Skechers says it is doing well in Europe, with the Benelux countries and Germany performing best in the 3rd quarter ended Sept. 30. There was also “significant growth” in the UK, Spain and Switzerland, while France is “turning around.” Its Kitson line of footwear is moving into the likes of Harrods and Selfridges in London. Styles from other Skechers lines such as The Hurricane are being spotted in European Foot Locker stores.
To give an additional boost to its sales in Europe, the American company is planning to take there its marketing campaign revolving around Ashlee Simpson, the American pop-culture star. Coincidently, Simpson recently played a part in a remake of the “Chicago” show in a London theater.
The company’s total sales outside of the USA increased by almost 21 percent in the quarter, including a 32 percent gain for its eight sales subsidiaries in Europe and Canada. The Canadian operation contributed much of the growth.
The company continues to perform strongly almost everywhere with the exception of Japan, where Skechers says its local distributor has failed to keep a consistent flow of new styles in the market. Skechers says it is working with the distributor to improve business in the country.
Skechers’ foreign distributors plan to open 5-7 additional single-brand stores in the next few months, including the company’s first store in Thailand, two more outlets in China and additional locations in South America and Australia. As of last Wednesday, 15 distributors had 44 Skechers stores in operation across 19 countries. They opened the first store in Malaysia during the 1st quarter of this year, followed by the first store in Shanghai, China, during the 2nd quarter. Furthermore, in line with the company’s marketing strategy, distributors outside of the USA continue to use regional celebrities to endorse Skechers’ products in Israel, Japan, Hong Kong, Taiwan, Greece, Croatia and in much of Central and South America.
Skechers’ network of company-owned retail stores outside of the USA, comprising 10 doors in Europe and 3 in Canada, posted a sales increase of nearly 30 percent in the 3rd quarter. Including the sales of its 100-plus outlets in the USA, global retail revenues were up by almost 19 percent, due to a combination of double-digit organic growth and the addition of 13 stores since the year-ago quarter. The company wants to add 20-25 more outlets next year, but primarily in the USA.
Global wholesale and retail revenues rose by 21.4 percent to $331,126,000 in the quarter. The gross margin improved by 190 basis points to 44.2 percent. Net earnings jumped by 75.7 percent to $22,199,000, aided by a non-recurring gain of $1.3 million stemming from an accounting technicality. Despite Skechers’ continued investments in celebrity endorsements, the company’s selling expenses were up to only 10.7 percent of sales, as compared to 10.0 percent last year.
Skechers’ breadth of celebrity endorsements now includes Terrence Howard, an American actor; The Game, an American rapper; Evangeline Lilly, an actress from the American TV series “Lost”; and Carrie Underwood and Ashlee Simpson, both American recording artists. The company expects strong turnover from its new Hurricane 2 sneaker, endorsed by The Game, as the rapper releases another album this November.
Moving ahead, sales in the 4th quarter are expected to be in the $255-265 million range. Full-year sales are being projected at $1.156-1.166 billion.