by | Jul 22, 2009 | Press Release
Jul 22, 2009 • 4:00 pm EDT
MANHATTAN BEACH, Calif.–(BUSINESS WIRE)– SKECHERS USA, Inc. (NYSE:SKX), a global leader in lifestyle footwear, today announced financial results for the second quarter ended June 30, 2009.
Second quarter 2009 net sales were $299.0 million and the net loss was $5.9 million. In the second quarter of 2008, we had net sales of $354.6 million, a record for second quarter net sales, and net earnings of $14.6 million. Second quarter loss per diluted share was $0.13 based on 46.3 million weighted average shares outstanding as compared to net earnings per diluted share of $0.31 based on 46.8 million weighted average shares outstanding in the second quarter of 2008.
“Our second quarter 2009 sales are in line with our recent expectations in light of today’s soft retail environment,” began Fred Schneider. “Our revenues continue to be negatively impacted by the weakness in the global economy, yet we have reacted in a strategic and aggressive manner to these challenges by continuing to focus on managing our inventory and expenses, and further strengthening our product offering and balance sheet. While we continued to experience margin pressure in the early part of the quarter, margins improved in June and we believe our inventory is now clean. In addition, our expenses are in line with our current business. Importantly, we are maintaining our position in the global footwear market and we currently expect to be profitable in the second half of the year.”
For the six months ended June 30, 2009, net sales were $642.4 million compared to net sales of $739.5 million in the first six months of 2008. Net earnings were $2.3 million, compared to net earnings of $47.5 million in the first six months of 2008. Net earnings per diluted share in the first six months of 2009 were $0.05 per share on 46.4 million diluted shares outstanding versus net earnings of $1.02 per share on 46.7 million diluted shares outstanding for the same period last year. Included in diluted earnings per share for the first six months of 2009 is a $1.9 million reduction in income tax expense or $0.04 per share adjustment recorded in the first quarter that relates to the prior year.
Gross profit for the second quarter of 2009 was $122.6 million or 41.0 percent of net sales compared to $157.2 million or 44.3 percent of net sales in the second quarter of last year. Gross profit for the first six months of 2009 was $248.0 million or 38.6 percent of net sales versus $329.4 million or 44.5 percent of net sales in the first six months of 2008.
Robert Greenberg, SKECHERS chief executive officer, commented: “We just completed three weeks of product review with our key accounts and are pleased with the reaction to our Spring 2010 collections for each of our brands. Though many of these accounts continue to feel the impact of the weak economy, we believe they are looking to SKECHERS to meet their immediate needs and for the coming Spring season due to the relevance of our styling and the value we offer consumers. We are continuing to develop fresh product and support our brands with targeted marketing, including new print campaigns and multiple commercials for SKECHERS Kids – featuring our cast of characters; SKECHERS Men and Women; and several new spots for our fashion brands, including one with Vanessa Hudgens for Red by Marc Ecko. As we continue to look at opportunities to grow our business, we have selectively opened new SKECHERS stores in the United States, established a subsidiary operation in Chile, and introduced existing lines into many key countries, and we are expanding into new markets. As a well-recognized brand and a financially strong company trusted by consumers and our wholesale partners, we believe we are well-positioned for the current economic climate as well as for profitable growth when the global economy begins to improve.”
“The last year has been a difficult one for many companies, retailers and consumers around the globe. Like many others, we too have been adversely affected by the economic climate, and have adjusted our inventory levels and expenses to meet the lower demand,” stated David Weinberg, chief operating officer of SKECHERS. “We are beginning to see positive improvements in our domestic and international sales trends, and our new product offerings have been well received and are testing well. We believe our cash position of $257 million, which increased by $184 million during the second quarter in part due to the redemption of our auction rate securities, provides us ample liquidity to effectively operate in a difficult retail environment. With a new untapped credit facility of $250 million and a cash balance in excess of $5.50 per share, we believe we are in a great position to capitalize on opportunities as they arise and to further grow our business around the world.”
SKECHERS USA, Inc., based in Manhattan Beach, California, designs, develops and markets a diverse range of footwear for men, women and children under the SKECHERS name, as well as under several uniquely branded names. SKECHERS footwear is available in the United States via department and specialty stores, Company-owned SKECHERS retail stores and its e-commerce website, as well as in over 100 countries and territories through the Company’s global network of distributors and subsidiaries in Canada, Brazil, Chile, and across Europe, as well as through joint ventures in Asia. For more information, please visit www.skechers.com.
This announcement may contain forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or simply state future results, performance or achievements, and can be identified by the use of forward looking language such as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “plan,” “project,” “will be,” “will continue,” “will result,” “could,” “may,” “might,” or any variations of such words with similar meanings. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in forward-looking statements. Factors that might cause or contribute to such differences include international, national and local general economic, political and market conditions including the recent global economic slowdown and financial crisis; the ability to sustain, manage and forecast costs and proper inventory levels; the loss of any significant customers, decreased demand by industry retailers and cancellation of order commitments due to the credit crisis in the global financial markets or other difficulties in their businesses; changes in fashion trends and consumer demands; the level of sales during the spring, back-to-school and holiday selling seasons; the ability to anticipate, identify, interpret or forecast changes in fashion trends, consumer demand for the products and the various market factors described above; new standards regarding lead content in children’s products including footwear under the Consumer Product Safety Improvement Act of 2008; the ability to maintain brand image; intense competition among sellers of footwear for consumers; further changes to the global economic slowdown that could affect the ability to open retail stores in new markets and/or the sales performance of existing stores; potential disruptions in manufacturing related to overseas sourcing and concentration of production in China, including, without limitation, difficulties associated with political instability in China, the occurrence of a natural disaster or outbreak of a pandemic disease in China, or electrical shortages, labor shortages or work stoppages that may lead to higher production costs and/or production delays; changes in monetary controls and valuations of the Yuan by the Chinese government; increased costs of freight and transportation to meet delivery deadlines; potential imposition of additional duties, tariffs or other trade restrictions; violation of labor or other laws by independent contract manufacturers, suppliers or licensees; popularity of particular designs and categories of products; changes in business strategy or development plans; the ability to attract and retain qualified personnel; the disruption, expense and potential liability associated with existing or unanticipated future litigation; the ability to secure and protect trademarks, patents and other intellectual property; business disruptions resulting from natural disasters such as an earthquake due to the location of domestic warehouse, headquarters and a substantial number of retail stores in California; and other factors referenced or incorporated by reference in the Company’s Form 10-K for the year ended December 31, 2008 and the Company’s Form 10-Q for the quarter ended March 31, 2009. The risks included here are not exhaustive. We operate in a very competitive and rapidly changing environment. New risks emerge from time to time and we cannot predict all such risk factors, nor can we assess the impact of all such risk factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, you should not place undue reliance on forward-looking statements as a prediction of actual results. Moreover, reported results should not be considered an indication of future performance.
SKECHERS U.S.A., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
June 30, December 31,
2009 2008
ASSETS
Current Assets:
Cash and cash equivalents $ 257,024 $ 114,941
Trade accounts receivable, net 193,729 175,064
Other receivables 10,713 7,816
Total receivables 204,442 182,880
Inventories 191,283 261,209
Prepaid expenses and other current assets 31,991 31,022
Deferred tax assets 11,955 11,955
Total current assets 696,695 602,007
Property and equipment, at cost less accumulated 174,411 157,757
depreciation and amortization
Intangible assets, less applicable amortization 5,036 5,407
Deferred tax assets 12,609 18,158
Long-term investments - 81,925
Other assets, at cost 12,450 11,062
TOTAL ASSETS $ 901,201 $ 876,316
LIABILITIES AND EQUITY
Current Liabilities:
Current installments of long-term borrowings $ 642 $ 572
Line of credit 639 -
Accounts payable 178,066 164,643
Accrued expenses 16,764 23,021
Total current liabilities 196,111 188,236
Long-term borrowings, excluding current installments 15,858 16,188
Total liabilities 211,969 204,424
Equity:
Skechers U.S.A., Inc. stockholders' equity 684,575 668,693
Noncontrolling interest 4,657 3,199
Total equity 689,232 671,892
TOTAL LIABILITIES AND EQUITY $ 901,201 $ 876,316
SKECHERS U.S.A., INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In thousands, except per share data)
Three Months Ended June 30, Six Months Ended June 30,
2009 2008 2009 2008
Net sales $ 298,976 $ 354,574 $ 642,446 $ 739,496
Cost of sales 176,373 197,381 394,414 410,131
Gross profit 122,603 157,193 248,032 329,365
Royalty income 332 230 604 1,070
122,935 157,423 248,636 330,435
Operating expenses:
Selling 34,813 38,592 56,323 64,126
General and 95,848 98,857 193,886 198,079
administrative
130,661 137,449 250,209 262,205
Other income (expense):
Interest, net (331 ) 488 333 1,941
Other, net 245 844 27 748
(86 ) 1,332 360 2,689
Earnings (loss) before (7,812 ) 21,306 (1,213 ) 70,919
income taxes
Income tax expense (1,186 ) 7,045 (1,939 ) 23,814
(benefit from)
Net income (loss) (6,626 ) 14,261 726 47,105
Less: Net income (loss)
attributable to (699 ) (380 ) (1,567 ) (380 )
noncontrolling interest
Net earnings (loss)
attributable to Skechers $ (5,927 ) $ 14,641 $ 2,293 $ 47,485
U.S.A., Inc.
Net earnings (loss) per
share attributable to
Skechers U.S.A., Inc.:
Basic $ (0.13 ) $ 0.32 $ 0.05 $ 1.03
Diluted $ (0.13 ) $ 0.31 $ 0.05 $ 1.02
Weighted average shares
used in calculating
earnings (loss) per share
attributable to Skechers
U.S.A, Inc.:
Basic 46,282 46,000 46,282 45,941
Diluted 46,282 46,810 46,424 46,737
by | Jul 16, 2009 | Press Release
Jul 16, 2009 • 4:00 pm EDT
MANHATTAN BEACH, Calif.–(BUSINESS WIRE)– SKECHERS USA, Inc. (NYSE: SKX), a global leader in lifestyle footwear, announced today that the Company’s conference call to review its fiscal 2009 second quarter financial results will be broadcast live over the internet on Wednesday, July 22, 2009 at 1:30 pm Pacific Time/4:30 pm Eastern Time. Participating on the call will be David Weinberg, Chief Operating Officer and Fred Schneider, Chief Financial Officer.
The call will be broadcast live over the Internet hosted at the Investor Relations section of the Company’s website at www.skx.com. The call will be archived for two weeks. The webcast will also be available at www.earnings.com and www.streetevents.com.
About SKECHERS USA, Inc.
SKECHERS USA, Inc., based in Manhattan Beach, California, designs, develops and markets a diverse range of footwear for men, women and children under the SKECHERS name, as well as under several uniquely branded names. SKECHERS footwear is available in the United States via department and specialty stores, Company-owned SKECHERS retail stores and its e-commerce website. It is also available in over 100 countries and territories throughout the Company’s global network of distributors and subsidiaries in Canada, Brazil, and across Europe, as well as through joint ventures in Asia. Please visit www.skechers.com for more information.
by | Jul 7, 2009 | Press Release
Jul 7, 2009 • 8:55 am EDT
Footwear Company Sees Continued Increase in Liquidity and Financial Flexibility, Expects to Break Even in the First Half of 2009
MANHATTAN BEACH, Calif.–(BUSINESS WIRE)– SKECHERS USA, Inc. (NYSE:SKX), a global leader in lifestyle footwear, today announced the closing of a new $250 million, four-year, syndicated secured credit facility. Wells Fargo Foothill, part of Wells Fargo & Company (NYSE:WFC), and Bank of America N.A., a subsidiary of Bank of America Corporation (NYSE:BAC), were co-lead arrangers for the facility. Additional participants in the transaction, which was oversubscribed, were CIT Bank, U.S. Bank National Association, HSBC Business Credit (USA) Inc., PNC Bank, N.A., Union Bank, N.A. and Capital One Leverage Finance Corporation.
“We were able to secure a new facility in these difficult times because of our strong financial position, operating history and place in the global market,” stated Fred Schneider, the company’s chief financial officer. “In addition to this new bank facility, the remaining $95 million of auction rate securities were redeemed, giving us approximately $250 million in cash and investments, which should provide us with sufficient capital for our initiatives and to fund our growth over the next four years.”
Separately, the Company announced that, due to the continuing difficult retail environment, it continues to believe that it will break even for the first half of 2009, and return to profitability in the back half of 2009.
“While the extremely weak global retail environment remains a factor in our performance as retailers slowed their orders, we had a good reception to our product at FFANY in June, and we continued to liquidate excess inventory and clean up our balance sheet in the second quarter,” added David Weinberg, chief operating officer of SKECHERS. “As we begin the third quarter with our key accounts reviewing Spring 2010, we have an extremely strong balance sheet, strong liquidity, and a significant cash position in excess of $5 per share. We are in a great position to further grow our business around the world, and are looking forward to capitalizing on opportunities as they arise.”
SKECHERS USA, Inc., based in Manhattan Beach, California, designs, develops and markets a diverse range of footwear for men, women and children under the SKECHERS name, as well as under several uniquely branded names. SKECHERS footwear is available in the United States via department and specialty stores, Company-owned SKECHERS retail stores and its e-commerce website, as well as in over 100 countries and territories through the Company’s global network of distributors and subsidiaries in Canada, Brazil, Chile, and across Europe, as well as through joint ventures in Asia. Please visit www.skechers.com or call the Company’s information line at 877-INFO-SKX.
This announcement may contain forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or simply state future results, performance or achievements, and can be identified by the use of forward looking language such as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “plan,” “project,” “will be,” “will continue,” “will result,” “could,” “may,” “might,” or any variations of such words with similar meanings. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in forward-looking statements. Factors that might cause or contribute to such differences include international, national and local general economic, political and market conditions including the recent global economic slowdown and financial crisis; the ability to sustain, manage and forecast costs and proper inventory levels; the loss of any significant customers, decreased demand by industry retailers and cancellation of order commitments due to the credit crisis in the global financial markets or other difficulties in their businesses; changes in fashion trends and consumer demands; the level of sales during the spring, back-to-school and holiday selling seasons; the ability to anticipate, identify, interpret or forecast changes in fashion trends, consumer demand for the products and the various market factors described above; new standards regarding lead content in children’s products including footwear under the Consumer Product Safety Improvement Act of 2008; the ability to maintain brand image; intense competition among sellers of footwear for consumers; further changes to the global economic slowdown that could affect the ability to open retail stores in new markets and/or the sales performance of existing stores; potential disruptions in manufacturing related to overseas sourcing and concentration of production in China, including, without limitation, difficulties associated with political instability in China, the occurrence of a natural disaster or outbreak of a pandemic disease in China, or electrical shortages, labor shortages or work stoppages that may lead to higher production costs and/or production delays; changes in monetary controls and valuations of the Yuan by the Chinese government; increased costs of freight and transportation to meet delivery deadlines; potential imposition of additional duties, tariffs or other trade restrictions; violation of labor or other laws by independent contract manufacturers, suppliers or licensees; popularity of particular designs and categories of products; changes in business strategy or development plans; the ability to attract and retain qualified personnel; the disruption, expense and potential liability associated with existing or unanticipated future litigation; the ability to secure and protect trademarks, patents and other intellectual property; business disruptions resulting from natural disasters such as an earthquake due to the location of domestic warehouse, headquarters and a substantial number of retail stores in California; and other factors referenced or incorporated by reference in the Company’s Form 10-K for the year ended December 31, 2008 and the Company’s Form 10-Q for the quarter ended March 31, 2009. The risks included here are not exhaustive. We operate in a very competitive and rapidly changing environment. New risks emerge from time to time and we cannot predict all such risk factors, nor can we assess the impact of all such risk factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, you should not place undue reliance on forward-looking statements as a prediction of actual results. Moreover, reported results should not be considered an indication of future performance.
by | Jun 25, 2009 | Press Release
Jun 25, 2009 • 2:28 pm EDT
MANHATTAN BEACH, Calif.–(BUSINESS WIRE)– SKECHERS USA (NYSE:SKX), a global leader in the lifestyle footwear industry, today announced that host, entrepreneur and former Dancing with the Stars champion Brooke Burke will be the next celebrity to join its charity-related “Nothing Compares to Family” advertising campaign.
Burke, whose first modeling appearance was in a SKECHERS ad in 1995, will appear in the SKECHERS campaign with her fiance David Charvet (ABC’s summer reality competition series The Superstars), son Shaya, 1, and daughters Rain, 2, Sierra, 7, and Neriah, 9. “I’m always on the lookout for new outlets to help organizations like Cedars-Sinai Women’s Cancer Research Institute,” said Burke. “I love that SKECHERS is focusing on families in their advertising and bringing awareness to important charities. And it’s great to be working with SKECHERS again – this time with my family.”
“We’re really proud of this campaign and thrilled that Brooke Burke is again a part of SKECHERS,” began Michael Greenberg, President of SKECHERS. “At the core, SKECHERS is a family brand and the ‘Nothing Compares to Family’ campaign is a perfect way for us to partner with great talent like Brooke to support and promote a wide array of important charities.”
Burke gained global recognition as the travel guide on the E! series, Wild On. She later went on to host two seasons of the CBS reality show Rock Star and recently competed on and ultimately won the 7th season of ABC’s hit series Dancing With The Stars. Burke founded the mommy website BabooshBaby.com in 2008, and she has recently merged it with ModernMom.com, for which she is now CEO. She partnered with SKECHERS to bring awareness to Cedars-Sinai Women’s Cancer Research Institute at the Samuel Oschin Comprehensive Cancer Institute, a program that is working to reduce the threat of cancer to women through research, education, early detection and prevention.
The SKECHERS “Nothing Compares to Family” campaign began in 2008 and stars some of today’s popular celebrity families while benefiting children’s charities with ads breaking in celebrity weekly magazines and other fashion and lifestyle glossies. Brooke Burke joins a roster of celebrities that has included Tori Spelling, Brandy, Jack Coleman, Trista and Ryan Sutter, Holly Robinson Peete, Niki Taylor, and most recently Cesar Milan. SKECHERS expects additional celebrity families to participate in support of new charities as the “Nothing Compares to Family” campaign continues through 2009.
The Brooke Burke “Nothing Compares to Family” ad image is available upon request. For further information go to: http://www.skechers.com/info/charities
SKECHERS USA, Inc., based in Manhattan Beach, California, designs, develops and markets a diverse range of footwear for men, women and children under the SKECHERS name, as well as under several uniquely branded names. SKECHERS footwear is available in the United States via department and specialty stores, Company-owned SKECHERS retail stores and its e-commerce website, as well as in over 100 countries and territories through the Company’s global network of distributors and subsidiaries in Canada, Brazil, Chile, and across Europe, as well as through joint ventures in Asia. Please visit www.skechers.com or call the Company’s information line at 877-INFO-SKX.
This announcement may contain forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or simply state future results, performance or achievements, and can be identified by the use of forward looking language such as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “plan,” “project,” “will be,” “will continue,” “will result,” “could,” “may,” “might,” or any variations of such words with similar meanings. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in forward-looking statements. Factors that might cause or contribute to such differences include international, national and local general economic, political and market conditions including the recent global economic slowdown and financial crisis; the ability to sustain, manage and forecast costs and proper inventory levels; the loss of any significant customers, decreased demand by industry retailers and cancellation of order commitments due to the credit crisis in the global financial markets or other difficulties in their businesses; the failure of financial institutions to fulfill their commitments under the Company’s secured line of credit; changes in fashion trends and consumer demands; the level of sales during the spring, back-to-school and holiday selling seasons; the ability to anticipate, identify, interpret or forecast changes in fashion trends, consumer demand for the products and the various market factors described above; new standards regarding lead content in children’s products including footwear under the Consumer Product Safety Improvement Act of 2008; the ability to maintain brand image; intense competition among sellers of footwear for consumers; further changes to the global economic slowdown that could affect the ability to open retail stores in new markets and/or the sales performance of existing stores; potential disruptions in manufacturing related to overseas sourcing and concentration of production in China, including, without limitation, difficulties associated with political instability in China, the occurrence of a natural disaster or outbreak of a pandemic disease in China, or electrical shortages, labor shortages or work stoppages that may lead to higher production costs and/or production delays; changes in monetary controls and valuations of the Yuan by the Chinese government; increased costs of freight and transportation to meet delivery deadlines; potential imposition of additional duties, tariffs or other trade restrictions; violation of labor or other laws by independent contract manufacturers, suppliers or licensees; popularity of particular designs and categories of products; changes in business strategy or development plans; the ability to attract and retain qualified personnel; the disruption, expense and potential liability associated with existing or unanticipated future litigation; the ability to secure and protect trademarks, patents and other intellectual property; business disruptions resulting from natural disasters such as an earthquake due to the location of domestic warehouse, headquarters and a substantial number of retail stores in California; and other factors referenced or incorporated by reference in the Company’s Form 10-K for the year ended December 31, 2008 and the Company’s Form 10-Q for the quarter ended March 31, 2009. The risks included here are not exhaustive. We operate in a very competitive and rapidly changing environment. New risks emerge from time to time and we cannot predict all such risk factors, nor can we assess the impact of all such risk factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, you should not place undue reliance on forward-looking statements as a prediction of actual results. Moreover, reported results should not be considered an indication of future performance.
Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=5995177&lang=en
by | Feb 18, 2009 | Press Release
Feb 18, 2009 • 4:00 pm EST
Record 2008 Net Sales of $1.441 Billion, an Increase of 3 Percent Over 2007 2008 Net Earnings of $55.4 Million, a Decrease of 27 Percent Over 2007
MANHATTAN BEACH, Calif.–(BUSINESS WIRE)– SKECHERS USA, Inc. (NYSE:SKX), a global leader in lifestyle footwear, today announced financial results for the fourth quarter and fiscal year ended December 31, 2008.
Fiscal year 2008 net sales increased 3 percent to $1.441 billion as compared to net sales of $1.394 billion in 2007. Net earnings for 2008 were $55.4 million versus net earnings of $75.7 million in 2007. For fiscal year 2008, diluted earnings per share were $1.19 based on 46,708,000 weighted average shares outstanding versus diluted earnings per share of $1.63 based on 46,741,000 weighted average shares outstanding in the prior year.
Net sales for the fourth quarter of 2008 were $298.1 million as compared to $302.0 million in the fourth quarter of 2007. Net loss for the fourth quarter of 2008 was $20.4 million versus net earnings of $12.1 million in the fourth quarter of 2007. Net loss per diluted share in the fourth quarter of 2008 was $0.44 based on 46,123,000 weighted average shares outstanding as compared to net earnings per diluted share of $0.26 based on 46,639,000 weighted average shares outstanding in the fourth quarter of 2007.
“SKECHERS 2008 net sales of over $1.4 billion represent a new record, a significant achievement in a year marked by a rapidly weakening global economic environment,” stated Fred Schneider, chief financial officer of SKECHERS. “Despite the record yearly sales, we saw a shortfall in earnings in the fourth quarter primarily due to a decrease in gross margin of approximately 1,000 basis points from the same period last year. The decrease in gross margin is a direct result of the extremely weak retail climate, which caused a significant decline in U.S. retailers’ comps as well as a number of both retail bankruptcies and going out of business sales. Due to these declining economic conditions, we began to manage our inventory levels down at reduced prices and increased our reserves by over $15 million. As we complete this process, we expect to see our gross margin percentage return to its historic levels of over 40 percent later in 2009.”
Gross profit for 2008 was $595.9 million compared to $600.0 million in 2007. Gross margin for 2008 was 41.4 percent versus 43.0 percent for 2007. Gross profit for the fourth quarter of 2008 was $95.0 million compared to $127.3 million in the fourth quarter of 2007. Gross margin in the fourth quarter 2008 was 31.9 percent versus 42.1 percent for the fourth quarter of 2007.
Robert Greenberg, SKECHERS chief executive officer, commented: “For SKECHERS, 2008 was a year of achievements with several new brands added to our fold, record sales, and meaningful growth in our international business. We continue to see the international arena as an opportunity to further grow our business, and are pleased with the continued solid performance of many of our SKECHERS and fashion brands in both the domestic and international markets. We are continuing to develop fresh styles in our more well-established lines and look forward to our first full year of footwear from Bebe Sport, Punkrose, and the emergence of TapouT footwear in sport retailers and with specialty chains, and other key accounts. Our product remains affordable, fashionable and relevant, offering a great value in the current marketplace. While the macro-economic environment remains challenging, we believe we will continue to be an increasingly important brand around the world given our on-target product, diversified distribution and team of talented people and dedicated partners.”
“In 2008, the economic downturn adversely affected our domestic and, to a lesser degree, our international business. We believe the economy will continue to have a negative impact on the retail industry for the foreseeable future, and the demand for consumer goods will be reduced,” stated David Weinberg, chief operating officer of SKECHERS. “In the first half of 2009, we are focusing on reducing our inventory levels and expenses while maintaining our strong domestic and international presence in this difficult economic environment, which will result in us breaking even in the first half of 2009. As our inventory levels come more in line with our current expected sales and backlog, we believe we will return to profitability in the second half of 2009, and achieve annual revenues between $1.2 billion and $1.3 billion. With a strong balance sheet and portfolio of brands, we remain confident that SKECHERS is well-positioned for sustainable long-term profitability.”
SKECHERS USA, Inc., based in Manhattan Beach, California, designs, develops and markets a diverse range of footwear for men, women and children under the SKECHERS name, as well as under several uniquely branded names. SKECHERS footwear is available in the United States via department and specialty stores, Company-owned SKECHERS retail stores and its e-commerce website, as well as in over 100 countries and territories through the Company’s global network of distributors and subsidiaries in Canada, Brazil, and across Europe, as well as through joint ventures in Asia. Please visit www.skechers.com or call the Company’s information line at 877-INFO-SKX.
This announcement may contain forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or simply state future results, performance or achievements, and can be identified by the use of forward looking language such as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “plan,” “project,” “will be,” “will continue,” “will result,” “could,” “may,” “might,” or any variations of such words with similar meanings. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in forward-looking statements. Factors that might cause or contribute to such differences include international, national and local general economic, political and market conditions; intense competition among sellers of footwear for consumers; changes in fashion trends and consumer demands; popularity of particular designs and categories of products; the level of sales during the spring, back-to-school and holiday selling seasons; the ability to anticipate, identify, interpret or forecast changes in fashion trends, consumer demand for the products and the various market factors described above; the ability to maintain brand image; the ability to sustain, manage and forecast growth and inventories; the ability to secure and protect trademarks, patents and other intellectual property; the loss of any significant customers, decreased demand by industry retailers and cancellation of order commitments; potential disruptions in manufacturing related to overseas sourcing and concentration of production in China, including, without limitation, difficulties associated with political instability in China, the occurrence of a natural disaster or outbreak of a pandemic disease in China, or electrical shortages, labor shortages or work stoppages that may lead to higher production costs and/or production delays; changes in monetary controls and valuations of the Yuan by the Chinese government; increased costs of freight and transportation to meet delivery deadlines; violation of labor or other laws by independent contract manufacturers, suppliers or licensees; potential imposition of additional duties, tariffs or other trade restrictions; business disruptions resulting from natural disasters such as an earthquake due to the location of domestic warehouse, headquarters and a substantial number of retail stores in California; changes in business strategy or development plans; changes in economic conditions that could affect the ability to open retail stores in new markets and/or the sales performance of existing stores; the ability to attract and retain qualified personnel; the disruption, expense and potential liability associated with existing or unanticipated future litigation; and other factors referenced or incorporated by reference in the Company’s Form 10-K for the year ended December 31, 2007 and the Company’s Form 10-Q for the quarter ended September 30, 2008. The risks included here are not exhaustive. We operate in a very competitive and rapidly changing environment. New risks emerge from time to time and we cannot predict all such risk factors, nor can we assess the impact of all such risk factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, you should not place undue reliance on forward-looking statements as a prediction of actual results. Moreover, reported results should not be considered an indication of future performance.
(tables to follow)
SKECHERS U.S.A., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
December 31, December 31,
2008 2007
ASSETS
Current Assets:
Cash and cash equivalents $ 114,941 $ 199,516
Short-term investments - 104,500
Trade accounts receivable, net 175,064 167,406
Other receivables 7,816 10,520
Total receivables 182,880 177,926
Inventories 261,209 204,211
Prepaid expenses and other current assets 31,022 13,993
Deferred tax assets 11,955 8,594
Total current assets 602,007 708,740
Property and equipment, at cost less accumulated 157,757 98,400
depreciation and amortization
Intangible assets, less applicable amortization 5,407 78
Deferred tax assets 18,158 13,983
Long-term investments 81,925 -
Other assets, at cost 11,062 6,776
TOTAL ASSETS $ 876,316 $ 827,977
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current installments of long-term borrowings $ 572 $ 437
Accounts payable 164,643 164,466
Accrued expenses 23,021 19,949
Total current liabilities 188,236 184,852
Long-term borrowings, excluding current installments 16,188 16,462
Minority interest 3,199 -
Stockholders' equity 668,693 626,663
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 876,316 $ 827,977
SKECHERS U.S.A., INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In thousands, except per share data)
Three Months Ended December 31, Twelve Months Ended December 31
2008 2007 2008 2007
Net sales $ 298,088 $ 302,041 $ 1,440,743 $ 1,394,181
Cost of sales 203,062 174,789 844,821 794,192
Gross profit 95,026 127,252 595,922 599,989
Royalty income 800 787 2,461 4,179
95,826 128,039 598,383 604,168
Operating
expenses:
Selling 21,853 21,079 126,890 126,527
General and 109,060 89,823 413,601 364,711
administrative
130,913 110,902 540,491 491,238
Other income
(expense):
Interest, net 436 1,434 2,731 5,277
Other, net 200 (31 ) 120 98
636 1,403 2,851 5,375
Earnings
before income
taxes and (34,451 ) 18,540 60,743 118,305
minority
interest
Income tax
expense (12,917 ) 6,445 7,258 42,619
(benefit from)
Minority
interest in
loss of (1,156 ) - (1,911 ) -
consolidated
subsidiary
Net earnings $ (20,378 ) $ 12,095 $ 55,396 $ 75,686
(loss)
Net earnings
per share:
Basic $ (0.44 ) $ 0.26 $ 1.20 $ 1.67
Diluted $ (0.44 ) $ 0.26 $ 1.19 $ 1.63
Weighted
average
shares:
Basic 46,123 45,750 46,031 45,262
Diluted 46,123 46,639 46,708 46,741