 and over 170
countries and territories worldwide via department and specialty stores,
2,651 SKECHERS Company-owned and third-party-owned retail stores, and
the Company’s e-commerce websites. The Company manages its international
business through a network of global distributors, joint venture
partners in Asia and the Middle East, and wholly-owned subsidiaries in
Canada, Japan, throughout Europe and Latin America. For more
information, please visit skechers.com and follow us on Facebook
(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, Skechers’ future domestic and international growth,
financial results and operations including expected net sales and
earnings, its development of new products, future demand for its
products, its planned domestic and international expansion, opening of
new stores and additional expenditures, and 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 international economic,
political and market conditions including the challenging consumer
retail markets in the United States; 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, especially in the
highly competitive performance footwear market; 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, 2017. The risks included here are not exhaustive. Skechers
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, 2018 | | December 31, 2017 |
ASSETS | | | | |
Current Assets:
| | | | |
Cash and cash equivalents
| |
$
|
700,071
| |
$
|
736,431
|
Trade accounts receivable, net
| | |
692,569
| | |
405,921
|
Other receivables
| |
|
31,271
| |
|
27,083
|
Total receivables
| | |
723,840
| | |
433,004
|
Inventories
| | |
800,323
| | |
873,016
|
Prepaid expenses and other current assets
| |
|
68,920
| |
|
62,573
|
Total current assets
| | |
2,293,154
| | |
2,105,024
|
Property, plant and equipment, net
| | |
552,540
| | |
541,601
|
Deferred tax assets
| | |
29,575
| | |
29,922
|
Other assets
| |
|
60,715
| |
|
58,535
|
Total non-current assets
| |
|
642,830
| |
|
630,058
|
TOTAL ASSETS
| | $ | 2,935,984 | | $ | 2,735,082 |
LIABILITIES AND EQUITY | | | | |
Current Liabilities:
| | | | |
Current installments of long-term borrowings
| |
$
|
1,805
| |
$
|
1,801
|
Accounts payable
| | |
524,427
| | |
505,334
|
Short-term borrowings
| | |
12,200
| | |
8,011
|
Accrued expenses
| |
|
135,588
| |
|
82,202
|
Total current liabilities
| | |
674,020
| | |
597,348
|
Long-term borrowings, net of current installments
| | |
70,646
| | |
71,103
|
Deferred tax liabilities
| | |
161
| | |
161
|
Other long-term liabilities
| |
|
107,832
| |
|
118,259
|
Total non-current liabilities
| |
|
178,639
| |
|
189,523
|
Total liabilities
| | |
852,659
| | |
786,871
|
Stockholders’ equity:
| | | | |
Skechers U.S.A., Inc. equity
| | |
1,946,170
| | |
1,829,064
|
Noncontrolling interests
| |
|
137,155
| |
|
119,147
|
Total equity
| |
|
2,083,325
| |
|
1,948,211
|
TOTAL LIABILITIES AND EQUITY
| | $ | 2,935,984 | | $ | 2,735,082 |
| | | | | |
|
|
| | |
SKECHERS U.S.A., INC. AND SUBSIDIARIES | |
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS | |
(Unaudited) | |
(In thousands, except per share data) | |
| | |
|
| | Three Months Ended March 31, | |
| |
| 2018 |
|
|
| 2017 |
| |
Net sales
| |
$
|
1,250,078
| | |
$
|
1,072,808
| | |
Cost of sales
| |
|
666,974
|
| |
|
596,310
|
| |
Gross profit
| | |
583,104
| | | |
476,498
| | |
Royalty income
| |
|
5,522
|
| |
|
4,230
|
| |
| |
|
588,626
|
| |
|
480,728
|
| |
Operating expenses:
| | | | | |
Selling
| | |
84,446
| | | |
73,809
| | |
General and administrative
| |
|
355,381
|
| |
|
282,496
|
| |
| |
|
439,827
|
| |
|
356,305
|
| |
Earnings from operations
| | |
148,799
| | | |
124,423
| | |
Other income (expense):
| | | | | |
Interest, net
| | |
(323
|
)
| | |
(1,077
|
)
| |
Other, net
| |
|
3,403
|
| |
|
696
|
| |
| |
|
3,080
|
| |
|
(381
|
)
| |
Earnings before income tax expense
| | |
151,879
| | | |
124,042
| | |
Income tax expense
| |
|
14,621
|
| |
|
17,407
|
| |
Net earnings
| | |
137,258
| | | |
106,635
| | |
Less: Net earnings attributable to noncontrolling interests
| |
|
19,606
|
| |
|
12,640
|
| |
Net earnings attributable to Skechers U.S.A., Inc.
| |
$
|
117,652
|
| |
$
|
93,995
|
| |
| | | | |
|
| | | | |
|
Net earnings per share attributable to Skechers U.S.A., Inc.:
| | | | | |
Basic
| |
$
|
0.75
|
| |
$
|
0.61
|
| |
Diluted
| |
$
|
0.75
|
| |
$
|
0.60
|
| |
| | | | |
|
Weighted average shares used in calculating earnings per share
attributable to Skechers U.S.A., Inc.:
| | | | | |
Basic
| |
|
156,433
|
| |
|
155,097
|
| |
Diluted
| |
|
157,630
|
| |
|
155,927
|
| |
| | | | | | | | |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20180419006355/en/
Contacts:
Company Contact:
SKECHERS USA, Inc.
David Weinberg
Chief
Operating Officer
John Vandemore
Chief Financial Officer
(310)
318-3100
or
Investor Relations:
Addo Investor Relations
Andrew
Greenebaum
(310) 829-5400
or
Press:
Jennifer Clay
Vice
President of
Corporate Communications
(310) 318-3100
Source: SKECHERS USA, Inc.
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