Exhibit 99.1

FOR IMMEDIATE RELEASE

 

Company Contact:

 

David Weinberg

Chief Operating Officer

John Vandemore

Chief Financial Officer

SKECHERS USA, Inc.

(310) 318-3100

 

Investor Relations:

 

Andrew Greenebaum

Addo Investor Relations

(310) 829-5400

 

Press:

 

Jennifer Clay

Vice President,

Corporate Communications

SKECHERS USA, Inc.

(310) 318-3100

 

 

 

 

 

SKECHERS ANNOUNCES THIRD QUARTER 2020 FINANCIAL RESULTS

 

 

 

MANHATTAN BEACH, CA. – October 29, 2020 – SKECHERS USA, Inc. (NYSE:SKX), a global footwear leader, today announced financial results for the third quarter ended September 30, 2020.

 

Third Quarter Highlights

 

Sales of $1.30 billion, a 3.9 percent decrease year-over-year, but a 78.3 percent increase from second quarter 2020

 

Domestic wholesale business grew 6.3 percent year-over-year

 

Diluted earnings per share were $0.41 and adjusted diluted earnings per share were $0.53

 

China sales grew 23.9 percent year-over-year

 

Cash, cash equivalents and investments were $1.50 billion at quarter-end

 

 

 

“As we continued to navigate through the global pandemic in the third quarter, we capitalized on our core strengths of comfort, style, innovation and quality at a reasonable price,” began Robert Greenberg, chief executive officer of Skechers. “Skechers integrates these strengths into every collection and makes them accessible to consumers globally. Whether people continue to work remotely or return to their offices, we offer them a brand they know and trust to deliver the comfort they want. Our men’s and women’s athletic casual footwear and sandal styles experienced the strongest growth. Further, we grew our Skechers Kids business in North America despite delays to in-person classroom learning for many kids. We continue to drive sales and support our retail partners through marketing efforts that drive product awareness and inspire consumers to shop online and in stores. In the third quarter, this included the launch of our commercial featuring Dodgers ace pitcher and world champion Clayton Kershaw. Though the pandemic is still impacting economies around the world, we are confident in our product offering and our team’s ability to drive sales around the world.”

 


Our third quarter sales were a significant accomplishment during a challenging period. As countries emerged from the crisis, Skechers experienced meaningful sequential sales improvement from the second quarter of 78.3 percent. We also saw a return to growth in many markets and a positive sequential trend in the quarter with September being our strongest month. This resulted in third quarter revenues of $1.30 billion, just a 3.9 percent decrease over the same period last year,” stated David Weinberg, chief operating officer of Skechers. “Our domestic wholesale business returned to mid-single digit growth as our accounts replenished with product that was in demand, and key international markets also experienced growth—especially China, Germany and Australia with strong double-digit increases. The demand in our ecommerce channels continued and we also saw strength in our re-opened big box stores. In the third quarter, we offered consumers alternative means to shop for Skechers through the launch of a new initiative to buy product online and pick up in store or curbside at Skechers retail locations across the United States. We also opened 24 Company-owned stores planned prior to COVID—including flagship locations on Rue de Rivoli in Paris, Oxford Circus in London, Shinjuku in Tokyo, and two stores in Colombia, bringing our store count to 3,770. To fuel future growth in our business, we continue to invest in our infrastructure, expanding our distribution centers in Europe and North America, opening a new logistic center in the United Kingdom, and nearing completion of our distribution center in China. Despite this difficult year, we believe our focus on building our digital initiatives and supply chain while delivering comfortable footwear globally, will result in an even stronger brand as the world continues to normalize.”  

 

Third Quarter 2020 Financial Results

  (Dollars in millions, except per share data)

 

 

Three months ended

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

 

Change

 

 

 

2020

 

 

2019

 

 

$

 

 

%

 

Sales

 

$

1,300.9

 

 

$

1,354.0

 

 

$

(53.1

)

 

 

(3.9

%)

Gross profit

 

 

625.1

 

 

 

653.1

 

 

 

(28.0

)

 

 

(4.3

%)

Gross margin

 

 

48.1

 

%

 

48.2

 

%

 

 

 

 

 

 

 

SG&A expenses

 

 

536.2

 

 

 

511.9

 

 

 

24.3

 

 

 

4.7

%

As a % of sales

 

 

41.2

 

%

 

37.8

 

%

 

 

 

 

 

 

 

Earnings from operations

 

 

92.1

 

 

 

147.4

 

 

 

(55.3

)

 

 

(37.5

%)

Operating margin

 

 

7.1

 

%

 

10.9

 

%

 

 

 

 

 

 

 

Net earnings

 

 

64.3

 

 

 

103.1

 

 

 

(38.8

)

 

 

(37.6

%)

Diluted earnings per share

 

$

0.41

 

 

$

0.67

 

 

$

(0.26

)

 

 

(38.8

%)

Adjusted diluted earnings per share

 

$

0.53

 

 

$

0.67

 

 

$

(0.14

)

 

 

(20.9

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales decreased 3.9 percent as a result of a 4.1 percent decrease in the Company’s international business and a 3.7 percent decrease in its domestic business. Declines in the Company’s international business were driven by lower distributor and retail sales, partially offset by increases in its joint venture and subsidiary sales, including growth of 23.9 percent in China and 18.1 percent in Europe. Declines in the Company’s domestic business were driven by lower retail sales, partially offset by growth of 172.1 percent in ecommerce sales and growth in its domestic wholesale business.

 

The Company’s domestic wholesale sales increased 6.3 percent, international wholesale sales decreased 0.5 percent and its direct-to-consumer business decreased 16.9 percent. Direct-to-consumer comparable same store sales decreased 22.1 percent, including decreases of 20.4 percent domestically and 26.1 percent internationally.  

 

Gross margins remained relatively flat at 48.1 percent as a result of higher promotional activity internationally, partially offset by favorable mix of online and international sales.

 


SG&A expenses increased $24.3 million, or 4.7 percent in the quarter. Selling expenses decreased by $11.6 million, or 11.9 percent, primarily due to lower global marketing expenses. General and administrative expenses increased by $35.9 million, or 8.7 percent. The increase was primarily the result of an $18.2 million one-time, non-cash compensation charge related to the cancellation of restricted share grants associated with a legal settlement, as well as volume driven increases in warehouse and distribution expenses in both its international and domestic businesses.

 

Earnings from operations decreased $55.3 million, or 37.5 percent, to $92.1 million.  

 

Net earnings were $64.3 million and diluted earnings per share were $0.41. Adjusted to exclude the effects of the one-time non-cash compensation charge, adjusted net earnings were $82.6 million and adjusted diluted earnings per share were $0.53.

 

In the third quarter, the Company’s effective income tax rate was 15.4 percent.

 

“Skechers third quarter results illustrate the strength and resilience of our brand, as business across the globe began to recover from the effects of the global pandemic. There were many bright spots, from a return to growth in our domestic wholesale channel and continued strength in e-commerce to resurgent growth in China and Europe,” said John Vandemore, chief financial officer of Skechers. “We continue to invest for growth, including increased penetration in our direct-to-consumer channel, evident in new stores and an enhanced digital presence, as well as improved global distribution infrastructure. We firmly believe that our focused strategy on global growth and deeper, direct relationships with consumers, coupled with our financial strength and operational capabilities, will translate into long-term growth for the Skechers brand.”

 

 

 

Nine Months 2020 Financial Results

  (Dollars in millions, except per share data)

 

 

Nine Months ended

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

 

Change

 

 

 

2020

 

 

2019

 

 

$

 

 

%

 

Sales

 

$

3,272.7

 

 

$

3,889.3

 

 

$

(616.6

)

 

 

(15.9

%)

Gross profit

 

 

1,541.4

 

 

 

1,853.4

 

 

 

(312.0

)

 

 

(16.8

%)

Gross margin

 

 

47.1

 

%

 

47.7

 

%

 

 

 

 

 

 

 

SG&A expenses

 

 

1,476.5

 

 

 

1,446.9

 

 

 

29.6

 

 

 

2.0

%

As a % of sales

 

 

45.1

 

%

 

37.2

 

%

 

 

 

 

 

 

 

Earnings from operations

 

 

76.0

 

 

 

424.4

 

 

 

(348.4

)

 

 

(82.1

%)

Operating margin

 

 

2.3

 

%

 

10.9

 

%

 

 

 

 

 

 

 

Net earnings

 

 

45.3

 

 

 

287.0

 

 

 

(241.7

)

 

 

(84.2

%)

Diluted earnings per share

 

$

0.29

 

 

$

1.86

 

 

$

(1.57

)

 

 

(84.4

%)

Adjusted diluted earnings per share

 

$

0.41

 

 

$

1.86

 

 

$

(1.45

)

 

 

(78.0

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the first nine months, sales decreased 15.9 percent, reflecting the impact of the global pandemic on its businesses worldwide.

 

Gross margins decreased 60 basis points to 47.1 percent due to lower international gross margins as a result of higher promotional activity.  

 

SG&A expenses increased by 2.0 percent or $29.6 million. Selling expenses decreased by 21.7 percent or $61.0 million, primarily due to lower advertising and marketing expenses globally. General and administrative expenses increased by 7.8 percent or $90.6 million, primarily driven by increased warehouse and distribution expenses for both international and domestic businesses, and an $18.2 million one-time, non-cash compensation charge related to the cancellation of restricted share grants associated with a legal settlement.

 


Earnings from operations decreased $348.4 million, or 82.1 percent, to $76.0 million.  

 

Net earnings were $45.3 million and diluted earnings per share were $0.29. Adjusted to exclude the effects of the one-time non-cash compensation charge, adjusted net earnings were $63.6 million and adjusted diluted earnings per share were $0.41.

 

 

Balance Sheet

At quarter-end, cash, cash equivalents and investments totaled $1.50 billion, an increase of $468.2 million, or 45.4 percent from December 31, 2019, and an increase of $478.1 million, or 46.8 percent, over September 30, 2019. The increase primarily reflects the drawdown of $490.0 million from the Company’s senior unsecured credit facility in the first quarter.

 

Total inventory was $1.05 billion, a decrease of $16.5 million or 1.5 percent from December 31, 2019, and an increase of $163.0 million or 18.3 percent over September 30, 2019. The higher year-over-year inventory levels primarily reflect growth in its international markets, particularly in China for the upcoming Single’s Day holiday.

 

 

Outlook

The Company is not providing further financial guidance at this time given the ongoing business disruption and substantial uncertainty surrounding the impact of the pandemic on its business globally.

 

Store Count

 

 

Number of Store Locations as of

 

 

 

 

 

 

 

 

 

 

Number of Store Locations as of

 

 

 

June 30,

2020

 

 

Opened

 

 

Closed(1)

 

 

September 30, 2020

 

Company-owned domestic stores

 

 

510

 

 

 

12

 

 

 

-

 

 

 

522

 

Company-owned international stores

 

 

308

 

 

 

12

 

 

 

(1

)

 

 

319

 

Joint-venture stores

 

 

390

 

 

 

35

 

 

 

(4

)

 

 

421

 

Distributor, licensee and franchise stores

 

 

2,407

 

 

 

154

 

 

 

(53

)

 

 

2,508

 

Total Skechers stores

 

 

3,615

 

 

 

213

 

 

 

(58

)

 

 

3,770

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Does not reflect temporary closures due to the COVID-19 pandemic.

 

Third Quarter 2020 Conference Call

The Company will host a conference call today at 1:30 p.m. Pacific Time / 4:30 p.m. Eastern Time to discuss its third quarter 2020 financial results. The call can be accessed on the Investor Relations section of the Company’s website at investors.skechers.com. For those unable to participate during the live broadcast, a replay will be available beginning October 29, 2020 at 7:30 p.m. ET, through November 12, 2020, at 11:59 p.m. ET. To access the replay, dial 844-512-2921 (U.S.) or 412-317-6671 (International) and use passcode: 10011381.

 

About SKECHERS USA, Inc.

Based in Manhattan Beach, California, Skechers designs, develops and markets a diverse range of lifestyle and performance footwear, apparel and accessories for men, women and children. The Company’s collections are available in the United States and over 170 countries and territories via department and specialty stores, and direct to consumers through 3,770 Company- and third-party-owned retail stores and e-commerce websites. The Company manages its international business through a network of global distributors, joint venture partners in Asia, Israel and Mexico, and wholly-owned subsidiaries in Canada, Japan, India, Europe and Latin America. For more information, please visit about.skechers.com and follow us on FacebookInstagramTwitter, and TikTok

 

Reference in this press release to “Sales” refers to Skechers’ net sales reported under generally accepted accounting principles in the United States. This announcement contains forward-looking statements that are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of


the Securities Exchange Act of 1934, as amended. These forward-looking statements may 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 the disruption of business and operations due to the COVID-19 pandemic; 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 Skechers’ annual report on Form 10-K for the year ended December 31, 2019 and its quarterly report on Form 10-Q for the three months ended June 30, 2020. More specifically, the COVID-19 pandemic has had and is currently having a significant impact on Skechers’ business, financial conditions, cash flow and results of operations. Forward-looking statements with respect to the COVID-19 pandemic include, without limitation, Skechers’ plans in response to this pandemic. At this time, there is significant uncertainty about the COVID-19 pandemic, including without limitation, (i) the duration and extent of the impact of the pandemic, (ii) governmental responses to the pandemic, including how such responses could impact Skechers’ business and operations, as well as the operations of its factories and other business partners, (iii) the effectiveness of Skechers’ actions taken in response to these risks, and (iv) Skechers’ ability to effectively and timely adjust its plans in response to the rapidly changing retail and economic environment. Taking these and other risk factors associated with the COVID-19 pandemic into consideration, the dynamic nature of these circumstances means that what is stated in this press release could change at any time, and as a result, actual results could differ materially from those contemplated by such forward-looking statements. 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 we cannot predict all such risk factors, nor can we assess the impact of all such risk factors on our business 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, dollars in thousands)

 

 

September 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,294,222

 

 

$

824,876

 

Short-term investments

 

 

106,767

 

 

 

112,037

 

Trade accounts receivable, net

 

 

708,947

 

 

 

645,303

 

Other receivables

 

 

74,727

 

 

 

53,932

 

Total receivables

 

 

783,674

 

 

 

699,235

 

Inventories

 

 

1,053,360

 

 

 

1,069,863

 

Prepaid expenses and other current assets

 

 

147,607

 

 

 

113,580

 

Total current assets

 

 

3,385,630

 

 

 

2,819,591

 

Property, plant and equipment, net

 

 

870,162

 

 

 

738,925

 

Operating lease right-of-use assets

 

 

1,106,047

 

 

 

1,073,660

 

Deferred tax assets

 

 

60,934

 

 

 

49,088

 

Long-term investments

 

 

98,698

 

 

 

94,589

 

Goodwill

 

 

93,497

 

 

 

71,412

 

Other assets, net

 

 

96,426

 

 

 

45,678

 

Total non-current assets

 

 

2,325,764

 

 

 

2,073,352

 

TOTAL ASSETS

 

$

5,711,394

 

 

$

4,892,943

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current installments of long-term borrowings

 

$

106,702

 

 

$

66,234

 

Short-term borrowings

 

 

21,720

 

 

 

5,789

 

Accounts payable

 

 

742,226

 

 

 

764,844

 

Operating lease liabilities

 

 

196,760

 

 

 

191,129

 

Accrued expenses

 

 

193,032

 

 

 

210,235

 

Total current liabilities

 

 

1,260,440

 

 

 

1,238,231

 

Long-term borrowings, excluding current installments

 

 

683,611

 

 

 

49,183

 

Long-term operating lease liabilities

 

 

1,004,584

 

 

 

966,011

 

Deferred tax liabilities

 

 

11,926

 

 

 

322

 

Other long-term liabilities

 

 

109,722

 

 

 

103,089

 

Total non-current liabilities

 

 

1,809,843

 

 

 

1,118,605

 

Total liabilities

 

 

3,070,283

 

 

 

2,356,836

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Skechers U.S.A., Inc. equity

 

 

2,402,402

 

 

 

2,314,665

 

Non-controlling interests

 

 

238,709

 

 

 

221,442

 

Total stockholders' equity

 

 

2,641,111

 

 

 

2,536,107

 

TOTAL LIABILITIES AND EQUITY

 

$

5,711,394

 

 

$

4,892,943

 

 


SKECHERS U.S.A., INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited, dollars in thousands except per share data)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Sales

 

$

1,300,886

 

 

$

1,353,998

 

 

$

3,272,703

 

 

$

3,889,319

 

Cost of sales

 

 

675,765

 

 

 

700,934

 

 

 

1,731,349

 

 

 

2,035,911

 

Gross profit

 

 

625,121

 

 

 

653,064

 

 

 

1,541,354

 

 

 

1,853,408

 

Royalty income

 

 

3,216

 

 

 

6,285

 

 

 

11,061

 

 

 

17,827

 

 

 

 

628,337

 

 

 

659,349

 

 

 

1,552,415

 

 

 

1,871,235

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling

 

 

85,926

 

 

 

97,516

 

 

 

220,222

 

 

 

281,237

 

General and administrative

 

 

450,285

 

 

 

414,417

 

 

 

1,256,228

 

 

 

1,165,637

 

 

 

 

536,211

 

 

 

511,933

 

 

 

1,476,450

 

 

 

1,446,874

 

Earnings from operations

 

 

92,126

 

 

 

147,416

 

 

 

75,965

 

 

 

424,361

 

Other income / (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

1,884

 

 

 

3,290

 

 

 

5,739

 

 

 

9,500

 

Interest expense

 

 

(4,643

)

 

 

(2,012

)

 

 

(11,428

)

 

 

(5,194

)

Other, net

 

 

7,726

 

 

 

(4,194

)

 

 

15,882

 

 

 

(8,628

)

Total other income / (expense)

 

 

4,967

 

 

 

(2,916

)

 

 

10,193

 

 

 

(4,322

)

Earnings before income tax expense

 

 

97,093

 

 

 

144,500

 

 

 

86,158

 

 

 

420,039

 

Income tax expense

 

 

14,983

 

 

 

22,766

 

 

 

18,104

 

 

 

75,288

 

Net earnings

 

 

82,110

 

 

 

121,734

 

 

 

68,054

 

 

 

344,751

 

Less: Net earnings attributable to non-controlling interests

 

 

17,832

 

 

 

18,644

 

 

 

22,771

 

 

 

57,723

 

Net earnings attributable to Skechers U.S.A., Inc.

 

$

64,278

 

 

$

103,090

 

 

$

45,283

 

 

$

287,028

 

Net earnings per share attributable to Skechers U.S.A., Inc.:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.42

 

 

$

0.67

 

 

$

0.29

 

 

$

1.87

 

Diluted

 

$

0.41

 

 

$

0.67

 

 

$

0.29

 

 

$

1.86

 

Weighted average shares used in calculating net earnings per share attributable to Skechers U.S.A, Inc.:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

154,462

 

 

 

153,298

 

 

 

154,061

 

 

 

153,396

 

Diluted

 

 

154,980

 

 

 

153,978

 

 

 

154,707

 

 

 

154,021

 

 


SKECHERS U.S.A., INC. AND SUBSIDIARIES

SUPPLEMENTAL FINANCIAL INFORMATION

(Unaudited, dollars in thousands)

 

 

 

Three months ended

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

 

Change

 

 

 

2020

 

 

2019

 

 

$

 

 

%

 

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic wholesale

 

$

318,449

 

 

$

299,634

 

 

$

18,815

 

 

 

6.3

%

International wholesale

 

 

643,393

 

 

 

646,596

 

 

 

(3,203

)

 

 

(0.5

%)

Direct-to-consumer

 

 

339,044

 

 

 

407,768

 

 

 

(68,724

)

 

 

(16.9

%)

Total

 

$

1,300,886

 

 

$

1,353,998

 

 

$

(53,112

)

 

 

(3.9

%)

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic wholesale

 

$

123,122

 

 

$

111,205

 

 

$

11,917

 

 

 

10.7

%

International wholesale

 

 

295,565

 

 

 

298,799

 

 

 

(3,234

)

 

 

(1.1

%)

Direct-to-consumer

 

 

206,434

 

 

 

243,060

 

 

 

(36,626

)

 

 

(15.1

%)

Total

 

$

625,121

 

 

$

653,064

 

 

$

(27,943

)

 

 

(4.3

%)

Gross margin percentage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic wholesale

 

38.7%

 

 

37.1%

 

 

 

 

 

 

 

 

 

International wholesale

 

45.9%

 

 

46.2%

 

 

 

 

 

 

 

 

 

Direct-to-consumer

 

60.9%

 

 

59.6%

 

 

 

 

 

 

 

 

 

Total gross margin percentage

 

48.1%

 

 

48.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months ended

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

 

Change

 

 

 

2020

 

 

2019

 

 

$

 

 

%

 

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic wholesale

 

$

827,148

 

 

$

951,635

 

 

$

(124,487

)

 

 

(13.1

%)

International wholesale

 

 

1,603,774

 

 

 

1,824,214

 

 

 

(220,440

)

 

 

(12.1

%)

Direct-to-consumer

 

 

841,781

 

 

 

1,113,470

 

 

 

(271,689

)

 

 

(24.4

%)

Total

 

$

3,272,703

 

 

$

3,889,319

 

 

$

(616,616

)

 

 

(15.9

%)

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic wholesale

 

$

318,824

 

 

$

354,299

 

 

$

(35,475

)

 

 

(10.0

%)

International wholesale

 

 

716,489

 

 

 

837,467

 

 

 

(120,978

)

 

 

(14.4

%)

Direct-to-consumer

 

 

506,041

 

 

 

661,642

 

 

 

(155,601

)

 

 

(23.5

%)

Total

 

$

1,541,354

 

 

$

1,853,408

 

 

$

(312,054

)

 

 

(16.8

%)

Gross margin percentage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic wholesale

 

38.5%

 

 

37.2%

 

 

 

 

 

 

 

 

 

International wholesale

 

44.7%

 

 

45.9%

 

 

 

 

 

 

 

 

 

Direct-to-consumer

 

60.1%

 

 

59.4%

 

 

 

 

 

 

 

 

 

Total gross margin percentage

 

47.1%

 

 

47.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


RECONCILIATION OF GAAP EARNINGS FINANCIAL MEASURES TO CORRESPONDING

NON-GAAP FINANCIAL MEASURES

(Unaudited, dollars in thousands except per share data)

 

Adjusted Earnings and Adjusted Diluted Earnings Per Share

We believe that Adjusted Earnings and Adjusted Diluted Earnings Per Share provides meaningful supplemental information to investors in evaluating our business performance for the three and nine months ended September 30, 2020. Adjusted Earnings and Adjusted Diluted Earnings Per Share are not measures of financial performance under GAAP and should be considered in addition to, and not a substitute for, Net Earnings and Diluted Net Earnings Per Share which are the most comparable GAAP measures. Our method of determining non-GAAP financial measures may differ from other companies’ methods and therefore may not be comparable to those used by other companies. The table below includes an adjustment for the cancellation of restricted shares in the quarter.

 

Constant Currency Adjustment

We evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of period-over-period fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our results of operations, thereby facilitating period-to-period comparisons of our business performance and is consistent with how management evaluates the company’s performance. We calculate constant currency percentages by converting our current period local currency financial results using the prior-period exchange rates and comparing these adjusted amounts to our prior period reported results.

 

 

 

Three months ended September 30,

 

 

 

2020

 

 

2019

 

 

Change

 

 

 

Reported GAAP Measure

 

 

Restricted share cancellation adjustment(1)

 

 

Adjusted for Non-GAAP Restricted share cancellation

 

 

Constant Currency

Adjustment

 

 

Adjusted for Non-GAAP Measure

 

 

Reported GAAP Measure

 

 

$

 

 

%

 

Sales

 

$

1,300,886

 

 

$

-

 

 

$

1,300,886

 

 

$

(12,499

)

 

$

1,288,387

 

 

$

1,353,998

 

 

$

(65,611

)

 

 

(4.8

%)

Cost of sales

 

 

675,765

 

 

 

-

 

 

 

675,765

 

 

 

(8,646

)

 

 

667,119

 

 

 

700,934

 

 

 

(33,815

)

 

 

(4.8

%)

Gross profit

 

$

625,121

 

 

$

-

 

 

$

625,121

 

 

$

(3,853

)

 

$

621,268

 

 

$

653,064

 

 

$

(31,796

)

 

 

(4.9

%)

Royalty income

 

 

3,216

 

 

 

-

 

 

 

3,216

 

 

 

(74

)

 

 

3,142

 

 

 

6,285

 

 

 

(3,143

)

 

 

(50.0

%)

SG&A expenses

 

 

536,211

 

 

 

(18,155

)

 

 

518,056

 

 

 

(2,624

)

 

 

515,432

 

 

 

511,933

 

 

 

3,499

 

 

 

0.7

%

Earnings from operations

 

$

92,126

 

 

$

18,155

 

 

$

110,281

 

 

$

(1,303

)

 

$

108,978

 

 

$

147,416

 

 

$

(38,438

)

 

 

(26.1

%)

Other income (expense)

 

 

4,967

 

 

 

-

 

 

 

4,967

 

 

 

(8,463

)

 

 

(3,496

)

 

 

(2,916

)

 

 

(580

)

 

 

19.9

%

Income tax expense

 

 

14,983

 

 

 

(181

)

 

 

14,802

 

 

 

(234

)

 

 

14,568

 

 

 

22,766

 

 

 

(8,198

)

 

 

(36.0

%)

Less: Non-controlling interests

 

 

17,832

 

 

 

-

 

 

 

17,832

 

 

 

(414

)

 

 

17,418

 

 

 

18,644

 

 

 

(1,226

)

 

 

(6.6

%)

Net earnings

 

$

64,278

 

 

$

18,336

 

 

$

82,614

 

 

$

(9,118

)

 

$

73,496

 

 

$

103,090

 

 

$

(29,594

)

 

 

(28.7

%)

Diluted earnings per share

 

$

0.41

 

 

$

0.12

 

 

$

0.53

 

 

$

(0.06

)

 

$

0.47

 

 

$

0.67

 

 

$

(0.20

)

 

 

(29.9

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

The effect of taxes on the adjustments used to arrive at Adjusted Earnings is zero as not deductible. The additional tax expense relates to the write-off of deferred tax assets associated with the cancelled shares.


 

 

 

Nine months ended September 30,

 

 

 

2020

 

 

2019

 

 

Change

 

 

 

Reported GAAP Measure

 

 

Restricted share cancellation adjustment(1)

 

 

Adjusted for Non-GAAP Restricted share cancellation

 

 

Constant Currency

Adjustment

 

 

Adjusted for Non-GAAP Measure

 

 

Reported GAAP Measure

 

 

$

 

 

%

 

Sales

 

$

3,272,703

 

 

$

-

 

 

$

3,272,703

 

 

$

19,929

 

 

$

3,292,632

 

 

$

3,889,319

 

 

$

(596,687

)

 

 

(15.3

%)

Cost of sales