by | Apr 30, 2007 | Press Release
Apr 30, 2007 • 6:20 pm EDT
U.S. District Court Denies Asics’ Motion for a Preliminary Injunction Against Skechers Court Finds “Substantial” Differences Between Asics Trademark and Skechers Designs
MANHATTAN BEACH, Calif.–(BUSINESS WIRE)–
SKECHERS USA, Inc. (NYSE:SKX), a global leader in lifestyle footwear, announced today that it won a major victory in a trademark lawsuit filed against Skechers by Asics Corporation and Asics America Corporation (collectively “Asics”). The U.S. District Court for the Central District of California denied Asics’ motion for a preliminary injunction against Skechers, expressly finding that there are “substantial” differences between Asics’ trademark and Skechers’ stripe designs.
Asics sued the company for trademark infringement, unfair competition, trademark dilution and false advertising, claiming that the stripe design on four Skechers shoe styles infringes Asics’ stripe trademark. Asics sought a preliminary injunction against Skechers to prevent Skechers from making and selling the four shoe styles. After hearing oral argument, the court denied Asics’ motion. In a 21-page opinion dated April 25, 2007, the court found that Asics had not shown that it is likely to succeed in its trademark infringement case against Skechers. The District Court’s opinion states: “the designs are quite different and in the marketplace the shoes appear highly dissimilar.” The court also found that the Asics trademark and Skechers stripes were not similar enough to infer that Skechers copied its designs from Asics.
“We feel vindicated by the court’s opinion that there are ‘substantial’ differences between the Skechers stripe designs and the Asics’ trademark,” stated Philip G. Paccione, General Counsel of Skechers. “As we have said all along, the Asics suit is nothing more than an attempt to monopolize the use of common design elements, undermine legitimate competition and intimidate retailers. Skechers is hip, cutting edge and original in its shoe designs, and does not attempt to trade on the brand image and identity of any company other than Skechers.”
The District Court also declined to grant Asics injunctive relief on its trade dress infringement claim, which was limited to one of the four Skechers styles in issue, the Skechers Showdowns. The court found that there was no evidence of actual confusion or that Skechers had intentionally copied Asics’ design.
Paccione continued, “In light of this resounding victory, Skechers has decided to focus its resources on bringing this infringement case to a successful and prompt conclusion, and will consider recourse for Asics’ anti-competitive and other wrongful conduct at a later date.”
Skechers was represented in the matter by Marshall Lerner, Brad Mattes and Philip Nulud of Kleinberg & Lerner of Los Angeles, California.
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.
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 of the Company, 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 the Company’s 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 our products and the various market factors described above; the ability of the Company to maintain its brand image; the ability to sustain, manage and forecast the Company’s 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 our 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 the Company’s domestic warehouse, headquarters and a substantial number of retail stores in California; 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; and other factors referenced or incorporated by reference in the Company’s annual report on Form 10-K for the year ended December 31, 2006. 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 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 the Company’s future performance.
by | Apr 25, 2007 | Press Release
Apr 25, 2007 • 4:00 pm EDT
— Net Sales Increase 24.3 Percent to $344.9 Million
— Net Earnings Increase of 44.0 Percent to $23.9 Million
— Diluted Earnings Per Share Rise 36.8 Percent to $0.52
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, 2007.
Net sales for the first quarter of 2007 rose 24.3 percent to $344.9 million as compared to net sales of $277.6 million for the first quarter of 2006. Net earnings for the quarter were $23.9 million versus net earnings of $16.6 million for the first quarter of 2006. Diluted earnings per share were $0.52 on 46,803,000 weighted average shares outstanding versus diluted earnings per share of $0.38 on 45,395,000 weighted average shares outstanding for the first quarter of 2006.
“We are very pleased with our first quarter 2007 top-line results of more than $344 million in net sales, which represent the highest quarterly revenues in our 15-year history,” stated Fred Schneider, chief financial officer of SKECHERS. “We are also pleased with our record net earnings, which improved by 44 percent for the quarter, and believe we can further capitalize on our momentum in the marketplace to continue to show improvements in our quarterly earnings for the balance of the year.”
Gross profit for the first quarter of 2007 was $149.0 million compared to $118.4 million for the first quarter of last year. Gross margin was 43.2 percent for the first quarter of 2007 up approximately 50 basis points compared to 42.7 percent for the first quarter of 2006.
“Our company’s record first quarter net sales are a result of double-digit sales increases across all of our revenue channels: domestic wholesale, domestic and international retail, our international subsidiaries and distributors, and e-commerce,” began David Weinberg, SKECHERS’ chief operating officer. “The sales were driven by the continued strength of our trend-right SKECHERS product, and the growth of our fashion and street brands domestically and the launch of these brands overseas.”
Robert Greenberg, the Company’s chief executive officer, commented: “SKECHERS was built on our mantra of ‘unseen, untold, unsold.’ Through a combination of consistent and pervasive advertising, designing and developing trend-right product, and then following up with more marketing support, we have developed a globally recognized brand, and grown to be a billion dollar-plus lifestyle company. We are pleased that these efforts have resulted in our key SKECHERS lines continuing to grow globally, and our fashion and street brands gaining a stronger foothold in the U.S. Our new SKECHERS and fashion and street lines were also embraced by consumers: SKECHERS Cali and Zoo York, both of which were introduced late last year, had strong sell-throughs in the first quarter. Additionally, Cali Gear by SKECHERS and Avirex both launched in the first quarter and saw strong acceptance in the market. We are also pleased with the initial acceptance of our fashion and street lines internationally as they have begun selling abroad. All of our 10 brands are supported with multiple marketing mediums – which may include print, outdoor and television advertising, and are positively impacted by the power of celebrities – including Ashlee Simpson, JoJo, Terrence Howard and NaS. SKECHERS is already a global brand, but we feel there is potential to further grow its presence and penetrate additional markets around the world. And with our fashion and street brands, we are just scratching the surface. As a product and marketing driven company, we plan to continue to support our brands with increased advertising in the second quarter to capitalize on our growth and position us well for the third quarter when we plan on taking a more moderate approach to increasing our advertising spend. We believe there is much more to be seen, told and sold.”
Mr. Weinberg added: “We believe the sales momentum we are seeing will continue into the second quarter based on key indicators including our double-digit backlog and strong retail comp sales. While we are projecting our second quarter sales to be a new quarterly record and are encouraged by our key indicators as well as strong shipments in April, we do believe the greater opportunity is in the third quarter when our back-to-school shipments may shift from June into July as they have done previously. We are gearing up for our continued growth with improvements in our infrastructure, additional marketing and fresh product.”
The Company now expects second quarter 2007 net sales to be in the range of $350 million to $360 million and diluted earnings per share in the range of $0.41 to $0.46. It is important to note, however, that historically SKECHERS’ back-to-school shipping period occurs in June and July over both its second and third quarters, which has caused sales to shift between the two quarters; the timing of when goods ship is determined by the delivery schedules set by the Company’s wholesale accounts. The Company would also like to note that embedded in its guidance are some important assumptions regarding expenses. As previously discussed, when the Company approaches $1.3 to $1.4 billion, it expected it would need to make necessary investments in its infrastructure to support its increased scale. These investments are in a variety of areas such as warehousing and distribution, retail due to accelerated store openings, research and development in China, sourcing, personnel, and other areas. Also a factor is the Company’s selling expenses for the second quarter; management believes advertising expense will be up approximately $8 million over last year’s second quarter.
Note that statements made by Mr. Greenberg, Mr. Weinberg, and Mr. Schneider as well as other statements included in this press release, may involve future goals and targets based upon current expectations. These comments, including those about guidance, are forward looking and actual results may differ materially.
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.
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 of the Company, 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 the Company’s 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 our products and the various market factors described above; the ability of the Company to maintain its brand image; the ability to sustain, manage and forecast the Company’s 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 the Company’s 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 the Company’s domestic warehouse, headquarters and a substantial number of retail stores in California; 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; and other factors referenced or incorporated by reference in the Company’s Form 10-K for the year ended December 31, 2006. 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 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 the Company’s future performance.
SKECHERS U.S.A., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
March 31, December 31,
2007 2006
-------------- -----------------
ASSETS
Current Assets:
Cash and cash equivalents $115,315 $160,485
Short-term investments 61,500 60,000
Trade accounts receivable, net 223,043 177,740
Other receivables 8,124 8,035
-------------- -----------------
Total receivables 231,167 185,775
-------------- -----------------
Inventories 169,052 200,877
Prepaid expenses and other current
assets 16,894 15,321
Deferred tax assets 9,490 9,490
-------------- -----------------
Total current assets 603,418 631,948
-------------- -----------------
Property and equipment, at cost less
accumulated depreciation and
amortization 88,581 87,645
Intangible assets, less applicable
amortization 392 633
Deferred tax assets 11,984 11,984
Other assets, at cost 4,869 4,843
-------------- -----------------
TOTAL ASSETS $709,244 $737,053
============== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current installments of long-term
borrowings $413 $576
Accounts payable 110,993 161,150
Accrued expenses 18,310 19,435
-------------- -----------------
Total current liabilities 129,716 181,161
-------------- -----------------
Long-term borrowings, excluding
current installments 16,747 106,805
-------------- -----------------
Stockholders' equity 562,781 449,087
-------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $709,244 $737,053
============== =================
SKECHERS U.S.A., INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In thousands, except per share data)
Three Months Ended March 31,
2007 2006
-------------- -------------
Net sales $344,896 $277,565
Cost of sales 195,857 159,190
-------------- -------------
Gross profit 149,039 118,375
Royalty income, net 1,201 994
-------------- -------------
150,240 119,369
-------------- -------------
Operating expenses:
Selling 26,841 20,187
General and administrative 85,984 71,933
-------------- -------------
112,825 92,120
-------------- -------------
Earnings from operations 37,415 27,249
-------------- -------------
Other income (expense):
Interest, net 847 (459)
Other, net (22) 206
-------------- -------------
825 (253)
-------------- -------------
Earnings before income taxes 38,240 26,996
Income tax expense 14,340 10,398
-------------- -------------
Net earnings $23,900 $16,598
============== =============
Net earnings per share:
Basic $0.54 $0.41
============== =============
Diluted $0.52 $0.38
============== =============
Weighted average shares:
Basic 43,951 40,306
============== =============
Diluted 46,803 45,395
============== =============
by | Apr 20, 2007 | Press Release
Apr 20, 2007 • 5:35 pm EDT
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 first quarter fiscal year 2007 financial results will be broadcast live over the Internet on Wednesday, April 25, 2007 at 4:30 pm Eastern Daylight Time.
This call is being webcast by CCBN and can be accessed at SKECHERS website at www.skx.com.
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 | Apr 16, 2007 | Press Release
Apr 16, 2007 • 4:42 pm EDT
Company Will Seek $100 Million in Punitive Damages
MANHATTAN BEACH, Calif.–(BUSINESS WIRE)–
SKECHERS USA, Inc. (NYSE:SKX), a global leader in lifestyle footwear, stated today that it will be re-filing its lawsuit against Asics Corporation and Asics America Corporation (collectively “Asics”) for trade libel, unfair competition and tortious interference with prospective economic advantage and economic business relations. The suit will be re-filed when Skechers answers Asics’ complaint. Skechers will seek $100 million in punitive damages and a declaration that none of its designs infringe Asics’ trademarks.
“SKECHERS dismissed its lawsuit against Asics without prejudice in the ‘interest of judicial economy’ and will be re-filing the suit as counterclaims in Asics’ lawsuit, which was explained in a March 28, 2007 letter to Asics’ lawyers,” began Philip G. Paccione, General Counsel of Skechers. “Given that Skechers’ declaratory relief claim against Asics involves the same legal and factual issues as Asics’ infringement claims against Skechers, we elected to re-file as counterclaims and avoid wasting public tax money by maintaining separate suits. It was an opportune time to dismiss and consolidate since the parties were attempting to resolve the matter and the Skechers’ suit had not yet been served.”
Paccione continued: “On April 13, 2007, Asics’ lawyers issued a press release stating that Skechers dropped its trade libel suit. The press release did not include relevant information given to Asics in the March 28 letter, including the reason why Skechers dropped the suit, that the suit was dismissed without prejudice, and that Skechers intends to re-file when it answers Asics’ complaint.”
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.
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 of the Company, 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 the Company’s 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 our products and the various market factors described above; the ability of the Company to maintain its brand image; the ability to sustain, manage and forecast the Company’s 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 our 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 the Company’s domestic warehouse, headquarters and a substantial number of retail stores in California; changes in business strategy or development plans; the ability to obtain additional capital to fund operations, finance growth and service debt obligations; the ability to attract and retain qualified personnel; compliance with recent corporate governance legislation including the Sarbanes-Oxley Act of 2002; 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 annual report on Form 10-K for the year ended December 31, 2005 and in the Company’s Form 10-K for the year ended December 31, 2006. 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 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 the Company’s future performance.
by | Feb 27, 2007 | Press Release
Feb 27, 2007 • 4:44 pm EST
Seeks Injunction, Disgorgement of Profits and $100 Million In Punitive Damages
MANHATTAN BEACH, Calif.–(BUSINESS WIRE)–
Please replace the image with the accompanying corrected graphic.
The release reads:
SKECHERS Sues Asics for Trade Libel, Unfair Competition and Tortious Interference with Business Relationships
Seeks Injunction, Disgorgement of Profits and $100 Million In Punitive Damages
SKECHERS USA, Inc. (NYSE:SKX), a global leader in lifestyle footwear, announced today that it has filed a lawsuit against Asics Corporation and Asics America Corporation (collectively “Asics”) for trade libel, unfair competition and tortious interference with prospective economic advantage and economic business relations. Skechers seeks injunctive relief enjoining Asics from engaging in further unlawful acts, disgorgement of Asics’ profits, attorneys’ fees and $100 million in punitive damages. Skechers also seeks a declaration that none of its designs infringe upon Asics’ trademarks. The suit was filed in the United States District Court for the Central District of California on February 26, 2007.
“We believe that Asics has engaged in a campaign of unfair competition and trade libel against Skechers by improperly issuing press releases and filing a lawsuit to disseminate false public information about Skechers,” says Philip G. Paccione, General Counsel of Skechers. “We also believe that these false statements were made with malice as they contradict sworn testimony of Asics’ executives. These falsehoods threaten Skechers’ reputation of being hip, cutting edge and original in its shoe designs, and they will interfere with customer relationships.”
Skechers’ lawsuit is in response to an Asics’ lawsuit and press release asserting that certain Skechers designs infringed Asics’ trademark.
Paccione continued: “It is obvious to the footwear trade as well as to the average consumer that the designs are different. Furthermore, no consumer will be confused by the Skechers’ styles considering how prominently and frequently Skechers marks its packaging and footwear with the globally recognized SKECHERS trademark and logo. In light of this, Asics’ campaign is nothing more than an attempt to monopolize the use of common footwear design elements and undermine legitimate competition by issuing false public statements that intimidate trade customers.”
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.
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 of the Company, 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 the Company’s 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 our products and the various market factors described above; the ability of the Company to maintain its brand image; the ability to sustain, manage and forecast the Company’s 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 our 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 the Company’s domestic warehouse, headquarters and a substantial number of retail stores in California; changes in business strategy or development plans; the ability to obtain additional capital to fund operations, finance growth and service debt obligations; the ability to attract and retain qualified personnel; compliance with recent corporate governance legislation including the Sarbanes-Oxley Act of 2002; 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 annual report on Form 10-K for the year ended December 31, 2005 and in the Company’s Form 10-Q for the quarter ended September 30, 2006. 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 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 the Company’s future performance.
by | Feb 21, 2007 | Press Release
Feb 21, 2007 • 4:00 pm EST
— 2006 Net Sales of $1.205 Billion, an Increase of 19.8 Percent Over 2005
— 2006 Net Earnings of $71.0 Million, an Increase of 58.8 Percent Over 2005
— 2006 Diluted EPS of $1.59, an Increase of 50.0 Percent Over 2005
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, 2006.
Fiscal year 2006 net sales increased 19.8 percent to $1.205 billion as compared to net sales of $1.006 billion in 2005. Net earnings for 2006 were $71.0 million versus net earnings of $44.7 million in 2005. For fiscal year 2006, diluted earnings per share were $1.59 on 46,139,000 weighted average shares outstanding versus diluted earnings per share of $1.06 on 44,518,000 weighted average shares outstanding in the prior year.
Net sales for the fourth quarter of 2006 increased 36.2 percent to $304.5 million as compared to $223.5 million in the fourth quarter of 2005. Net earnings for the fourth quarter of 2006 were $14.6 million versus net earnings of $5.9 million in the fourth quarter of 2005. Net earnings per diluted share in the fourth quarter of 2006 were $0.33 on 46,564,000 weighted average shares outstanding compared to net earnings per diluted share of $0.14 on 41,229,000 weighted average shares outstanding in the fourth quarter of 2005.
“Our record sales are the result of successfully delivering the right product, in the right place at the right time and in the right quantity,” stated David Weinberg, chief operating officer of SKECHERS. “We have consistently delivered more in-season product, continuously offered fresh trend-right styles and introduced new lines and categories in our domestic and international wholesale channel as well as in our SKECHERS-owned retail businesses. This has resulted in improved margins and increased profitability.”
“We are very pleased with our record fourth quarter and full-year 2006 sales, which improved significantly over last year’s record fourth quarter and full-year sales,” said Fred Schneider, chief financial officer of SKECHERS. “The fourth quarter marks the second time we have achieved over $300 million in quarterly sales, with the first being in the third quarter of 2006. Furthermore, we continue to carefully manage our inventory and prudently invest our cash as we profitably grow the business.”
Gross profit for 2006 was $523.3 million compared to $420.5 million in 2005. Gross margin for 2006 was 43.4 percent versus 41.8 percent for 2005. Gross profit for the fourth quarter of 2006 was $127.9 million compared to $93.0 million in the fourth quarter of 2005. Gross margin in the fourth quarter 2006 was 42.0 percent versus 41.6 percent for the fourth quarter of 2005.
Robert Greenberg, the Company’s chief executive officer, began: “We are entering our 15th year of business as a $1.2 billion dollar company, an achievement we are extremely proud of. This is the result of building a globally recognized and accepted brand, SKECHERS, as well as successfully launching several other footwear brands. By the close of 2006, we had created 10 on-target brands and over 20 divisions comprised of relevant product that is supported by compelling marketing campaigns. Many of our established fashion and street brands – which are only a few years old – such as 310 Motoring and Marc Ecko Footwear, are creating their own niches in the market place and are now becoming sought after and respected brands. We see these brands, along with our newer brands like Zoo York, as being key players in the footwear industry with strong growth potential. Additionally, we believe that our continuous marketing efforts have helped build and establish each of our brands and have positively impacted 2006 sales. Our extensive marketing campaign includes print ads, outdoor, mall kiosks and in-store displays, as well new television campaigns. We also currently have eight celebrities behind our brands – Ashlee Simpson for SKECHERS, JoJo for Rhino Red, Evangeline Lilly for Michelle K, Donny Barley for Zoo York, Paul Wall for Avirex, and The Game, Nas and Terrence Howard for 310, each in sync with their respective brand’s image.”
Mr. Greenberg continued: “We believe that this is just the beginning for our brands and that we are in a very strong position in terms of our product offering, marketing efforts and operation execution. We believe we are now at the point where we can truly propel all our brands to new heights. We are setting new standards for ourselves and are looking forward to breaking our 2006 records in 2007.”
Mr. Weinberg continued: “With three years of record breaking quarters and our highest annual sales combined with our key performance indicators – including comp store sales growth and double-digit backlog, we believe that our strong growth pattern will continue and that 2007 will again bring new records as we push past the billion and a quarter mark in net sales.”
The Company now expects first quarter 2007 net sales to be in the range of $325 million to $335 million and diluted earnings per share in the range of $0.50 to $0.55.
Note that statements made by Mr. Weinberg, Mr. Schneider and Mr. Greenberg, as well as other statements included in this press release, may involve future goals and targets based upon current expectations. These comments, including those about guidance, are forward looking and actual results may differ materially.
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.
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 of the Company, 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 the Company’s 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 our products and the various market factors described above; the ability of the Company to maintain its brand image; the ability to sustain, manage and forecast the Company’s 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 our 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 the Company’s domestic warehouse, headquarters and a substantial number of retail stores in California; changes in business strategy or development plans; the ability to obtain additional capital to fund operations, finance growth and service debt obligations; the ability to attract and retain qualified personnel; compliance with recent corporate governance legislation including the Sarbanes-Oxley Act of 2002; 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 annual report on Form 10-K for the year ended December 31, 2005 and in the Company’s Form 10-Q for the quarter ended September 30, 2006. 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 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 the Company’s future performance.
SKECHERS U.S.A., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
December December
31, 31,
2006 2005
------------------
ASSETS
Current Assets:
Cash and cash equivalents $160,485 $197,007
Short-term investments 60,000 -
Trade accounts receivable, net 177,740 134,600
Other receivables 8,035 6,888
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Total receivables 185,775 141,488
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Inventories 200,877 136,171
Prepaid expenses and other current assets 13,313 11,628
Deferred tax assets 12,384 5,755
------------------
Total current assets 632,834 492,049
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Property and equipment, at cost less accumulated
depreciation and amortization 87,645 72,945
Intangible assets, less applicable amortization 633 1,131
Deferred tax assets 11,984 9,337
Other assets, at cost 4,843 6,495
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TOTAL ASSETS $737,939 $581,957
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current installments of long-term borrowings $576 $1,040
Accounts payable 161,150 108,395
Accrued expenses 20,321 21,404
------------------
Total current liabilities 182,047 130,839
------------------
Long-term borrowings, excluding current installments 106,805 107,288
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Stockholders' equity 449,087 343,830
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $737,939 $581,957
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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,
2006 2005 2006 2005
--------- --------- ----------- -----------
Net sales $304,494 $223,494 $1,205,368 $1,006,477
Cost of sales 176,561 130,457 682,022 585,995
--------- --------- ----------- -----------
Gross profit 127,933 93,037 523,346 420,482
Royalty income, net 1,202 1,556 4,114 6,628
--------- --------- ----------- -----------
129,135 94,593 527,460 427,110
--------- --------- ----------- -----------
Operating expenses:
Selling 22,935 15,042 109,886 81,378
General and
administrative 82,818 68,984 305,030 269,436
--------- --------- ----------- -----------
105,753 84,026 414,916 350,814
--------- --------- ----------- -----------
Earnings from operations 23,382 10,567 112,544 76,296
--------- --------- ----------- -----------
Other income (expense):
Interest, net (80) (677) (876) (4,786)
Other, net 652 (311) 980 1,287
--------- --------- ----------- -----------
572 (988) 104 (3,499)
--------- --------- ----------- -----------
Earnings before income
taxes 23,954 9,579 112,648 72,797
Income tax expense 9,372 3,678 41,654 28,080
--------- --------- ----------- -----------
Net earnings $14,582 $5,901 $70,994 $44,717
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Net earnings per share:
Basic $0.35 $0.15 $1.73 $1.13
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Diluted $0.33 $0.14 $1.59 $1.06
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Weighted average shares:
Basic 41,622 39,956 41,079 39,686
========= ========= =========== ===========
Diluted 46,564 41,229 46,139 44,518
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