Once again, Skechers USA surprised financial analysts by announcing a jump of 129.2 percent in net earnings for the second quarter on 36.3 percent higher revenues of $800.5 million. The gross margin was up by 0.9 percentage points to 46.8 percent, while the operating margin shot up to 14.0 percent of sales from 9.2 percent in the year-ago period, leaving the company with a cash pile of around $500 million.
Skechers' stockmarket price soared by 12 percent after the announcement and the management's comments on the results. Company managers are predicting continued strong growth for the balance of 2015 and in 2016 on the strength of increases in forward orders of between 35 and 45 percent, partly in view of the launch of the Star Wars line in the autumn. The biggest gains came from foreign markets: China alone, where sales of $50 million in the quarter compare with $18 million in the year-ago period, is expected to reach a turnover of between $175 million and $200 million this year.
International sales grew by 60 percent in the quarter, and the growth rate reached 64 percent for foreign subsidiaries and joint ventures, while sales to distributors went up by 55 percent. Sales were particularly strong in the U.K. At the GDS trade show in Düsseldorf, company officials indicated that sales were driven by a constant flow of new products, including trendy sneakers and other lightweight shoes, offered at low prices and backed by a lot of advertising.
Skechers' corporate and third-party stores in the U.S. and the rest of the world enjoyed a strong momentum, lifting their sales by 12.9 percent on a same-store basis. A 31.9 percent increase was scored in the U.S. wholesale business, one of the factors being a 9.0 percent increase in the average price per pair.
The brand plans to open 30 to 35 more corporate stores by the end of 2015, bringing the total door count to more than 500. Adding franchises, it will have more than 1,300 stores around the world.
The strong sales momentum is producing an impressive leverage in overheads. In spite of increased advertising expenditures, selling costs amounted to only 8.1 percent of revenues in the quarter, down from 9.2 percent a year ago.