Skechers USA’s net sales for the fiscal year 2006 rose by 19.8 percent to a record of $1.205 billion as compared to 2005, while net earnings totaled $71.0 million as compared to $44.7 million in 2005. The company’s gross profit margin grew to 43.4 percent from 41.8 percent. The 310 Motoring line had triple-digit sales growth while Mark Ecko and Rhino Red saw revenues increase by over 50 percent.
For the 4th quarter of 2006, net sales grew by 36.2 percent to $304.5 million, marking the second time that Skechers has made over $300 million in quarterly sales, while net earnings reached $14.6 million as compared to $5.9 million in the same period in 2005. The gross margin was up to 42.0 percent as compared to 41.6 percent in 2005.
Outside the USA, Skechers’ sales grew by 18 percent over the quarter and by 12 percent over the year. Seven of the company’s eight distributors improved their sales by over 30 percent during the year; the only one that did not was the Japanese importer. Sales in the UK grew by nearly 15 percent, with backlog up significantly, while sales in France picked up some speed.
As the company enters its 15th year in business, it believes that many of its fashion and street brands, such as 310 Motoring and Marc Ecko Footwear, are creating their own respectable market niches and that they, along with newer brands like Zoo York, have strong growth potential. By the end of 2006, Skechers had 10 on-target brands and over 20 divisions, and the total order backlog was up by 29 percent. It also has eight celebrities endorsing their brands, including Ashlee Simpson.
Company stores, which totaled 155 at the end of the year, experienced nice gains on a same-store basis, particularly abroad where they grew in double digits.
In a separate development, Skechers has filed a counter-lawsuit against ASICS in the USA for libel and unfair competition, seeking $100 million in “punitive damages” and a declaration that none of its designs infringe upon ASICS’ trademarks. The suit was filed with a district court in California on Feb. 26 and follows a claim made by the Japanese brand earlier this year that a set of Skechers’ shoes had a design “confusingly similar” to its own.
Skechers is partly launching the countersuit to save its reputation and is accusing ASICS of improperly using press releases and filing a lawsuit to disseminate false public information. Furthermore, Skechers accuses ASICS of making false statements “with malice”, saying that these statements contradict sworn testimony of ASICS’ executives.