by | Jul 16, 2009 | Press Release
Jul 16, 2009 • 4:00 pm EDT
MANHATTAN BEACH, Calif.–(BUSINESS WIRE)– SKECHERS USA, Inc. (NYSE: SKX), a global leader in lifestyle footwear, announced today that the Company’s conference call to review its fiscal 2009 second quarter financial results will be broadcast live over the internet on Wednesday, July 22, 2009 at 1:30 pm Pacific Time/4:30 pm Eastern Time. Participating on the call will be David Weinberg, Chief Operating Officer and Fred Schneider, Chief Financial Officer.
The call will be broadcast live over the Internet hosted at the Investor Relations section of the Company’s website at www.skx.com. The call will be archived for two weeks. The webcast will also be available at www.earnings.com and www.streetevents.com.
About SKECHERS USA, Inc.
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. It is also available in over 100 countries and territories throughout the Company’s global network of distributors and subsidiaries in Canada, Brazil, and across Europe, as well as through joint ventures in Asia. Please visit www.skechers.com for more information.
by | Jul 7, 2009 | Press Release
Jul 7, 2009 • 8:55 am EDT
Footwear Company Sees Continued Increase in Liquidity and Financial Flexibility, Expects to Break Even in the First Half of 2009
MANHATTAN BEACH, Calif.–(BUSINESS WIRE)– SKECHERS USA, Inc. (NYSE:SKX), a global leader in lifestyle footwear, today announced the closing of a new $250 million, four-year, syndicated secured credit facility. Wells Fargo Foothill, part of Wells Fargo & Company (NYSE:WFC), and Bank of America N.A., a subsidiary of Bank of America Corporation (NYSE:BAC), were co-lead arrangers for the facility. Additional participants in the transaction, which was oversubscribed, were CIT Bank, U.S. Bank National Association, HSBC Business Credit (USA) Inc., PNC Bank, N.A., Union Bank, N.A. and Capital One Leverage Finance Corporation.
“We were able to secure a new facility in these difficult times because of our strong financial position, operating history and place in the global market,” stated Fred Schneider, the company’s chief financial officer. “In addition to this new bank facility, the remaining $95 million of auction rate securities were redeemed, giving us approximately $250 million in cash and investments, which should provide us with sufficient capital for our initiatives and to fund our growth over the next four years.”
Separately, the Company announced that, due to the continuing difficult retail environment, it continues to believe that it will break even for the first half of 2009, and return to profitability in the back half of 2009.
“While the extremely weak global retail environment remains a factor in our performance as retailers slowed their orders, we had a good reception to our product at FFANY in June, and we continued to liquidate excess inventory and clean up our balance sheet in the second quarter,” added David Weinberg, chief operating officer of SKECHERS. “As we begin the third quarter with our key accounts reviewing Spring 2010, we have an extremely strong balance sheet, strong liquidity, and a significant cash position in excess of $5 per share. We are in a great position to further grow our business around the world, and are looking forward to capitalizing on opportunities as they arise.”
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. Please visit www.skechers.com or call the Company’s information line at 877-INFO-SKX.
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 recent global economic slowdown and financial crisis; the ability to sustain, manage and forecast costs and proper inventory levels; the loss of any significant customers, decreased demand by industry retailers and cancellation of order commitments due to the credit crisis in the global financial markets or other difficulties in their businesses; changes in fashion trends and consumer demands; the level of sales during the spring, back-to-school and holiday selling seasons; the ability to anticipate, identify, interpret or forecast changes in fashion trends, consumer demand for the products and the various market factors described above; new standards regarding lead content in children’s products including footwear under the Consumer Product Safety Improvement Act of 2008; the ability to maintain brand image; intense competition among sellers of footwear for consumers; further changes to the global economic slowdown that could affect the ability to open retail stores in new markets and/or the sales performance of existing stores; potential disruptions in manufacturing related to overseas sourcing and concentration of production in China, including, without limitation, difficulties associated with political instability in China, the occurrence of a natural disaster or outbreak of a pandemic disease in China, or electrical shortages, labor shortages or work stoppages that may lead to higher production costs and/or production delays; changes in monetary controls and valuations of the Yuan by the Chinese government; increased costs of freight and transportation to meet delivery deadlines; potential imposition of additional duties, tariffs or other trade restrictions; violation of labor or other laws by independent contract manufacturers, suppliers or licensees; popularity of particular designs and categories of products; changes in business strategy or development plans; the ability to attract and retain qualified personnel; the disruption, expense and potential liability associated with existing or unanticipated future litigation; the ability to secure and protect trademarks, patents and other intellectual property; business disruptions resulting from natural disasters such as an earthquake due to the location of domestic warehouse, headquarters and a substantial number of retail stores in California; and other factors referenced or incorporated by reference in the Company’s Form 10-K for the year ended December 31, 2008 and the Company’s Form 10-Q for the quarter ended March 31, 2009. The risks included here are not exhaustive. We operate 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 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.
by | Jun 25, 2009 | Press Release
Jun 25, 2009 • 2:28 pm EDT
MANHATTAN BEACH, Calif.–(BUSINESS WIRE)– SKECHERS USA (NYSE:SKX), a global leader in the lifestyle footwear industry, today announced that host, entrepreneur and former Dancing with the Stars champion Brooke Burke will be the next celebrity to join its charity-related “Nothing Compares to Family” advertising campaign.
Burke, whose first modeling appearance was in a SKECHERS ad in 1995, will appear in the SKECHERS campaign with her fiance David Charvet (ABC’s summer reality competition series The Superstars), son Shaya, 1, and daughters Rain, 2, Sierra, 7, and Neriah, 9. “I’m always on the lookout for new outlets to help organizations like Cedars-Sinai Women’s Cancer Research Institute,” said Burke. “I love that SKECHERS is focusing on families in their advertising and bringing awareness to important charities. And it’s great to be working with SKECHERS again – this time with my family.”
“We’re really proud of this campaign and thrilled that Brooke Burke is again a part of SKECHERS,” began Michael Greenberg, President of SKECHERS. “At the core, SKECHERS is a family brand and the ‘Nothing Compares to Family’ campaign is a perfect way for us to partner with great talent like Brooke to support and promote a wide array of important charities.”
Burke gained global recognition as the travel guide on the E! series, Wild On. She later went on to host two seasons of the CBS reality show Rock Star and recently competed on and ultimately won the 7th season of ABC’s hit series Dancing With The Stars. Burke founded the mommy website BabooshBaby.com in 2008, and she has recently merged it with ModernMom.com, for which she is now CEO. She partnered with SKECHERS to bring awareness to Cedars-Sinai Women’s Cancer Research Institute at the Samuel Oschin Comprehensive Cancer Institute, a program that is working to reduce the threat of cancer to women through research, education, early detection and prevention.
The SKECHERS “Nothing Compares to Family” campaign began in 2008 and stars some of today’s popular celebrity families while benefiting children’s charities with ads breaking in celebrity weekly magazines and other fashion and lifestyle glossies. Brooke Burke joins a roster of celebrities that has included Tori Spelling, Brandy, Jack Coleman, Trista and Ryan Sutter, Holly Robinson Peete, Niki Taylor, and most recently Cesar Milan. SKECHERS expects additional celebrity families to participate in support of new charities as the “Nothing Compares to Family” campaign continues through 2009.
The Brooke Burke “Nothing Compares to Family” ad image is available upon request. For further information go to: http://www.skechers.com/info/charities
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. Please visit www.skechers.com or call the Company’s information line at 877-INFO-SKX.
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 recent global economic slowdown and financial crisis; the ability to sustain, manage and forecast costs and proper inventory levels; the loss of any significant customers, decreased demand by industry retailers and cancellation of order commitments due to the credit crisis in the global financial markets or other difficulties in their businesses; the failure of financial institutions to fulfill their commitments under the Company’s secured line of credit; changes in fashion trends and consumer demands; the level of sales during the spring, back-to-school and holiday selling seasons; the ability to anticipate, identify, interpret or forecast changes in fashion trends, consumer demand for the products and the various market factors described above; new standards regarding lead content in children’s products including footwear under the Consumer Product Safety Improvement Act of 2008; the ability to maintain brand image; intense competition among sellers of footwear for consumers; further changes to the global economic slowdown that could affect the ability to open retail stores in new markets and/or the sales performance of existing stores; potential disruptions in manufacturing related to overseas sourcing and concentration of production in China, including, without limitation, difficulties associated with political instability in China, the occurrence of a natural disaster or outbreak of a pandemic disease in China, or electrical shortages, labor shortages or work stoppages that may lead to higher production costs and/or production delays; changes in monetary controls and valuations of the Yuan by the Chinese government; increased costs of freight and transportation to meet delivery deadlines; potential imposition of additional duties, tariffs or other trade restrictions; violation of labor or other laws by independent contract manufacturers, suppliers or licensees; popularity of particular designs and categories of products; changes in business strategy or development plans; the ability to attract and retain qualified personnel; the disruption, expense and potential liability associated with existing or unanticipated future litigation; the ability to secure and protect trademarks, patents and other intellectual property; business disruptions resulting from natural disasters such as an earthquake due to the location of domestic warehouse, headquarters and a substantial number of retail stores in California; and other factors referenced or incorporated by reference in the Company’s Form 10-K for the year ended December 31, 2008 and the Company’s Form 10-Q for the quarter ended March 31, 2009. The risks included here are not exhaustive. We operate 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 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.
Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=5995177&lang=en
by | Feb 18, 2009 | Press Release
Feb 18, 2009 • 4:00 pm EST
Record 2008 Net Sales of $1.441 Billion, an Increase of 3 Percent Over 2007 2008 Net Earnings of $55.4 Million, a Decrease of 27 Percent Over 2007
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, 2008.
Fiscal year 2008 net sales increased 3 percent to $1.441 billion as compared to net sales of $1.394 billion in 2007. Net earnings for 2008 were $55.4 million versus net earnings of $75.7 million in 2007. For fiscal year 2008, diluted earnings per share were $1.19 based on 46,708,000 weighted average shares outstanding versus diluted earnings per share of $1.63 based on 46,741,000 weighted average shares outstanding in the prior year.
Net sales for the fourth quarter of 2008 were $298.1 million as compared to $302.0 million in the fourth quarter of 2007. Net loss for the fourth quarter of 2008 was $20.4 million versus net earnings of $12.1 million in the fourth quarter of 2007. Net loss per diluted share in the fourth quarter of 2008 was $0.44 based on 46,123,000 weighted average shares outstanding as compared to net earnings per diluted share of $0.26 based on 46,639,000 weighted average shares outstanding in the fourth quarter of 2007.
“SKECHERS 2008 net sales of over $1.4 billion represent a new record, a significant achievement in a year marked by a rapidly weakening global economic environment,” stated Fred Schneider, chief financial officer of SKECHERS. “Despite the record yearly sales, we saw a shortfall in earnings in the fourth quarter primarily due to a decrease in gross margin of approximately 1,000 basis points from the same period last year. The decrease in gross margin is a direct result of the extremely weak retail climate, which caused a significant decline in U.S. retailers’ comps as well as a number of both retail bankruptcies and going out of business sales. Due to these declining economic conditions, we began to manage our inventory levels down at reduced prices and increased our reserves by over $15 million. As we complete this process, we expect to see our gross margin percentage return to its historic levels of over 40 percent later in 2009.”
Gross profit for 2008 was $595.9 million compared to $600.0 million in 2007. Gross margin for 2008 was 41.4 percent versus 43.0 percent for 2007. Gross profit for the fourth quarter of 2008 was $95.0 million compared to $127.3 million in the fourth quarter of 2007. Gross margin in the fourth quarter 2008 was 31.9 percent versus 42.1 percent for the fourth quarter of 2007.
Robert Greenberg, SKECHERS chief executive officer, commented: “For SKECHERS, 2008 was a year of achievements with several new brands added to our fold, record sales, and meaningful growth in our international business. We continue to see the international arena as an opportunity to further grow our business, and are pleased with the continued solid performance of many of our SKECHERS and fashion brands in both the domestic and international markets. We are continuing to develop fresh styles in our more well-established lines and look forward to our first full year of footwear from Bebe Sport, Punkrose, and the emergence of TapouT footwear in sport retailers and with specialty chains, and other key accounts. Our product remains affordable, fashionable and relevant, offering a great value in the current marketplace. While the macro-economic environment remains challenging, we believe we will continue to be an increasingly important brand around the world given our on-target product, diversified distribution and team of talented people and dedicated partners.”
“In 2008, the economic downturn adversely affected our domestic and, to a lesser degree, our international business. We believe the economy will continue to have a negative impact on the retail industry for the foreseeable future, and the demand for consumer goods will be reduced,” stated David Weinberg, chief operating officer of SKECHERS. “In the first half of 2009, we are focusing on reducing our inventory levels and expenses while maintaining our strong domestic and international presence in this difficult economic environment, which will result in us breaking even in the first half of 2009. As our inventory levels come more in line with our current expected sales and backlog, we believe we will return to profitability in the second half of 2009, and achieve annual revenues between $1.2 billion and $1.3 billion. With a strong balance sheet and portfolio of brands, we remain confident that SKECHERS is well-positioned for sustainable long-term profitability.”
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, and across Europe, as well as through joint ventures in Asia. Please visit www.skechers.com or call the Company’s information line at 877-INFO-SKX.
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; intense competition among sellers of footwear for consumers; changes in fashion trends and consumer demands; popularity of particular designs and categories of products; the level of sales during the spring, back-to-school and holiday selling seasons; the ability to anticipate, identify, interpret or forecast changes in fashion trends, consumer demand for the products and the various market factors described above; the ability to maintain brand image; the ability to sustain, manage and forecast growth and inventories; the ability to secure and protect trademarks, patents and other intellectual property; the loss of any significant customers, decreased demand by industry retailers and cancellation of order commitments; potential disruptions in manufacturing related to overseas sourcing and concentration of production in China, including, without limitation, difficulties associated with political instability in China, the occurrence of a natural disaster or outbreak of a pandemic disease in China, or electrical shortages, labor shortages or work stoppages that may lead to higher production costs and/or production delays; changes in monetary controls and valuations of the Yuan by the Chinese government; increased costs of freight and transportation to meet delivery deadlines; violation of labor or other laws by independent contract manufacturers, suppliers or licensees; potential imposition of additional duties, tariffs or other trade restrictions; business disruptions resulting from natural disasters such as an earthquake due to the location of domestic warehouse, headquarters and a substantial number of retail stores in California; changes in business strategy or development plans; changes in economic conditions that could affect the ability to open retail stores in new markets and/or the sales performance of existing stores; the ability to attract and retain qualified personnel; the disruption, expense and potential liability associated with existing or unanticipated future litigation; and other factors referenced or incorporated by reference in the Company’s Form 10-K for the year ended December 31, 2007 and the Company’s Form 10-Q for the quarter ended September 30, 2008. The risks included here are not exhaustive. We operate 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 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.
(tables to follow)
SKECHERS U.S.A., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
December 31, December 31,
2008 2007
ASSETS
Current Assets:
Cash and cash equivalents $ 114,941 $ 199,516
Short-term investments - 104,500
Trade accounts receivable, net 175,064 167,406
Other receivables 7,816 10,520
Total receivables 182,880 177,926
Inventories 261,209 204,211
Prepaid expenses and other current assets 31,022 13,993
Deferred tax assets 11,955 8,594
Total current assets 602,007 708,740
Property and equipment, at cost less accumulated 157,757 98,400
depreciation and amortization
Intangible assets, less applicable amortization 5,407 78
Deferred tax assets 18,158 13,983
Long-term investments 81,925 -
Other assets, at cost 11,062 6,776
TOTAL ASSETS $ 876,316 $ 827,977
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current installments of long-term borrowings $ 572 $ 437
Accounts payable 164,643 164,466
Accrued expenses 23,021 19,949
Total current liabilities 188,236 184,852
Long-term borrowings, excluding current installments 16,188 16,462
Minority interest 3,199 -
Stockholders' equity 668,693 626,663
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 876,316 $ 827,977
SKECHERS U.S.A., INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In thousands, except per share data)
Three Months Ended December 31, Twelve Months Ended December 31
2008 2007 2008 2007
Net sales $ 298,088 $ 302,041 $ 1,440,743 $ 1,394,181
Cost of sales 203,062 174,789 844,821 794,192
Gross profit 95,026 127,252 595,922 599,989
Royalty income 800 787 2,461 4,179
95,826 128,039 598,383 604,168
Operating
expenses:
Selling 21,853 21,079 126,890 126,527
General and 109,060 89,823 413,601 364,711
administrative
130,913 110,902 540,491 491,238
Other income
(expense):
Interest, net 436 1,434 2,731 5,277
Other, net 200 (31 ) 120 98
636 1,403 2,851 5,375
Earnings
before income
taxes and (34,451 ) 18,540 60,743 118,305
minority
interest
Income tax
expense (12,917 ) 6,445 7,258 42,619
(benefit from)
Minority
interest in
loss of (1,156 ) - (1,911 ) -
consolidated
subsidiary
Net earnings $ (20,378 ) $ 12,095 $ 55,396 $ 75,686
(loss)
Net earnings
per share:
Basic $ (0.44 ) $ 0.26 $ 1.20 $ 1.67
Diluted $ (0.44 ) $ 0.26 $ 1.19 $ 1.63
Weighted
average
shares:
Basic 46,123 45,750 46,031 45,262
Diluted 46,123 46,639 46,708 46,741
by | Feb 13, 2009 | Press Release
Feb 13, 2009 • 8:30 am EST
MANHATTAN BEACH, Calif.–(BUSINESS WIRE)– SKECHERS USA, Inc. (NYSE: SKX), a global leader in lifestyle footwear, today announced that the Company’s conference call to review fiscal 2008 fourth quarter and full year financial results will be broadcast live over the internet on Wednesday, February 18, 2009 at 4:30 pm Eastern Time.
This call is being webcast by CCBN and can be accessed at SKECHERS website at www.skx.com. The call will be archived for two weeks.
The webcast is also being distributed over CCBN’s Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through CCBN’s individual investor center at www.companyboardroom.com or by visiting any of the investor sites in CCBN’s Individual Investor Network. Institutional investors can access the call via CCBN’s password-protected event management site, StreetEvents (www.streetevents.com).
About SKECHERS USA, Inc.
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 10 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 Canadian and European subsidiaries. Please visit www.skechers.com or call the Company’s information line at 877-INFO-SKX.
by | Feb 5, 2009 | Press Release
Feb 5, 2009 • 4:00 pm EST
MANHATTAN BEACH, Calif.–(BUSINESS WIRE)– SKECHERS USA, Inc. (NYSE:SKX), a global leader in lifestyle footwear, today announced that its fourth quarter 2008 results are expected to be significantly below the range of its previous outlook. For the fourth quarter of 2008, the Company now expects net sales to be in the range of $290 million to $300 million and a net loss per diluted share of [$0.45 to $0.50].
The shortfall in earnings versus its previous outlook is primarily due to a decrease in gross margin of approximately 1,000 basis points from the same period last year. The decrease in gross margin is a result of the extremely weak retail climate, which caused the Company to manage its inventory levels down at reduced prices and, as a result, the Company expects to increase its reserves for inventory and accounts receivable by over $15 million. The Company’s sales and margins were adversely impacted in the fourth quarter due to U.S. retailers’ comps being down significantly and a number of both retail bankruptcies and going out of business sales. The Company believes it will continue to be negatively impacted by these factors in 2009. The Company further expects that buying plans for many of the Company’s key retail partners may be down approximately 7 to 20 percent across all categories of merchandise, including footwear, in the first half of 2009 versus the prior year. While many of these same accounts are also planning to close some stores, potentially creating further reductions in their buying patterns, the company believes it remains one of the key footwear brands with its retail partners.
Robert Greenberg, SKECHERS’ chief executive officer, commented: “In spite of the recent downturn of economic events affecting our performance, we remain confident in our long-term strategic plan, and in the global strength and increasing awareness of our many brands. Our recent pre-lines with our key retail partners confirm the belief that our products remain affordable, fashionable and relevant. SKECHERS continues to provide great value in the current marketplace. In our nearly 17 years in business, we have continually grown, diversified and emerged stronger, and we believe this cycle will be no different. While the macro-economic environment remains weak, we are a company with compelling products and merchandising, talented people, and dedicated partners, and look forward to continuing to deliver on target product.”
David Weinberg, SKECHERS’ chief operating officer, stated: “The global economic environment has resulted in a far more substantial impact to consumer demand than we had previously anticipated. Despite the economic challenges, we remain confident that SKECHERS is well-positioned for sustainable long-term profitability based on the breadth and depth of our global footwear business. Furthermore, our balance sheet and liquidity remain very strong.”
The Company’s international business continues to perform well. Bookings across South America, Europe, and key areas in Asia are equivalent to the prior year. The Company is beginning to see a benefit from its new subsidiary in Brazil and its recent joint ventures in China and Hong Kong. However, the Company does expect to see some margin compression in its international business due to worsening economic conditions in many of these regions.
The Company’s retail business experienced mid-single digit declines in the fourth quarter and does not see any near term catalysts that would change its retail performance over the coming months. In response to the weakness at retail, it has pared back store openings where possible, deferred store re-models, and is attempting to renegotiate rents in certain locations.
“The financial performance of our domestic businesses was largely impacted by significant margin pressure in the retail marketplace, and we have taken these into consideration in our analysis of inventory and accounts receivable at year end,” stated Fred Schneider, chief financial officer of SKECHERS. “Going forward, we plan to further rationalize our expenses to be in line with our reduced outlook for 2009. Despite our disappointment with our fourth quarter results and near-term outlook, we are confident that the combination of our inventory reduction plan, reduced expenses and current sales performance will allow us to return to profitability in the back half of the year.”
The Company will report its fourth quarter 2008 results and hold a conference call after the close of market on Wednesday, February 18, 2009, but based on its preliminary analysis expects to end the fourth quarter with approximately $190 million to $200 million in cash and investments and $250 million to $260 million in inventory. While the inventory is appreciably higher than initially expected, the Company has slowed its production, and has an aggressive plan to manage both its inventory and expenses down by the middle of 2009. The Company is cutting additional operating expenses in all key areas of business and has reduced its headcount by approximately three percent. The Company will provide further detail on its inventory and expense reduction initiatives on its February 18 fourth quarter conference call. Furthermore, the Company expects to see its cash position increase during the year.
Based on all the factors discussed, the Company now expects to break even in the first half of 2009, to return to profitability in the second half of 2009, and to achieve 2009 annual revenues between $1.2 billion and $1.3 billion.
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, and across Europe, as well as through a joint venture in China and Hong Kong. Please visit www.skechers.com or call the Company’s information line at 877-INFO-SKX.
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; intense competition among sellers of footwear for consumers; changes in fashion trends and consumer demands; popularity of particular designs and categories of products; the level of sales during the spring, back-to-school and holiday selling seasons; the ability to anticipate, identify, interpret or forecast changes in fashion trends, consumer demand for the products and the various market factors described above; the ability to maintain brand image; the ability to sustain, manage and forecast growth and inventories; the ability to secure and protect trademarks, patents and other intellectual property; the loss of any significant customers, decreased demand by industry retailers and cancellation of order commitments; potential disruptions in manufacturing related to overseas sourcing and concentration of production in China, including, without limitation, difficulties associated with political instability in China, the occurrence of a natural disaster or outbreak of a pandemic disease in China, or electrical shortages, labor shortages or work stoppages that may lead to higher production costs and/or production delays; changes in monetary controls and valuations of the Yuan by the Chinese government; increased costs of freight and transportation to meet delivery deadlines; violation of labor or other laws by independent contract manufacturers, suppliers or licensees; potential imposition of additional duties, tariffs or other trade restrictions; business disruptions resulting from natural disasters such as an earthquake due to the location of domestic warehouse, headquarters and a substantial number of retail stores in California; changes in business strategy or development plans; changes in economic conditions that could affect the ability to open retail stores in new markets and/or the sales performance of existing stores; the ability to attract and retain qualified personnel; the disruption, expense and potential liability associated with existing or unanticipated future litigation; and other factors referenced or incorporated by reference in the Company’s Form 10-K for the year ended December 31, 2007 and the Company’s Form 10-Q for the quarter ended September 30, 2008. The risks included here are not exhaustive. We operate 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 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.
