by Zach | Jul 23, 2020 | Press Release
Jul 23, 2020 • 4:05 pm EDT
MANHATTAN BEACH, Calif.–(BUSINESS WIRE)–
SKECHERS USA, Inc. (NYSE:SKX), a global footwear leader, today announced financial results for the second quarter ended June 30, 2020.
Second Quarter Results
“Skechers, like most businesses around the world, has never faced a more challenging time than during the pandemic, which caused the closing of nearly every market worldwide,” stated Robert Greenberg, chief executive officer of Skechers. “COVID-19 continues to be a serious concern globally, and the health and welfare of our team, partners and customers remain our number one priority. In the face of this on-going challenge, I am extremely proud of our company. We are a resilient organization driven by a dedicated and flexible team determined to do what it takes to not only survive but position ourselves for a return to profitability. Now, with more than 90 percent of our Skechers stores safely re-opened and some markets in the early stages of recovery, we believe that we will remain a brand consumers and retailers trust to deliver comfort, quality, and style. We are hopeful that global economies will continue to improve, and as they do, we will continue to operate efficiently and judiciously during this pandemic.”
“The impact of COVID-19 to Skechers’ business was significant in the second quarter as we saw much of the world outside Asia shutter nearly all businesses,” began David Weinberg, chief operating officer of Skechers. “However, we remain optimistic about the early signs of recovery we witnessed during the quarter, including a return to growth in China, consistent improvement each month in some markets outside of China, and record shattering growth of over 400 percent in our Company-owned e-commerce business. While every country’s recovery has been unique, we began to see a similar recovery trend, first reflected in China and now extending into other markets globally including Australia, Germany, South Korea and Taiwan. We believe the positive sales trends in markets that have re-opened, as well as the efficiency with which we addressed the pandemic challenges, are strong indicators that when the global health crisis stabilizes, Skechers will remain a global footwear leader.”
Second Quarter 2020 Financial Results
(Dollars in millions, except per share data)
Three months ended
June 30,
Change
2020
2019
$
%
Sales
$
729.5
$
1,258.6
$
(529.1
)
-42.0
%
Gross Profit
368.6
609.8
(241.2
)
-39.6
%
Gross Margin
50.5
%
48.5
%
SG&A Expenses
432.1
505.1
(73.0
)
-14.5
%
As a % of Sales
59.2
%
40.1
%
Earnings / (loss) from Operations
(61.0
)
111.1
(172.1
)
-154.9
%
Operating Margin
(8.4
)
%
8.8
%
Net Earnings / (loss)
(68.1
)
75.2
(143.3
)
-190.6
%
Diluted Earnings / (loss) per Share
$
(0.44
)
$
0.49
$
(0.93
)
-189.8
%
Sales decreased 42.0 percent as a result of a 37.8 percent decrease in its international business and a 47.3 percent decrease in the Company’s domestic business, reflecting the impact of the global pandemic. The Company’s international sales declines were partially offset by an 11.5 percent increase in China sales. The Company’s international wholesale business decreased 29.9 percent and its domestic wholesale business decreased 57.2 percent. With nearly all its Skechers stores closed at some point in the quarter, its direct-to-consumer business decreased 47.1 percent, which includes a 428.2 percent increase in its e-commerce business. Comparable same store sales in its direct-to-consumer business decreased 45.6 percent, including a decrease of 35.9 percent in the United States and 66.9 percent internationally.
Gross margins increased by approximately 210 basis points as a result of a favorable mix of online and international sales.
SG&A expenses decreased $73.0 million, or 14.5 percent in the quarter. Selling expenses decreased by $53.3 million, or 46.9 percent, primarily due to lower advertising and marketing expenses globally. General and administrative expenses decreased by $19.7 million, or 5.0 percent, despite the inclusion of an incremental $10.2 million in bad debt expense, due predominately to the impact of COVID-19 on wholesale customers across the globe. The decrease was primarily the result of a reduction in compensation related expenses due to the temporary closure of its retail stores and the furlough of select corporate staff.
Earnings (loss) from operations decreased $172.1 million, or 154.9 percent, to a loss of $61.0 million.
Net loss was $68.1 million and diluted loss per share was $0.44.
In the second quarter, the Company’s effective income tax rate was 7.2 percent, resulting in a net tax benefit of $4.3 million.
“Despite the challenges of the second quarter, we are optimistic about the early-stage recovery we are seeing in much of our business, including a return to growth in China and the explosive growth of our e-commerce channel,” said John Vandemore, chief financial officer of Skechers. “We ended the second quarter in a position of significant financial strength, having grown our cash balances sequentially by more than $175 million through prudent inventory, working capital and operating expense management. We remain confident in our ability to manage through this crisis and are extremely optimistic about the long-term future of the Skechers brand.”
Six Months 2020 Financial Results
(Dollars in millions, except per share data)
Six Months ended
June 30,
Change
2020
2019
$
%
Sales
$
1,971.8
$
2,535.3
$
(563.5
)
-22.2
%
Gross Profit
916.2
1,200.3
(284.1
)
-23.7
%
Gross Margin
46.5
%
47.3
%
SG&A Expenses
940.2
934.9
5.3
0.6
%
As a % of Sales
47.7
%
36.9
%
Earnings / (loss) from Operations
(16.2
)
276.9
(293.1
)
-105.9
%
Operating Margin
(0.8
)
%
10.9
%
Net Earnings / (loss)
(19.0
)
183.9
(202.9
)
-110.3
%
Diluted Earnings / (loss) per Share
$
(0.12
)
$
1.19
$
(1.31
)
-110.1
%
For the first six months, sales decreased 22.2 percent, reflecting the impact of the global pandemic on our businesses worldwide.
Gross margins decreased slightly due to lower international gross margins, including the impact of a one-time, non-cash purchase price adjustment related to the acquisition of the Company’s interest in the Mexico joint venture in 2019 of $8.0 million.
For the first six months, SG&A expenses increased by 0.6 percent or $5.3 million. Selling expenses decreased by 26.9 percent or $49.4 million, primarily due to lower advertising and marketing expenses globally. General and administrative expenses increased by 7.3 percent or $54.7 million, reflecting the inclusion of Mexico operations and a net increase in new Company-owned Skechers stores.
Earnings (loss) from operations decreased $293.1 million, or 105.9 percent, to a loss of $16.2 million.
Net loss was $19.0 million and diluted loss per share was $0.12.
Balance Sheet
At quarter-end, cash, cash equivalents and investments totaled $1.56 billion, an increase of $524.5 million, or 50.9 percent from December 31, 2019, and an increase of $583.0 million, or 59.9 percent, over June 30, 2019. The increase primarily reflects the drawdown of $490 million from the Company’s senior unsecured credit facility in the first quarter.
Total inventory, including inventory in transit, was $1.03 billion, a decrease of $42.1 million or 3.9 percent from December 31, 2019, and an increase of $172.1 million or 20.1 percent over June 30, 2019. The higher year-over-year inventory levels reflect lower wholesale shipping and decreased retail activity associated with the global pandemic.
Outlook
The Company is not providing further financial guidance at this time given the ongoing business disruption and substantial uncertainty surrounding the impact of the pandemic on its business globally.
Store Count
Number of Store Locations as of
Number of Store Locations as of
March 31, 2020
Opened
Closed(1)
June 30, 2020
Company-owned domestic stores
508
3
(1
)
510
Company-owned international stores
304
4
–
308
Joint-venture stores
377
21
(8
)
390
Distributor, licensee and franchise stores
2,386
81
(60
)
2,407
Total Skechers stores
3,575
109
(69
)
3,615
(1) Does not reflect temporary closures due to the COVID-19 pandemic.
Second Quarter 2020 Conference Call
The Company will host a conference call today at 1:30 p.m. Pacific Time / 4:30 p.m. Eastern Time to discuss its second quarter 2020 financial results. The call can be accessed on the Investor Relations section of the Company’s website at investors.skechers.com. For those unable to participate during the live broadcast, a replay will be available beginning July 23, 2020 at 7:30 p.m. ET, through August 6, 2020, at 11:59 p.m. ET. To access the replay, dial 844-512-2921 (U.S.) or 412-317-6671 (International) and use passcode: 13706218.
About SKECHERS USA, Inc.
Based in Manhattan Beach, California, Skechers designs, develops and markets a diverse range of lifestyle and performance footwear, apparel and accessories for men, women and children. The Company’s collections are available in the United States and over 170 countries and territories via department and specialty stores, and direct to consumers through 3,615 Company- and third-party-owned retail stores and e-commerce websites. The Company manages its international business through a network of global distributors, joint venture partners in Asia, Israel and Mexico, and wholly-owned subsidiaries in Canada, Japan, India, Europe and Latin America. For more information, please visit about.skechers.com and follow us on Facebook, Instagram, Twitter, and TikTok.
Reference in this press release to “Sales” refers to Skechers’ net sales reported under generally accepted accounting principles in the United States. This announcement also contains forward-looking statements that are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, without limitation, Skechers’ future domestic and international growth, financial results and operations including expected net sales and earnings, its development of new products, future demand for its products, its planned domestic and international expansion, opening of new stores and additional expenditures, and advertising and marketing initiatives. Forward-looking statements 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 the disruption of business and operations due to the COVID-19 pandemic; international economic, political and market conditions including the challenging consumer retail markets in the United States; 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, especially in the highly competitive performance footwear market; 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 Skechers’ annual report on Form 10-K for the year ended December 31, 2019, and its quarterly report on Form 10-Q for the three-months ended March 31, 2020. More specifically, the COVID-19 pandemic has had and is currently having a significant impact on Skechers’ business, financial conditions, cash flow and results of operations. Forward-looking statements with respect to the COVID-19 pandemic include, without limitation, Skechers’ plans in response to this pandemic. At this time, there is significant uncertainty about the COVID-19 pandemic, including without limitation, (i) the duration and extent of the impact of the pandemic, (ii) governmental responses to the pandemic, including how such responses could impact Skechers’ business and operations, as well as the operations of its contract manufacturers and other business partners, (iii) the effectiveness of Skechers’ actions taken in response to these risks, and (iv) Skechers’ ability to effectively and timely adjust its plans in response to the rapidly changing retail and economic environment. Taking these and other risk factors associated with COVID-19 into consideration, the dynamic nature of these circumstances means that what is stated in this press release could change at any time, and as a result, actual results could differ materially from those contemplated by such forward-looking statements. The risks included here are not exhaustive. Skechers operates 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 future performance.
SKECHERS U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, dollars in thousands)
June 30,
December 31,
2020
2019
ASSETS
Current assets:
Cash and cash equivalents
$
1,352,120
$
824,876
Short-term investments
105,677
112,037
Trade accounts receivable, net
478,011
645,303
Other receivables
68,104
53,932
Total receivables
546,115
699,235
Inventories
1,027,735
1,069,863
Prepaid expenses and other current assets
105,141
113,580
Total current assets
3,136,788
2,819,591
Property, plant and equipment, net
833,103
738,925
Operating lease right-of-use assets
1,102,885
1,073,660
Deferred tax assets
49,198
49,088
Long-term investments
98,236
94,589
Goodwill
93,497
71,412
Other assets, net
94,339
45,678
Total non-current assets
2,271,258
2,073,352
TOTAL ASSETS
$
5,408,046
$
4,892,943
LIABILITIES AND EQUITY
Current liabilities:
Current installments of long-term borrowings
$
69,359
$
66,234
Short-term borrowings
13,870
5,789
Accounts payable
621,142
764,844
Operating lease liabilities
194,508
191,129
Accrued expenses
177,907
210,235
Total current liabilities
1,076,786
1,238,231
Long-term borrowings, excluding current installments
680,109
49,183
Long-term operating lease liabilities
1,099,798
966,011
Deferred tax liabilities
12,435
322
Other long-term liabilities
101,774
103,089
Total non-current liabilities
1,894,116
1,118,605
Total liabilities
2,970,902
2,356,836
Stockholders’ equity:
Skechers U.S.A., Inc. equity
2,224,715
2,314,665
Non-controlling interests
212,429
221,442
Total stockholders’ equity
2,437,144
2,536,107
TOTAL LIABILITIES AND EQUITY
$
5,408,046
$
4,892,943
SKECHERS U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited, dollars in thousands except per share data)
Three Months Ended
Six Months Ended
June 30,
June 30,
2020
2019
2020
2019
Sales
$
729,472
$
1,258,565
$
1,971,817
$
2,535,321
Cost of sales
360,906
648,730
1,055,583
1,334,977
Gross profit
368,566
609,835
916,234
1,200,344
Royalty income
2,596
6,341
7,844
11,542
371,162
616,176
924,078
1,211,886
Operating expenses:
Selling
60,240
113,507
134,295
183,721
General and administrative
371,893
391,588
805,944
751,220
432,133
505,095
940,239
934,941
Earnings / (loss) from operations
(60,971
)
111,081
(16,161
)
276,945
Other income / (expense):
Interest income
1,547
3,067
3,854
6,209
Interest expense
(4,804
)
(1,905
)
(6,785
)
(3,182
)
Other, net
4,704
553
8,157
(4,433
)
Total other income / (expense)
1,447
1,715
5,226
(1,406
)
Earnings (loss) before income tax expense
(59,524
)
112,796
(10,935
)
275,539
Income tax expense / (benefit)
(4,307
)
20,798
3,122
52,522
Net earnings / (loss)
(55,217
)
91,998
(14,057
)
223,017
Less: Net earnings attributable to non-controlling interests
12,880
16,818
4,939
39,079
Net earnings / (loss) attributable to Skechers U.S.A., Inc.
$
(68,097
)
$
75,180
$
(18,996
)
$
183,938
Net earnings / (loss) per share attributable to Skechers U.S.A., Inc.:
Basic
$
(0.44
)
$
0.49
$
(0.12
)
$
1.20
Diluted
$
(0.44
)
$
0.49
$
(0.12
)
$
1.19
Weighted average shares used in calculating net earnings / (loss) per share attributable to Skechers U.S.A, Inc.:
Basic
154,138
153,413
153,849
153,446
Diluted
154,138
153,912
153,849
154,051
SKECHERS U.S.A., INC. AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(Unaudited, dollars in thousands)
Three Months ended
June 30,
Change
2020
2019
$
%
Sales:
Domestic wholesale
$
130,738
$
305,307
$
(174,569)
-57.2%
International wholesale
385,181
549,551
(164,370)
-29.9%
Direct-to-consumer
213,553
403,707
(190,154)
-47.1%
Total
$
729,472
$
1,258,565
$
(529,093)
-42.0%
Gross profit:
Domestic wholesale
$
50,426
$
116,643
$
(66,217)
-56.8%
International wholesale
180,449
249,939
(69,490)
-27.8%
Direct-to-consumer
137,691
243,253
(105,562)
-43.4%
Total
$
368,566
$
609,835
$
(241,269)
-39.6%
Gross margin percentage:
Domestic wholesale
38.6%
38.2%
International wholesale
46.8%
45.5%
Direct-to-consumer
64.5%
60.3%
Total gross margin percentage
50.5%
48.5%
Six Months ended
June 30,
Change
2020
2019
$
%
Sales:
Domestic wholesale
$
508,700
$
652,001
$
(143,301)
-22.0%
International wholesale
960,380
1,177,619
(217,239)
-18.4%
Direct-to-consumer
502,737
705,701
(202,964)
-28.8%
Total
$
1,971,817
$
2,535,321
$
(563,504)
-22.2%
Gross profit:
Domestic wholesale
$
195,703
$
243,094
$
(47,391)
-19.5%
International wholesale
420,924
538,668
(117,744)
-21.9%
Direct-to-consumer
299,607
418,582
(118,975)
-28.4%
Total
$
916,234
$
1,200,344
$
(284,110)
-23.7%
Gross margin percentage:
Domestic wholesale
38.5%
37.3%
International wholesale
43.8%
45.7%
Direct-to-consumer
59.6%
59.3%
Total gross margin percentage
46.5%
47.3%
RECONCILIATION OF GAAP EARNINGS FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, dollars in thousands except per share data)
Three months ended June 30,
2020
2019
Change
Reported GAAP Measure
Constant Currency
Adjustment(1)
Adjusted for Non-GAAP Measure
Reported GAAP Measure
$
%
Sales
$
729,472
$
12,904
$
742,376
$
1,258,565
$
(516,189
)
-41.0%
Cost of sales
360,906
7,395
368,301
648,730
(280,429
)
-43.2%
Gross profit
$
368,566
$
5,509
$
374,075
$
609,835
$
(235,760
)
-38.7%
Royalty income
2,596
145
2,741
6,341
(3,600
)
-56.8%
SG&A expenses
432,133
6,652
438,785
505,095
(66,310
)
-13.1%
Earnings / (loss) from operations
$
(60,971
)
$
(998
)
$
(61,969
)
$
111,081
$
(173,050
)
-155.8%
Other income / (expense)
1,447
(5,208
)
(3,761
)
1,715
(5,476
)
-319.3%
Income tax expense / (benefit)
(4,307
)
71
(4,236
)
20,798
(25,034
)
-120.4%
Less: Non-controlling interests
12,880
127
13,007
16,818
(3,811
)
-22.7%
Net earnings / (loss)
$
(68,097
)
$
(6,404
)
$
(74,501
)
$
75,180
$
(149,681
)
-199.1%
Diluted earnings / (loss) per share
$
(0.44
)
$
(0.04
)
$
(0.48
)
$
0.49
$
(0.97
)
-198.0%
Six months ended June 30,
2020
2019
Change
Reported GAAP Measure
Constant Currency
Adjustment(1)
Adjusted for Non-GAAP Measure
Reported GAAP Measure
$
%
Sales
$
1,971,817
$
32,428
$
2,004,245
$
2,535,321
$
(531,076
)
-20.9%
Cost of sales
1,055,583
20,201
1,075,784
1,334,977
(259,193
)
-19.4%
Gross profit
$
916,234
$
12,227
$
928,461
$
1,200,344
$
(271,883
)
-22.7%
Royalty income
7,844
(150
)
7,694
11,542
(3,848
)
-33.3%
SG&A expenses
940,239
14,504
954,743
934,941
19,802
2.1%
Earnings / (loss) from operations
$
(16,161
)
$
(2,427
)
$
(18,588
)
$
276,945
$
(295,533
)
-106.7%
Other income / (expense)
5,226
4,796
10,022
(1,406
)
11,428
-812.8%
Income tax expense
3,122
298
3,420
52,522
(49,102
)
-93.5%
Less: Non-controlling interests
4,939
(411
)
4,528
39,079
(34,551
)
-88.4%
Net earnings / (loss)
$
(18,996
)
$
2,482
$
(16,514
)
$
183,938
$
(200,452
)
-109.0%
Diluted earnings / (loss) per share
$
(0.12
)
$
0.02
$
(0.10
)
$
1.19
$
(1.29
)
-108.4%
Constant Currency Adjustment and Acquisition Related Charges (1)
We evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of period-over-period fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our results of operations, thereby facilitating period-to-period comparisons of our business performance and is consistent with how management evaluates the company’s performance. We calculate constant currency percentages by converting our current period local currency financial results using the prior-period exchange rates and comparing these adjusted amounts to our prior period reported results.
Certain Non-GAAP Measures
We use the non-GAAP financial measures presented above to evaluate our results of operations, financial condition, liquidity and indebtedness. We believe that these non-GAAP measures provides useful information to investors regarding financial and business trends related to our results of operations, cash flows and indebtedness and that when this non-GAAP financial information is viewed with our GAAP financial information, investors are provided with valuable supplemental information regarding our results of operations, thereby facilitating period-to-period comparisons of our business performance and is consistent with how management evaluates the company’s operating performance and liquidity. In addition, these non-GAAP measures address questions the company routinely receives from analysts and investors and, in order to assure that all investors have access to similar data the company has determined that it is appropriate to make this data available to all investors. None of the non-GAAP measures presented should be considered as an alternative to net income or loss, operating income, cash flows from operating activities, total indebtedness or any other measures of operating performance and financial condition, liquidity or indebtedness derived in accordance with GAAP. These non-GAAP measures have important limitations as analytical tools and should not be considered in isolation or as substitutes for an analysis of our results as reported under GAAP. Our use of these terms may vary from the use of similarly-titled measures by others in our industry due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation.
Company Contact:
David Weinberg
Chief Operating Officer
John Vandemore
Chief Financial Officer
SKECHERS USA, Inc.
(310) 318-3100
Investor Relations:
Andrew Greenebaum
Addo Investor Relations
(310) 829-5400
Press:
Jennifer Clay
Vice President,
Corporate Communications
SKECHERS USA, Inc.
(310) 318-3100
Source: SKECHERS USA, Inc.
by Zach | Jul 16, 2020 | Press Release
Jul 16, 2020 • 9:00 am EDT
MANHATTAN BEACH, Calif.–(BUSINESS WIRE)–
SKECHERS USA, Inc. (NYSE: SKX), a global leader in lifestyle and performance footwear, today announced that it will release its second quarter 2020 financial results after market close on Thursday, July 23, 2020. A conference call will be held the same day at 4:30 p.m. ET / 1:30 p.m. PT. Participating on the call will be David Weinberg, Chief Operating Officer, and John Vandemore, Chief Financial Officer.
The call can be accessed on the Investor Relations section of the Company’s website at investors.skechers.com. For those unable to participate during the live broadcast, a replay will be available beginning July 23, 2020 at 7:30 p.m. ET, through August 6, 2020, at 11:59 p.m. ET. To access the replay, dial 844-512-2921 (U.S.) or 412-317-6671 (International) and use passcode: 13706218.
About SKECHERS USA, Inc.
Based in Manhattan Beach, California, Skechers designs, develops and markets a diverse range of lifestyle and performance footwear, apparel and accessories for men, women and children. The Company’s collections are available in the United States and over 170 countries and territories via department and specialty stores, and direct to consumers through 3,575 Company- and third-party-owned retail stores and e-commerce websites. The Company manages its international business through a network of global distributors, joint venture partners in Asia, Israel and Mexico, and wholly-owned subsidiaries in Canada, Japan, India, Europe and Latin America. For more information, please visit about.skechers.com and follow us on Facebook, Instagram, Twitter and TikTok.
Investor Relations:
Addo Investor Relations
Andrew Greenebaum
310-829-5400
Source: SKECHERS USA, Inc.
by Zach | Jun 8, 2020 | Press Release
Jun 8, 2020 • 9:00 am EDT
MANHATTAN BEACH, Calif.–(BUSINESS WIRE)–
SKECHERS USA, Inc. (NYSE: SKX), a global footwear leader, today announced that John Vandemore, Chief Financial Officer, will participate in a virtual fireside chat at the Evercore ISI Virtual Consumer & Retail Summit on Monday, June 15, 2020 at 11:00 AM ET.
The audio portion of the fireside chat will be available live and on replay for 90 days at the ‘Investor Relations’ section of the Company’s Website at investors.skechers.com.
About SKECHERS USA, Inc.
Based in Manhattan Beach, California, Skechers designs, develops and markets a diverse range of lifestyle and performance footwear, apparel and accessories for men, women and children. The Company’s collections are available in the United States and over 170 countries and territories via department and specialty stores, and direct to consumers through 3,575 Company- and third-party-owned retail stores and e-commerce websites. The Company manages its international business through a network of global distributors, joint venture partners in Asia, Israel and Mexico, and wholly-owned subsidiaries in Canada, Japan, India, Europe and Latin America. For more information, please visit about.skechers.com and follow us on Facebook, Instagram, Twitter and TikTok.
This announcement also contains forward-looking statements that are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, without limitation, Skechers’ future domestic and international growth, financial results and operations including expected net sales and earnings, its development of new products, future demand for its products, its planned domestic and international expansion, opening of new stores and additional expenditures, and advertising and marketing initiatives. Forward-looking statements 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 the disruption of business and operations due to the COVID-19 pandemic; international economic, political and market conditions including the challenging consumer retail markets in the United States; 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, especially in the highly competitive performance footwear market; 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 Skechers’ annual report on Form 10-K for the year ended December 31, 2019 and its quarterly report on Form 10-Q for the three months ended March 31, 2020. More specifically, the COVID-19 pandemic has had and is currently having a significant impact on Skechers’ business, financial conditions, cash flow and results of operations. Forward-looking statements with respect to the COVID-19 pandemic include, without limitation, Skechers’ plans in response to this pandemic. At this time, there is significant uncertainty about the COVID-19 pandemic, including without limitation, (i) the duration and extent of the impact of the pandemic, (ii) governmental responses to the pandemic, including how such responses could impact Skechers’ business and operations, as well as the operations of its factories and other business partners, (iii) the effectiveness of Skechers’ actions taken in response to these risks, and (iv) Skechers’ ability to effectively and timely adjust its plans in response to the rapidly changing retail and economic environment. Taking these and other risk factors associated with the COVID-19 pandemic into consideration, the dynamic nature of these circumstances means that what is stated in this press release could change at any time, and as a result, actual results could differ materially from those contemplated by such forward-looking statements. The risks included here are not exhaustive. Skechers operates 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 future performance.
Company Contact:
David Weinberg
Chief Operating Officer
John Vandemore
Chief Financial Officer
SKECHERS USA, Inc.
(310) 318-3100
Press:
Jennifer Clay
Vice President, Corporate Communications
(310) 318-3100
Investor Relations:
Andrew Greenebaum
Addo Investor Relations
(310) 829-5400
Source: SKECHERS
by Zach | May 13, 2020 | Press Release
May 13, 2020 • 9:00 am EDT
MANHATTAN BEACH, Calif.–(BUSINESS WIRE)–
SKECHERS USA, Inc. (NYSE:SKX), a global footwear leader, today announced that John Vandemore, Chief Financial Officer, will participate in a virtual fireside chat hosted by Kimberly Greenberger of Morgan Stanley, on Thursday, May 14, 2020 at 1:00 PM ET.
The audio portion of the fireside chat will be available live by visiting the ‘Investor Relations’ section of the Company’s Website at investors.skechers.com. A replay of the audio will be accessible on the site for 14 days following the live presentation.
About SKECHERS USA, Inc.
Based in Manhattan Beach, California, Skechers (NYSE: SKX) designs, develops and markets a diverse range of lifestyle and performance footwear, apparel and accessories for men, women and children. The Company’s collections are available in the United States and over 170 countries and territories via department and specialty stores, and direct to consumers through 3,575 Company- and third-party-owned retail stores and e-commerce websites. The Company manages its international business through a network of global distributors, joint venture partners in Asia, Israel and Mexico, and wholly-owned subsidiaries in Canada, Japan, India, Europe and Latin America. For more information, please visit about.skechers.com and follow us on Facebook, Instagram, Twitter and TikTok.
This announcement also contains forward-looking statements that are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, without limitation, Skechers’ future domestic and international growth, financial results and operations including expected net sales and earnings, its development of new products, future demand for its products, its planned domestic and international expansion, opening of new stores and additional expenditures, and advertising and marketing initiatives. Forward-looking statements 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 the disruption of business and operations due to the COVID-19 pandemic; international economic, political and market conditions including the challenging consumer retail markets in the United States; 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, especially in the highly competitive performance footwear market; 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 Skechers’ annual report on Form 10-K for the year ended December 31, 2019 and its quarterly report on Form 10-Q for the three months ended March 31, 2020. More specifically, the COVID-19 pandemic has had and is currently having a significant impact on Skechers’ business, financial conditions, cash flow and results of operations. Forward-looking statements with respect to the COVID-19 pandemic include, without limitation, Skechers’ plans in response to this pandemic. At this time, there is significant uncertainty about the COVID-19 pandemic, including without limitation, (i) the duration and extent of the impact of the pandemic, (ii) governmental responses to the pandemic, including how such responses could impact Skechers’ business and operations, as well as the operations of its factories and other business partners, (iii) the effectiveness of Skechers’ actions taken in response to these risks, and (iv) Skechers’ ability to effectively and timely adjust its plans in response to the rapidly changing retail and economic environment. Taking these and other risk factors associated with the COVID-19 pandemic into consideration, the dynamic nature of these circumstances means that what is stated in this press release could change at any time, and as a result, actual results could differ materially from those contemplated by such forward-looking statements. The risks included here are not exhaustive. Skechers operates 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 future performance.
Company Contact:
David Weinberg
Chief Operating Officer
John Vandemore
Chief Financial Officer
SKECHERS USA, Inc.
(310) 318-3100
Press:
Jennifer Clay
Vice President, Corporate Communications
(310) 318-3100
Investor Relations:
Andrew Greenebaum
Addo Investor Relations
(310) 829-5400
Source: SKECHERS
by Zach | Apr 29, 2020 | Press Release
Apr 29, 2020 • 12:00 pm EDT
Viral Sleeper Hit Takes World by Storm with More Than 57 Million Views on YouTube
MANHATTAN BEACH, Calif.–(BUSINESS WIRE)– It’s all about those Skechers shoes in the hit track performed by DripReport and produced by Ouhboy that has become a viral sensation on TikTok. Since the track was first posted on YouTube in January 2020, millions have taken the Skechers challenge with countless impressions for the brand as many create and share content dancing to the hit song with lyrics that repeatedly feature Skechers.
The “Skechers” track has moved up the Billboard Emerging Artists Chart and rose to as high as #1 on the Spotify US Viral Chart and #1 on the Shazam US Discovery Chart. More than 57 million have seen the original video on YouTube, and a remix of the song has taken over TikTok. A pair of videos by top content creators on the platform—and sisters—@dixiedamelio and @charlidamelio have earned more than a combined 59 million views, 10.1 million likes and tens of thousands of shares, while creator @lilhuddy’s take on the song earned 14.8 million views. GRAMMY®-nominated rapper, singer and songwriter @tyga also recorded an intro remix of the track on April 19, receiving over 6.1 million views. All of this helped launch the trend into the stratosphere with over 2.3 million TikTok videos created using the “Skechers” song to date.
DripReport started sharing remixes on social media late last year and in only five months has gained hundreds of millions of views on YouTube and social media for his content. He was recently signed to Arista Records for an official release of “Skechers”—his first original track.
About SKECHERS USA, Inc.
Based in Manhattan Beach, California, Skechers (NYSE: SKX) designs, develops and markets a diverse range of lifestyle footwear for men, women and children, as well as performance footwear for men and women. Skechers footwear is available in the United States and over 170 countries and territories worldwide via department and specialty stores, 3,575 Skechers Company-owned and third-party-owned retail stores, and the Company’s e-commerce websites. The Company manages its international business through a network of global distributors, joint venture partners in Asia, Israel and Mexico, and wholly-owned subsidiaries in Canada, Japan, India, and throughout Europe and Latin America. For more information, please visit about.skechers.com and follow us on Facebook, Instagram, and Twitter, and TikTok.
Reference in this press release to “Sales” refers to Skechers’ net sales reported under generally accepted accounting principles in the United States. This announcement also contains forward-looking statements that are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, without limitation, Skechers’ future domestic and international growth, financial results and operations including expected net sales and earnings, its development of new products, future demand for its products, its planned domestic and international expansion, opening of new stores and additional expenditures, and advertising and marketing initiatives. Forward-looking statements 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 the disruption of business and operations due to the coronavirus; international economic, political and market conditions including the challenging consumer retail markets in the United States; 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, especially in the highly competitive performance footwear market; 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 Skechers’ annual report on Form 10-K for the year ended December 31, 2019. More specifically, the COVID-19 pandemic has had and is currently having a significant impact on Skechers’ business, financial conditions, cash flow and results of operations. Forward-looking statements with respect to the COVID-19 pandemic include, without limitation, Skechers’ plans in response to this pandemic. At this time, there is significant uncertainty about the COVID-19 pandemic, including without limitation, (i) the duration and extent of the impact of the pandemic, (ii) governmental responses to the pandemic, including how such responses could impact Skechers’ business and operations, as well as the operations of its factories and other business partners, (iii) the effectiveness of Skechers’ actions taken in response to these risks, and (iv) Skechers’ ability to effectively and timely adjust its plans in response to the rapidly changing retail and economic environment. Taking these and other risk factors associated with COVID-19 into consideration, the dynamic nature of these circumstances means that what is stated in this press release could change at any time, and as a result, actual results could differ materially from those contemplated by such forward-looking statements. The risks included here are not exhaustive. Skechers operates 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 future performance.
Jennifer Clay
SKECHERS USA, Inc.
310.937.1326
Source: SKECHERS USA, Inc.
by Zach | Apr 23, 2020 | Press Release
Apr 23, 2020 • 4:05 pm EDT
MANHATTAN BEACH, Calif.–(BUSINESS WIRE)–
SKECHERS USA, Inc. (NYSE:SKX), a global footwear leader, today announced financial results for the first quarter ended March 31, 2020.
First Quarter Results
“We are in unprecedented times, facing difficult decisions daily as we navigate this global pandemic that has negatively impacted every business throughout our industry, and most others,” stated Robert Greenberg, chief executive officer of Skechers. “Our priority is the health and welfare of our global team, and we’re taking swift and decisive actions that will ensure Skechers remains a go-to brand as we also prepare for the reopening of markets around the world. We know from the triple-digit growth we are experiencing so far in this month in our ecommerce business and the positive sales trajectory of our recovering business in China, that Skechers’ product continues to resonate with consumers. As our business begins to return to normal, we firmly believe that our retail partners and customers will look to a brand they trust that delivers comfort, innovation, style, and quality at a value.”
“We experienced strong momentum throughout 2019, which continued into the first two months of 2020,” began David Weinberg, chief operating officer of Skechers. “However, due to significantly reduced economic activity in China after January, and the spread of the COVID-19 pandemic around the rest of the world in March, sales decreased 2.7 percent in the first quarter. Until then, Skechers business was on track for a new first quarter sales record. We achieved the highest shipments ever from our North American and European distribution centers in January and February, and our worldwide comparable same store sales increased 9.8 percent in our company-owned direct-to-consumer business for the first two months of the quarter. We believe that our quarterly performance prior to the disruption is a testament to the strength of our product and brand, all of which leads us to believe that when markets reopen, people return to work and customers get back to shopping, Skechers will continue in its position as a leading footwear brand.”
First Quarter 2020 Financial Results
(Dollars in millions, except per share data)
Three months ended
March 31,
2020
2019
Sales
$
1,242.3
$
1,276.8
Gross Profit
547.7
590.5
Gross Margin
44.1
%
46.2
%
SG&A Expenses
508.1
429.8
As a % of Sales
40.9
%
33.7
%
Earnings from Operations
44.8
165.9
Operating Margin
3.6
%
13.0
%
Net Earnings
49.1
108.8
Diluted Earnings per Share
$
0.32
$
0.71
Sales decreased 2.7 percent as a result of a 6.8 percent decrease in its international business which was partially offset by a 2.9 percent increase in the Company’s domestic business. On a constant currency basis, the Company’s total sales decreased 1.2 percent. The Company’s domestic wholesale business increased 9.0 percent, its Company-owned direct-to-consumer business decreased 4.2 percent, and the Company’s international wholesale business decreased 8.4 percent. The Company’s international wholesale business was adversely impacted by results in China, which was down 47 percent in the quarter and impacted by a significant return reserve to keep franchisee inventory levels clean with seasonally appropriate merchandise. Comparable same store sales in Company-owned direct-to-consumer business decreased 8.1 percent, including a decrease of 4.7 percent in the United States and 16.6 percent internationally, reflecting the closure of the majority of its Company-owned stores since mid-March.
Gross margins decreased by approximately 220 basis points as a result of lower international gross margins. There was also a negative impact to gross profit in the quarter related to the acquisition of the Company’s interest in the Mexico joint venture in 2019. During the first quarter, the Company recorded a one-time, non-cash purchase price adjustment of approximately $8.0 million.
SG&A expenses increased $78.3 million, or 18.2 percent in the quarter. Selling expenses increased by $3.8 million, or 5.5 percent, primarily due to higher digital advertising expenses domestically. General and administrative expenses increased by $74.4 million, or 20.7 percent. The increase included $28.1 million associated with its direct-to-consumer business, due to a net increase of 54 new Company-owned Skechers stores, including 16 that opened in the first quarter; $16.2 million related to the inclusion of Mexico operations, including non-cash charges of approximately $7.8 million related to the acquisition of our interest in the joint venture; $7.3 million in China primarily related to the absence of a rebate comparable to prior year; and $9.0 million related to higher compensation and outside services costs.
Earnings from operations decreased $121.1 million, or 73.0 percent, to $44.8 million.
Net earnings were $49.1 million and diluted earnings per share were $0.32. Adjusted net earnings and adjusted diluted earnings per share were $59.9 million and $0.39, respectively, and reflect the impact of negative foreign currency rates and certain purchase price adjustments related to the Company’s acquisition in its Mexico joint venture.
In the first quarter, the Company’s effective income tax rate was 15.3 percent.
Balance Sheet
At quarter-end, cash, cash equivalents and investments totaled $1.37 billion, an increase of $335.3 million, or 32.5 percent from December 31, 2019, and an increase of $487.0 million, or 55.4 percent, over March 31, 2019. The increase reflects the drawdown of the Company’s senior unsecured facility in March.
Total inventory, including inventory in transit, was $985.7 million, a decrease of $84.2 million from December 31, 2019, but an increase of $244.8 million or 33.0 percent over March 31, 2019. The increase reflects the unexpected cessation of wholesale shipping and retail activity at the end of the quarter.
Working capital was $2.187 billion, a $606.1 million increase over December 31, 2019, and a $624.8 million increase over March 31, 2019. This was due to the Company’s drawdown on its senior unsecured credit facility and increased inventory levels globally, partially offset by lower accounts payable balances.
“Despite an extremely strong end to 2019 and equally strong beginning to 2020, we did see a meaningful slowdown in markets impacted by the COVID-19 pandemic,” said John Vandemore, chief financial officer of Skechers. “We have taken decisive action to fortify our business for the duration of this crisis, including drawing down on our senior unsecured credit facility, actively managing operating expenses, inventory levels and production orders, and deferring non-critical capital expenditures. We are confident that the actions we have taken and will continue to take, combined with the global strength of our brand and balance sheet, will position Skechers to successfully navigate this situation, and poise us to return to growth in the future.”
Outlook
The Company is not providing any further financial guidance at this time given the ongoing business disruption and substantial uncertainty surrounding the impact of the COVID-19 pandemic on its business globally.
Store Count
Number of Store
Locations as of
Number of Store
Locations as of
December 31, 2019
Opened
Closed(1)
March 31, 2020
Company-owned domestic stores
497
14
(3
)
508
Company-owned international stores
303
2
(1
)
304
Joint-venture stores
354
25
(2
)
377
Distributor, licensee and franchise stores
2,393
51
(58
)
2,386
Total Skechers stores
3,547
92
(64
)
3,575
(1) Does not reflect temporary closures due to the COVID-19 pandemic.
First Quarter 2020 Conference Call
The Company will host a conference call today at 1:30 p.m. Pacific Time / 4:30 p.m. Eastern Time to discuss its first quarter 2020 financial results. The call can be accessed on the Investor Relations section of the Company’s website at investors.skechers.com. For those unable to participate during the live broadcast, a replay will be available beginning April 23, 2020 at 7:30 p.m. ET, through May 7, 2020, at 11:59 p.m. ET. To access the replay, dial 844-512-2921 (U.S.) or 412-317-6671 (International) and use passcode: 13701352.
About SKECHERS USA, Inc.
Based in Manhattan Beach, California, Skechers designs, develops and markets a diverse range of lifestyle footwear for men, women and children, as well as performance footwear for men and women. Skechers footwear is available in the United States and over 170 countries and territories worldwide via department and specialty stores, more than 3,575 Skechers Company-owned and third-party-owned retail stores, and the Company’s e-commerce websites. The Company manages its international business through a network of global distributors, joint venture partners in Asia, Israel and Mexico, and wholly-owned subsidiaries in Canada, Japan, India, and throughout Europe and Latin America. For more information, please visit about.skechers.com and follow us on Facebook, Instagram, and Twitter.
Reference in this press release to “Sales” refers to Skechers’ net sales reported under generally accepted accounting principles in the United States. This announcement also contains forward-looking statements that are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, without limitation, Skechers’ future domestic and international growth, financial results and operations including expected net sales and earnings, its development of new products, future demand for its products, its planned domestic and international expansion, opening of new stores and additional expenditures, and advertising and marketing initiatives. Forward-looking statements 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 the disruption of business and operations due to the COVID-19 pandemic; international economic, political and market conditions including the challenging consumer retail markets in the United States; 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, especially in the highly competitive performance footwear market; 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 Skechers’ annual report on Form 10-K for the year ended December 31, 2019. More specifically, the COVID-19 pandemic has had and is currently having a significant impact on Skechers’ business, financial conditions, cash flow and results of operations. Forward-looking statements with respect to the COVID-19 pandemic include, without limitation, Skechers’ plans in response to this pandemic. At this time, there is significant uncertainty about the COVID-19 pandemic, including without limitation, (i) the duration and extent of the impact of the pandemic, (ii) governmental responses to the pandemic, including how such responses could impact Skechers’ business and operations, as well as the operations of its contract manufacturers and other business partners, (iii) the effectiveness of Skechers’ actions taken in response to these risks, and (iv) Skechers’ ability to effectively and timely adjust its plans in response to the rapidly changing retail and economic environment. Taking these and other risk factors associated with COVID-19 into consideration, the dynamic nature of these circumstances means that what is stated in this press release could change at any time, and as a result, actual results could differ materially from those contemplated by such forward-looking statements. The risks included here are not exhaustive. Skechers operates 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 future performance.
SKECHERS U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
March 31,
December 31,
2020
2019
ASSETS
Current assets:
Cash and cash equivalents
$
1,158,766
$
824,876
Short-term investments
130,658
112,037
Trade accounts receivable, net
796,195
645,303
Other receivables
63,685
53,932
Total receivables
859,880
699,235
Inventories
985,659
1,069,863
Prepaid expenses and other current assets
95,444
113,580
Total current assets
3,230,407
2,819,591
Property, plant and equipment, net
787,980
738,925
Operating lease right-of-use assets
1,067,228
1,073,660
Deferred tax assets
48,858
49,088
Long-term investments
77,338
94,589
Other assets, net
183,209
117,090
Total non-current assets
2,164,613
2,073,352
TOTAL ASSETS
$
5,395,020
$
4,892,943
LIABILITIES AND EQUITY
Current liabilities:
Current installments of long-term borrowings
$
16,926
$
66,234
Short-term borrowings
13,701
5,789
Accounts payable
624,677
764,844
Operating lease liabilities
189,394
191,129
Accrued expenses
198,292
210,235
Total current liabilities
1,042,990
1,238,231
Long-term borrowings, excluding current installments
669,152
49,183
Long-term operating lease liabilities
977,327
966,011
Deferred tax liabilities
12,948
322
Other long-term liabilities
104,137
103,089
Total non-current liabilities
1,763,564
1,118,605
Total liabilities
2,806,554
2,356,836
Stockholders’ equity:
Skechers U.S.A., Inc. equity
2,347,723
2,314,665
Non-controlling interests
240,743
221,442
Total stockholders’ equity
2,588,466
2,536,107
TOTAL LIABILITIES AND EQUITY
$
5,395,020
$
4,892,943
SKECHERS U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In thousands, except per share data)
Three Months Ended
March 31,
2020
2019
Sales
$
1,242,345
$
1,276,756
Cost of sales
694,677
686,247
Gross profit
547,668
590,509
Royalty income
5,248
5,201
552,916
595,710
Operating expenses:
Selling
74,055
70,214
General and administrative
434,051
359,632
508,106
429,846
Earnings from operations
44,810
165,864
Other income / (expense):
Interest income
2,307
3,142
Interest expense
(1,999
)
(1,277
)
Other, net
3,471
(4,986
)
Total other income / (expense)
3,779
(3,121
)
Earnings before income tax expense
48,589
162,743
Income tax expense
7,429
31,724
Net earnings
41,160
131,019
Less: Net earnings / (loss) attributable to non-controlling interests
(7,941
)
22,261
Net earnings attributable to Skechers U.S.A., Inc.
$
49,101
$
108,758
Net earnings per share attributable to Skechers U.S.A., Inc.:
Basic
$
0.32
$
0.71
Diluted
$
0.32
$
0.71
Weighted average shares used in calculating net earnings per share attributable to Skechers U.S.A, Inc.:
Basic
153,555
153,480
Diluted
154,652
154,134
SKECHERS U.S.A., INC. AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(Unaudited)
(In thousands)
Three months ended
March 31,
Change
2020
2019
$
%
Sales:
Domestic wholesale
$
377,962
$
346,694
$
31,268
9.0
%
International wholesale
575,199
628,067
(52,868
)
-8.4
%
Direct-to-consumer
289,184
301,995
(12,811
)
-4.2
%
Total
$
1,242,345
$
1,276,756
$
(34,411
)
-2.7
%
Gross profit:
Domestic wholesale
$
145,277
$
126,451
$
18,826
14.9
%
International wholesale
240,475
288,728
(48,253
)
-16.7
%
Direct-to-consumer
161,916
175,330
(13,414
)
-7.7
%
Total
$
547,668
$
590,509
$
(42,841
)
-7.3
%
Gross margin percentage:
Domestic wholesale
38.4%
36.5%
International wholesale
41.8%
46.0%
Direct-to-consumer
56.0%
58.1%
Total gross margin percentage
44.1%
46.3%
SKECHERS U.S.A., INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, dollars in thousands except per share data)
Three months ended March 31,
2020
2019
Change
Reported
GAAP
Measure
Constant
Currency
Adjustment(1)
Acquisition-
Related
Charges (1)
Adjusted for
Non-GAAP
Measure
Reported
GAAP
Measure
$
%
Sales
$
1,242,345
$
19,524
$
–
$
1,261,869
$
1,276,756
$
(14,887
)
-1.2
%
Cost of sales
694,677
12,806
(7,995
)
699,488
686,247
13,241
1.9
%
Gross profit
$
547,668
$
6,718
$
7,995
$
562,381
$
590,509
$
(28,128
)
-4.8
%
Royalty income
5,248
(295
)
4,953
5,201
(248
)
-4.8
%
SG&A expenses
508,106
7,852
(7,841
)
508,117
429,846
78,271
18.2
%
Earnings from operations
$
44,810
$
(1,429
)
$
15,836
$
59,217
$
165,864
$
(106,647
)
-64.3
%
Other income / (expense)
3,779
10,004
(13,877
)
(94
)
(3,121
)
3,027
-97.0
%
Income tax expense
7,429
227
–
7,656
31,724
(24,068
)
-75.9
%
Less: Non-controlling interests
(7,941
)
(538
)
–
(8,479
)
22,261
(30,740
)
-138.1
%
Net earnings
$
49,101
$
8,886
$
1,959
$
59,946
$
108,758
$
(48,812
)
-44.9
%
Diluted earnings per share
$
0.32
$
0.06
$
0.01
$
0.39
$
0.71
$
(0.32
)
-45.1
%
Constant Currency Adjustment and Acquisition Related Charges (1)
We evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of period-over-period fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our results of operations, thereby facilitating period-to-period comparisons of our business performance and is consistent with how management evaluates the company’s performance. We calculate constant currency percentages by converting our current period local currency financial results using the prior-period exchange rates and comparing these adjusted amounts to our prior period reported results. The financial information presented above, including Cost of sales, SG&A expenses, and Earnings from operations and Other income / (expense), have been presented excluding the effect of certain items related to the Company’s acquisition of its distributor in Mexico recorded in the first quarter of 2020.
Certain Non-GAAP Measures
We use the non-GAAP financial measures presented above to evaluate our results of operations, financial condition, liquidity and indebtedness. We believe that these non-GAAP measures provides useful information to investors regarding financial and business trends related to our results of operations, cash flows and indebtedness and that when this non-GAAP financial information is viewed with our GAAP financial information, investors are provided with valuable supplemental information regarding our results of operations, thereby facilitating period-to-period comparisons of our business performance and is consistent with how management evaluates the company’s operating performance and liquidity. In addition, these non-GAAP measures address questions the company routinely receives from analysts and investors and, in order to assure that all investors have access to similar data the company has determined that it is appropriate to make this data available to all investors. None of the non-GAAP measures presented should be considered as an alternative to net income or loss, operating income, cash flows from operating activities, total indebtedness or any other measures of operating performance and financial condition, liquidity or indebtedness derived in accordance with GAAP. These non-GAAP measures have important limitations as analytical tools and should not be considered in isolation or as substitutes for an analysis of our results as reported under GAAP. Our use of these terms may vary from the use of similarly-titled measures by others in our industry due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation.
Company Contact:
David Weinberg
Chief Operating Officer
John Vandemore
Chief Financial Officer
SKECHERS USA, Inc.
(310) 318-3100
Investor Relations:
Andrew Greenebaum
Addo Investor Relations
(310) 829-5400
Press:
Jennifer Clay
Vice President,
Corporate Communications
SKECHERS USA, Inc.
(310) 318-3100
Source: SKECHERS USA, Inc.