SKECHERS Announces First Quarter 2011 Financial Results
April 27, 2011
- Net Sales of $476.2 Million
- Net Earnings of $11.8 Million
- Diluted Earnings Per Share of $0.24
MANHATTAN BEACH, Calif.--(BUSINESS WIRE)-- SKECHERS USA, Inc. (NYSE:SKX), a global leader in lifestyle footwear, today announced financial results for the first quarter ended March 31, 2011.
First quarter 2011 net sales were $476.2 million compared to $492.8 million in the first quarter of 2010. Operating income for the first quarter of 2011 was $14.7 million compared to $81.0 million in the first quarter of 2010. Net earnings for the first quarter of 2011 were $11.8 million versus net earnings of $56.3 million in the first quarter of 2010. Diluted earnings per share were $0.24 based on 49,280,000 weighted average shares outstanding as compared to net earnings per diluted share of $1.15 based on 48,742,000 weighted average shares outstanding.
"We view our first quarter 2011 sales of more than $475 million as a solid accomplishment and a testament to the strength of our core business. However, the difficult comparison against a record first quarter 2010, which benefitted from strong toning sales, resulted in a 3.4 percent decrease in our first quarter 2011 sales. International wholesale and retail sales improved in the first quarter 2011 by 37 percent and 51 percent respectively, but were offset by weak domestic wholesale and retail sales," stated David Weinberg, chief operating officer and chief financial officer. "We believe the toning market is stabilizing as we continue to clear inventory and deliver fresh fitness styles. We do expect a difficult comparison to continue as we are again against a record second quarter 2010 especially given international sales are historically stronger in the first quarter."
Gross profit for the first quarter of 2011 was $192.6 million or 40.4 percent of net sales compared to $237.4 million or 48.2 percent of net sales in the first quarter of last year.
Robert Greenberg, SKECHERS chief executive officer, commented: "As always, we continue to innovate and develop new product with exciting marketing campaigns to support our efforts for men, women and kids. During this year's Super Bowl, we aired one of our most-talked about television campaigns, which featured Kim Kardashian working out in SKECHERS. We also launched new television and print campaigns with Brooke Burke and Wayne Gretzky, and this month we saw these celebrities along with Ms. Kardashian and Karl Malone appear in print and mall advertisements across America and around the world. We recently shot several new commercials with our female celebrities, which will launch in the second quarter, capitalizing on the power of these stars, who will be appearing in our newest lines. Early reads on our new product is very positive, and we are eager to deliver fresh product for men and women. We also introduced two new lines for girls, and will be supporting them with animated commercials later this quarter. In addition, key accounts are visiting our offices this week and are viewing product that we will launch in Holiday 2011 and Spring 2012. We believe the enthusiasm for our product by both retailers and consumers remains strong, and we are looking forward to the second half of 2011."
David Weinberg, SKECHERS chief operating officer and chief financial officer, stated: "Our first quarter 2011 sales and margins are in line with our expectations given the current retail environment, changes in trends and our excess inventory position, which we are continuing to work through. Our inventory increased by approximately $187 million since first quarter 2010, but decreased by $22 million since year-end 2010. We believe both our sales and margins will improve in the second half of the year as we continue to realize the benefits of reducing older inventory and delivering exciting new styles. We are also carefully reviewing our expense structure and expect to reduce costs and achieve significant operating economies over the next several quarters, positioning the Company for greater profitability in the future. We plan to strategically open another 25 to 30 company-owned SKECHERS stores this year, believe international will continue to grow and our brand remains strong, and we expect improvements to profitability in the latter half of the year."
SKECHERS USA, Inc., based in Manhattan Beach, California, designs, develops and markets a diverse range of footwear for men, women and children under the SKECHERS name, as well as under several uniquely branded names. SKECHERS footwear is available in the United States via department and specialty stores, Company-owned SKECHERS retail stores and its e-commerce website, as well as in over 100 countries and territories through the Company's global network of distributors and subsidiaries in Canada, Brazil, Chile, and across Europe, as well as through joint ventures in Asia. For more information, please visit www.skechers.com.
This announcement may contain forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or simply state future results, performance or achievements, and 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, national and local general economic, political and market conditions including the 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 Form 10-K for the year ended December 31, 2010. 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. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands) March 31, December 31, 2011 2010 ASSETS Current Assets: Cash and cash equivalents $ 197,898 $ 233,558 Trade accounts receivable, net 320,177 266,057 Other receivables 10,427 9,650 Total receivables 330,604 275,707 Inventories 376,189 398,588 Prepaid expenses and other current assets 48,650 53,791 Deferred tax assets 11,720 11,720 Total current assets 965,061 973,364 Property and equipment, at cost less accumulated 329,699 293,802 depreciation and amortization Intangible assets, less applicable amortization 6,982 7,367 Deferred tax assets 12,323 12,323 Other assets, at cost 18,000 17,938 TOTAL ASSETS $ 1,332,065 $ 1,304,794 LIABILITIES AND EQUITY Current Liabilities: Current installments of long-term borrowings $ 5,130 $ 11,984 Short-term borrowings 34,390 18,346 Accounts payable 250,230 246,595 Accrued expenses 24,429 30,385 Total current liabilities 314,179 307,310 Long-term borrowings, excluding current installments 50,396 51,650 Total liabilities 364,575 358,960 Equity: Skechers U.S.A., Inc. equity 929,128 908,203 Noncontrolling interests 38,362 37,631 Total equity 967,490 945,834 TOTAL LIABILITIES AND EQUITY $ 1,332,065 $ 1,304,794
SKECHERS U.S.A., INC. CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (In thousands, except per share data) Three Months Ended March 31, 2011 2010 Net sales $ 476,234 $ 492,764 Cost of sales 283,624 255,346 Gross profit 192,610 237,418 Royalty income 1,648 385 194,258 237,803 Operating expenses: Selling 37,560 34,309 General and administrative 141,983 122,487 179,543 156,796 Income from operations 14,715 81,007 Other income (expense): Interest, net (1,378 ) 713 Other, net 349 209 (1,029 ) 922 Earnings before income taxes 13,686 81,929 Income tax expense 1,533 25,806 Net income 12,153 56,123 Less: Net income (loss) attributable to 345 (173 ) noncontrolling interest Net earnings attributable to Skechers U.S.A., Inc. $ 11,808 $ 56,296 Net earnings per share attributable to Skechers U.S.A., Inc.: Basic $ 0.24 $ 1.20 Diluted $ 0.24 $ 1.15 Weighted average shares used in calculating earnings per share attributable to Skechers U.S.A., Inc.: Basic 48,243 46,781 Diluted 49,280 48,742
Source: SKECHERS USA, Inc.
Released April 27, 2011