Skechers reports that its sales dropped by 11 percent for the first quarter ended March 31 to $343.5 million, with net income plummeting by 78 percent to $7.4 million. The gross margin fell by 8.2 percentage points to 36.5 percent.
Outside the U.S., total sales were flat at $99.6 million, but their proportion climbed to 29 percent of all revenues, from 26 percent in the first quarter of 2008. Germany and Italy each posted unspecified dollar sales improvements, and sales to non-domestic distributors were up by 16 percent, boosted by big growth in Greece, Japan, Russia and several Eastern European countries.
In the U.S., wholesale revenues fell by 18 percent, while comparable store sales decreased by 7 percent. The revenues of Skechers’ foreign subsidiaries were down by 5 percent in dollars, but their sales increased by 8 percent in terms of pairs.
The company made big efforts to reduce inventory during the quarter, and as of March 31 it was down by 34 percent to $172.9 million compared with the end of the fourth quarter.
Management says the gross margin will climb back above 40 percent later this year. It has begun the process of taking over the distribution in Chile, where it sold 800,000 pairs. It has 10 stores in that country. It is working to expand the brand also in Brazil, China and Hong Kong.
Meanwhile Skechers inaugurated last April 2 the second section of its European distribution center near Liège, in Belgium, whose surface has been doubled tos 45,000 square meters. It has a capacity for three million pairs. It employs 94 persons and a further 53 should be hired by next year.