On average, financial analysts were anticipating a turnover of $508 million for the second quarter, but Skechers reported sales of $587.1 million, up by 37.1 percent from the year-ago period. Net earnings beat their most optimistic projections by a long shot, recording a jump of 439 percent to $34,802,000.
The gross margin improved slightly to 45.9 percent from 45.5 percent a year ago, but operating expenses were cut to 27.9 percent of sales from 32 percent, thanks to the higher turnover. Advertising expenditures were kept at the same level as a year ago.
Besides a shift in deliveries from the third quarter to the second one, the strong progress was attributed by the management to the success of many product lines in many categories and the strong visibility of the brand around the world.
Sales to wholesale clients in the U.S. went up by 35.4 percent, partly aided by 4 percent higher average prices. The management reported triple-digit increases in the Women's Sport and Sport Active segments, and double-digit growth in the Kids, Men's Sport and Work lines.
The Princeton Retail Analysis described Skechers as the “hottest major footwear brand” in the U.S. during the months of April and June. In the U.K., it was named Best Lifestyle Brand of the Year in the Sports Trade Awards.
European sales experienced a rebound, as we have already indicated. The political issues in Ukraine and parts of the Middle East and South America had little effect on consumers' demand for the company's products.
In particular, sales at the company's foreign subsidiaries and joint ventures rose by 42.7 percent, with two of the subsidiaries recording triple-digit growth. The joint ventures in Southeast Asia scored a 31 percent increase and China was up by 60 percent. Sales to foreign distributors jumped by 87.3 percent, reaching a triple-digit pace in Australia, New Zealand, Mexico, South Africa, South Korea, Turkey and the United Arab Emirates.
The company opened 16 new stores in the second quarter and plans to accelerate the pace of new openings, adding between 40 and 50 more in the U.S. during the second half of this year. This would compare with the 47 new stores opened worldwide in 2013. Foreign distributors are expected to open between 60 and 65 new stores. The door count would then reach 1,050 units worldwide by year-end.
Company-owned stores raised their sales by 20.9 percent in the U.S. and 75.1 percent in the rest of the world during the quarter, with same-store sales rising by 12.1 percent in the U.S. and 24.6 percent elsewhere. Online sales increased by 5 percent.
The sales momentum remains strong as orders are up by between 25 and 30 percent overall, with a slightly higher increase outside the U.S.
Meanwhile, confirming our earlier report, Skechers has announced plans to expand its European distribution center in Belgium by 25,000 square meters to a total of 70,000 square meters, to cope with the rising demand for its products in Europe. It had already been extended by 23,000 square meters in 2009.