SKECHERS TURNS AROUND IN QUARTER
Skechers made net earnings of $6.0 million for the 3rd quarter ended Sept. 30, reversing the net loss of $5.9 million recorded in the same period a year ago, but the results were 25 percent below Wall Street’s expectations, sending shares down 11.4 percent.
Sales increased by 16.2 percent to $257.7 million, which was better than expected, while gross margins rose by 510 basis points to 40.6 percent of sales, versus 35.5 percent in the same quarter in 2003. Average selling prices increased and nventories declined.
Domestic wholesale sales improved by over 5 percent, aided by the launch of 310 Motoring and the Rhino collections, and average unit prices also increased. The foreign wholesale business rose to account for around 19 percent of sales, with Germany, the UK and India performing most strongly, followed by Canada and Spain. Skechers wants the international side of its business to reach 25-30 percent of its revenues within 2-3 years.
The company expects a loss for the 4th quarter but a profit for the full year. Sales should continue to increase into the 1st quarter of 2005 as the order backlog is nearly 22-23 percent ahead of 2003.