SKECHERS Announces Fourth Quarter and Fiscal Year 2010 Financial Results
February 16, 2011
-- Fourth Quarter 2010 Net Sales of $454.6 Million, an Increase of 17 Percent Over 2009, and Net Earnings of $3.2 Million
-- Fiscal Year 2010 Net Sales of $2.006 Billion, and Net Earnings of $136.1 Million
MANHATTAN BEACH, Calif.--(BUSINESS WIRE)-- SKECHERS USA, Inc. (NYSE:SKX), a global leader in lifestyle footwear, today announced financial results for the fourth quarter and fiscal year ended December 31, 2010.
Net sales for the fourth quarter of 2010 increased 17 percent to $454.6 million as compared to $388.6 million in the fourth quarter of 2009. Earnings from operations in the fourth quarter of 2010 were $1.4 million versus income from operations of $41.7 million in the fourth quarter of 2009. Net earnings for the fourth quarter of 2010 were $3.2 million versus $27.9 million in the fourth quarter of 2009. Net earnings per diluted share in the fourth quarter of 2010 were $0.07 based on 49.2 million weighted average shares outstanding as compared to net earnings per diluted share of $0.58 based on 48.3 million weighted average shares outstanding in the fourth quarter of 2009. Gross profit for the fourth quarter of 2010 was $184.2 million compared to $189.3 million in the fourth quarter of 2009. Gross margin in the fourth quarter 2010 was 40.5 percent versus 48.7 percent for the fourth quarter of 2009.
Fiscal year 2010 net sales were $2.006 billion as compared to net sales of $1.436 billion in 2009. Earnings from operations for 2010 were $196.7 million versus $72.6 million in 2009. Net earnings for 2010 were $136.1 million versus net earnings of $54.7 million in 2009. Diluted earnings per share for fiscal year 2010 were $2.78 based on 49.0 million weighted average shares outstanding versus diluted earnings per share of $1.16 based on 47.1 million weighted average shares outstanding in the prior year. Gross profit for 2010 was $911.9 million compared to $621.0 million in 2009. Gross margin for 2010 was 45.4 percent versus 43.2 percent for 2009.
Robert Greenberg, SKECHERS chief executive officer, commented: "2010 was truly an amazing year for SKECHERS and our many product initiatives as we reached $2 billion in annual sales. Earlier this month, we were named Company of the Year for 2010 by Footwear Plus, and we're the No. 2 lifestyle footwear brand and the leading source for toning footwear in the United States*. In 2010, we broadened our product range with increased kids offerings, fresh fitness styles, and a larger assortment of boots. Consistent with our approach of supporting our product through advertising, our kids' commercials featured our animated characters, and our toning products incorporated a diverse collection of celebrities, including TV personality Brooke Burke, football legend Joe Montana and former basketball star Karl Malone. Our domestic business increased by 48.3 percent, our international wholesale business increased by 32.9 percent and our company-owned retail sales increased by 27.6 percent, which reflects the combined power of our product and marketing efforts. We continue to develop new and on target product, which we unveiled to our key accounts during FFANY in December, as well as meetings at our new corporate offices last month. We recently enlisted the power of reality star Kim Kardashian, whose 5 million plus Twitter followers and constant media attention helped drive her Shape-ups Super Bowl TV spot to headline news earlier this month. We see numerous opportunities to continue to strategically grow our business around the world, including through the addition of retail stores and further expansion of our international business. We are energized by our record sales, the enthusiasm for our product by both retailers and consumers, and the many opportunities we see in the marketplace in 2011 and beyond."
David Weinberg, SKECHERS chief operating officer and chief financial officer, stated: "As we look forward, we are assessing all areas of our business to position ourselves to profitably grow in the future. Currently, we are carefully reviewing our expenses, which have increased in part due to significant growth over the past year. Our inventory increased by $175 million year-over-year, of which approximately $65 million is to support the increases in our international and retail expansion, and $110 million is related to our domestic wholesale business. As we aggressively work through our inventory position, we anticipate our domestic wholesale revenues and margins will be impacted in the first and second quarters, but we believe they will improve in the second half of the year. And with a healthy double-digit backlog in international as well, we believe our growth will continue to accelerate around the world. Our stores saw positive comps of over 3 percent for the quarter and over 15 percent for the year, and we are planning to open another 30 to 35 company-owned SKECHERS stores this year. We expect improvements to profitability in the latter half of the year when we anticipate a return to full-price selling with an improved margin profile from our new product offering. We are confident that the demand for our brand remains very high globally, and our momentum will continue in 2011."
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.
*Respectively: In revenues, Sporting Goods Intelligence, June 21, 2010; 2010 SportsOneSource in Review
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, 2009 and the Company's Form 10-Q for the quarter ended September 30, 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) December 31, December 31, 2010 2009 ASSETS Current Assets: Cash and cash equivalents $ 233,558 $ 265,675 Short-term investments - 30,000 Trade accounts receivable, net 266,057 219,924 Other receivables 9,650 12,177 Total receivables 275,707 232,101 Inventories 398,588 224,050 Prepaid expenses and other current assets 53,791 28,233 Deferred tax assets 11,720 8,950 Total current assets 973,364 789,009 Property and equipment, at cost less accumulated 293,802 171,667 depreciation and amortization Intangible assets, less applicable amortization 7,367 9,011 Deferred tax assets 12,323 13,660 Other assets, at cost 17,938 12,205 TOTAL ASSETS $ 1,304,794 $ 995,552 LIABILITIES AND EQUITY Current Liabilities: Current installments of long-term borrowings $ 11,984 $ 529 Short-term borrowings 18,346 2,006 Accounts payable 246,595 196,163 Accrued expenses 30,385 31,843 Total current liabilities 307,310 230,541 Long-term borrowings, excluding current installments 51,650 15,641 Total liabilities 358,960 246,182 Equity: Skechers U.S.A., Inc. equity 908,203 745,922 Noncontrolling interests 37,631 3,448 Total equity 945,834 749,370 TOTAL LIABILITIES AND EQUITY $ 1,304,794 $ 995,552
SKECHERS U.S.A., INC. CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (In thousands, except per share data) Three Months Ended Twelve Months Ended December 31, December 31, 2010 2009 2010 2009 Net sales $ 454,619 $ 388,620 $ 2,006,868 $ 1,436,440 Cost of sales 270,427 199,368 1,094,962 815,430 Gross profit 184,192 189,252 911,906 621,010 Royalty income 1,420 633 4,568 1,655 185,612 189,885 916,474 622,665 Operating expenses: Selling 40,476 31,421 186,738 128,989 General and 143,755 116,754 532,996 421,094 administrative 184,231 148,175 719,734 550,083 Income from operations 1,381 41,710 196,740 72,582 Other income (expense): Interest, net (1,735 ) (643 ) (220 ) (975 ) Other, net 1,406 (2,700 ) 83 (497 ) (329 ) (3,343 ) (137 ) (1,472 ) Earnings before income 1,052 38,367 196,603 71,110 taxes Income tax expense (2,334 ) 11,992 60,198 20,228 (benefit) Net income 3,386 26,375 136,405 50,882 Less: Net income (loss) attributable to 149 (1,571 ) 257 (3,817 ) noncontrolling interest Net earnings attributable to Skechers $ 3,237 $ 27,946 $ 136,148 $ 54,699 U.S.A., Inc. Net earnings per share attributable to Skechers U.S.A., Inc.: Basic $ 0.07 $ 0.60 $ 2.87 $ 1.18 Diluted $ 0.07 $ 0.58 $ 2.78 $ 1.16 Weighted average shares used in calculating earnings per share attributable to Skechers U.S.A., Inc.: Basic 47,913 46,448 47,433 46,341 Diluted 49,152 48,344 49,050 47,105
Source: SKECHERS USA, Inc.
Released February 16, 2011