SKECHERS Announces Record First Quarter 2010 Sales, Operating Income, Net Earnings and Earnings Per Share
April 28, 2010
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, 2010.
First quarter 2010 net sales increased 43.5 percent to $492.8 million compared to $343.5 million in the first quarter of 2009. Operating income for the first quarter of 2010 was $81.0 million compared to $6.2 million in the first quarter of 2009. Net earnings for the first quarter of 2010 were $56.3 million versus net earnings of $8.2 million in the first quarter of 2009. Diluted earnings per share were $1.15 based on 48,742,000 weighted average shares outstanding as compared to net earnings per diluted share of $0.18 based on 46,467,000 weighted average shares outstanding, which is an increase of approximately 2.3 million shares from the first quarter of 2009. The first quarter 2010 earnings are based on a higher tax rate of 31.5 percent; we currently expect our annual effective tax rate to be approximately 32 percent for 2010.
"Our first quarter net sales of nearly $500 million and earnings per share of $1.15 mark the highest quarterly sales and EPS in our nearly 18-year history, and continue the strong momentum we experienced in the second half of 2009," began David Weinberg, chief operating officer and chief financial officer. "The significant revenue growth in our domestic and international wholesale and retail channels, increased profitability and much improved margins are evidence that we continue to grow market share in the global footwear market. We believe our momentum is the result of our strong product offering, backed by targeted marketing efforts, strong execution, and increased brand awareness globally."
Gross profit for the first quarter of 2010 was $237.4 million or 48.2 percent of net sales compared to $125.4 million or 36.5 percent of net sales in the first quarter of last year.
Robert Greenberg, SKECHERS chief executive officer, commented: "Achieving record quarterly revenues is an incredible way to start both a new year and a new decade. We are extremely pleased with our growth - and what it means for us, the SKECHERS brand and our position in the world market. We believe challenging times, such as the past couple of years, present opportunities. We believe that our decisive actions in 2009, including the continued development of new product and consistent marketing efforts, resulted in our accelerated growth, improved profitability, and a growing buzz about SKECHERS in the first quarter. We see this momentum continuing for us and many of our retail partners as we remain dedicated to delivering fresh men's, women's and kids' product and developing new marketing campaigns to support these efforts, including our latest with Hall of Fame quarterback Joe Montana. The strong growth we are experiencing is primarily the result of the positive reaction of consumers in the United States to our product offering. We believe this enthusiasm and acceptance is beginning to spread around the world as these new styles are just reaching South America, Europe, Asia, and beyond. It is an exciting place to be, the Number 2 athletic brand in the United States, and we are eager for continued growth in 2010 and throughout this decade."
"With strong April sales in our wholesale and international business, double digit retail store comps, accelerating backlog, and the addition of 20 to 25 more retail stores in the United States and in new markets in Europe this year, we believe our momentum will continue throughout the year. More new relevant men's, women's and kids' product will also be delivering for back to school in June and July, which can result in a shift in revenue between the second and third quarters," Mr. Weinberg added. "We are well-positioned for growth in 2010 and beyond with clean inventory, a cash position of $326 million at quarter end, and a new, more efficient, 1.8 million-square-foot distribution center in Rancho Belago, California in development."
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 the ongoing financial crisis 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. 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 Company cannot predict all such risk factors, nor can the Company assess the impact of all such risk factors on the 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. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands) March 31, December 31, 2010 2009 ASSETS Current Assets: Cash and cash equivalents $ 325,879 $ 265,675 Short-term investments - 30,000 Trade accounts receivable, net 291,963 219,924 Other receivables 4,619 12,177 Total receivables 296,582 232,101 Inventories 189,002 224,050 Prepaid expenses and other current assets 31,170 28,233 Deferred tax assets 8,950 8,950 Total current assets 851,583 789,009 Property and equipment, at cost less accumulated 174,072 171,667 depreciation and amortization Intangible assets, less applicable amortization 8,618 9,011 Deferred tax assets 13,665 13,660 Other assets, at cost 13,183 12,205 TOTAL ASSETS $ 1,061,121 $ 995,552 LIABILITIES AND EQUITY Current Liabilities: Current installments of long-term borrowings $ 16,024 $ 529 Short-term borrowings 1,323 2,006 Accounts payable 184,325 196,163 Accrued expenses 40,886 31,843 Total current liabilities 242,558 230,541 Long-term borrowings, excluding current installments - 15,641 Total liabilities 242,558 246,182 Equity: Skechers U.S.A., Inc. equity 815,249 745,922 Noncontrolling interests 3,314 3,448 Total equity 818,563 749,370 TOTAL LIABILITIES AND EQUITY $ 1,061,121 $ 995,552
SKECHERS U.S.A., INC. CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (In thousands, except per share data) Three Months Ended March 31, 2010 2009 Net sales $ 492,764 $ 343,470 Cost of sales 255,346 218,041 Gross profit 237,418 125,429 Royalty income 385 272 237,803 125,701 Operating expenses: Selling 34,309 21,510 General and administrative 122,487 98,038 156,796 119,548 Income from operations 81,007 6,153 Other income (expense): Interest, net 713 664 Other, net 209 (218 ) 922 446 Earnings before income taxes 81,929 6,599 Income tax expense (benefit from) 25,806 (753 ) Net income 56,123 7,352 Less: Net income attributable to noncontrolling (173 ) (868 ) interest Net earnings attributable to Skechers U.S.A., Inc. $ 56,296 $ 8,220 Net earnings per share attributable to Skechers U.S.A., Inc.: Basic $ 1.20 $ 0.18 Diluted $ 1.15 $ 0.18 Weighted average shares used in calculating earnings per share attributable to Skechers U.S.A, Inc.: Basic 46,781 46,221 Diluted 48,742 46,467
Source: SKECHERS USA, Inc.
Released April 28, 2010