- Prachi Singh |
Second quarter net sales at Skechers increased 16.9 percent to 1.026 billion dollars, which the company attributed to a 6.4 percent increase in the company’s domestic wholesale business, an 18.6 percent increase in the company’s international wholesale business, and a 28 percent increase in its company-owned global retail business, which included comparable same store sales increases of 7.1 percent. Gross profit for the quarter was 488.3 million dollars, or 47.6 percent of net sales, compared to 416.3 million dollars, or 47.4 percent of net sales, for the same quarter last year.
“Second quarter net sales exceeded our expectations setting another record quarter, and making the first half of 2017 a new record with sales surpassing 2 billion dollars,” said David Weinberg, COO and CFO of Skechers in a media statement.
Review of the second quarter results
Earnings from operations were 86.3 million dollars or 8.4 percent of sales, a decrease of 14 percent over the second quarter of 2016. Net earnings decreased 19.7 percent to 59.5 million dollars, and diluted net earnings per share were 0.38 dollar.
The company said, general and administrative expenses for the second quarter increased 62.1 million dollars to 305.3 million dollars due to Skechers’ focus on long-term global growth, including 22.3 million dollars associated with the Company’s 68 additional domestic and international retail stores—31 of which were opened in the second quarter, and 26.2 million dollars to support its international growth, of which 16.9 million dollars was due to increased costs in China, 3.6 million dollars for the transition of its South Korean distributor to a joint venture, and 2.4 million dollars in Japan.
Highlights of the six month financial performance
Net sales for the fist six months, were 2.099 billion dollars and gross profit was 964.8 million dollars or 46 percent of net sales, and earnings from operations were 210.7 million dollars or 10.0 percent of net sales. Net earnings were 153.5 million dollars and diluted net earnings per share were 0.98 dollar per share.
Commenting on the positive trading, Robert Greenberg, Skechers Chief Executive officer, said: “In the international markets, we achieved double-digit growth in many countries worldwide—including Germany, Chile, India, China, and Australia. Skechers retail stores around the world now include 1,870 international stores of which 1,691 are third-party-owned locations. At quarter end, our total Skechers retail store count was 2,305, and included the opening of several key locations—Tokyo’s popular Shibuya district, the new Century City Mall in Los Angeles, a super store in Ontario Mills in Southern California, a store in New York’s SoHo, among others—and the relocation of our store on San Francisco’s Powell Street.”
Expects global sales to boost Q3 results
Based on these key indicators, the company believes it will achieve net sales in the third quarter in the range of 1.050 billion dollars to 1.075 billion dollars, which would represent a third quarter sales record, and earnings per share of 0.42 dollar to 0.47 dollar. This projection includes flat sales increases in the Company’s domestic wholesale business, and double-digit increases in its international wholesale business, and its global company-owned retail stores.
“Based on our global meetings in May and June, and our on-going domestic key account meetings at our corporate offices, plus our July sell-throughs, we believe that the record sales we experienced in the first six months will continue in the second half,” added Greenberg.
The company expects its capital expenditures for the remainder of 2017 to be approximately 35.0 million to 40 million dollars, which includes corporate office upgrades and an additional 35 to 40 company-owned retail store openings and several store remodels.