Skechers posts rise in Q2 net sales, earnings suffer

Second quarter 2016 net sales at Skechers USA were 877.8 million dollars compared to 800.5 million dollars for the second quarter of 2015. Gross profit for the quarter was 416.3 million dollars, or 47.4 percent of net sales and earnings from operations were 100.4 million dollars, or 11.4 percent of net sales, compared to earnings from operations of 112.3 million dollars, or 14 percent of net sales for the second quarter of 2015.

“Skechers achieved new record second quarter net sales of 877.8 million dollars, which led to a 1.86 billion dollars net sales record for the first six months of 2016,” said David Weinberg, COO and CFO of Skechers, adding, “The growth in the quarter was primarily attributable to a 34.6 percent increase in our international subsidiary and joint venture businesses and a 40.5 percent increase in our international company-owned Skechers retail stores.”

Financial review of the quarter and first half

Net earnings in the second quarter were 74.1 million dollars compared to net earnings of 79.8 million dollars for the second quarter of 2015. Diluted net earnings per share were 0.48 dollar based on 155 million weighted average shares outstanding compared to diluted net earnings per share of 0.52 dollar based on 154 million weighted average shares outstanding for the same period last year. The company said diluted earnings per share for the quarter were negatively impacted by several factors including foreign currency translation and exchange losses of 8.3 million dollars, or 0.05 dollar per diluted share.

For the six months ended June 30, 2016, net sales were 1.86 billion dollars compared to net sales of 1.57 billion dollars in the first six months of 2015. Gross profit was 848.4 million dollars, or 45.7 percent of net sales, compared to 707.1 million dollars, or 45.1 percent of net sales, for the first six months of 2015. Earnings from operations were 238.9 million dollars, or 12.9 percent of net sales, compared to earnings from operations of 200.5 million dollars, or 12.8 percent of net sales, for the first six months of 2015.

Net earnings in the first six months were 171.7 million dollars compared to net earnings of 135.9 million dollars in the same period last year. Diluted net earnings per share were 1.11 dollars based on 154.9 million weighted average common shares outstanding compared to diluted net earnings per share of 0.88 dollar based on 153.8 million weighted average common shares outstanding for the first six months of 2015.

Commenting on the results, Robert Greenberg, Skechers CEO, said, “International is a key focus for Skechers as we expand our reach and deliver more product into more channels of distribution—including the expansion of our retail arm of the company with our first Skechers stores in Belgium, Norway and Finland; another 42 Skechers stores in China—bringing the total Skechers store count to 233 in that country; and double-digit sales growth in many countries—from Germany to Canada and Scandinavia to Russia.”

“Together with our international partners, we opened a net 133 Skechers stores in the second quarter, bringing the total number of retail stores to 1,548, of which 1,144 are outside the United States. We expect to have more than 1,600 Skechers stores by year-end, including our first retail stores in Uruguay, Paraguay, Botswana and Sri Lanka, as well as the opening next month of our store at One World Trade Center in New York,” he added.

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