Skechers USA, Inc. announced financial results for the second quarter ended June 30, 2005. Net sales for the quarter rose 12.5% to $263.9 million compared to $234.7 million in last year's quarter. Net earnings were $15.9 million versus net earnings of $8.3 million in the second quarter of 2004. Net earnings per diluted share were 38 cents on 44,120,000 diluted shares outstanding, above First Call consensus of 25 cents per diluted share, and 81.0% higher than net earnings per diluted share of 21 cents in the second quarter of 2004.
“Much like our record first quarter 2005 sales, our reported second quarter net sales of $263.9 million represent our highest second quarter revenues in the Company's history,” began David Weinberg, chief financial officer of Skechers USA, Inc. “This marks the sixth consecutive quarter of year-over-year top-line quarterly increases, a clear testament to the continued strength of our brands.”
For the six-month period ended June 30, 2005, net sales were $510.1 million compared to net sales of $456.2 million in the first six months of 2004. Net earnings were $26.2 million, compared to net earnings of $15.4 million in the first six months of 2004. Net earnings per diluted share in the first six months of 2005 were 62 cents versus net earnings per share of 39 cents for the same period last year.
Gross profit for the second quarter of 2005 was $111.5 million compared to $95.2 million in the second quarter of 2004. Gross margin was 42.3% compared to 40.6% in the second quarter of 2004. Gross profit for the first six months of 2005 reached $212.0 million, or 41.6% of sales versus $184.9 million, or 40.5% of sales in the first six months of 2004.
Weinberg continued: “Our record second quarter net sales were the result of growth in key Skechers men's, women's and children's lines, and our new fashion brands, including 310 Motoring and Red by Marc Ecko — both of which experienced their first full year of shipping. With our product on target and in demand, we saw double-digit sales increases in our domestic wholesale and retail businesses, as well as growth in our international wholesale business and company-owned international retail stores. Due to this increased demand of our in-line product and strong sell-throughs, we also experienced very strong margins. The growth from all our key divisions and our improved margins give us continued confidence as we head into the second half of the year.”
Robert Greenberg, Skechers' chief executive officer, said: “We are very pleased with our consecutive quarters of record growth and see this as a strong indicator for the remainder of the year as we continue to build on the strength and success of both Skechers and our newer lifestyle brands. We believe that signing both Carrie Underwood, the new American Idol winner and rising star, for Skechers and the multi-platinum hip-hop artist The Game for 310 Motoring will help increase awareness of both brands when consumers see the advertising in the second half of 2005. During our pre-line meetings with major accounts earlier this month, we consistently heard enthusiastic feedback as we shared preliminary images of our new marketing campaigns as well as Holiday 2005 and Spring 2006 product. Given our new marketing plans, new products and early response from retailers, we are excited about next week's WSA trade show. We believe our company is savvier than ever. Our products and marketing are on target in all our divisions, which we believe should result in continued year-over-year improvements.”
The company now expects third quarter 2005 net sales to be in the range of $270 million to $280 million and net earnings per diluted share of 25 cents to 30 cents.
SKECHERS U.S.A., INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
--------- --------- --------- ---------
Net sales $263,928 $234,704 $510,147 $456,192
Cost of sales 152,392 139,467 298,175 271,248
--------- --------- --------- ---------
Gross profit 111,536 95,237 211,972 184,944
Royalty income 1,990 1,219 3,074 2,607
--------- --------- --------- ---------
113,526 96,456 215,046 187,551
--------- --------- --------- ---------
Operating expenses:
Selling 20,973 20,738 39,146 36,828
General and administrative 65,282 59,288 131,612 120,329
--------- --------- --------- ---------
86,255 80,026 170,758 157,157
--------- --------- --------- ---------
Earnings from operations 27,271 16,430 44,288 30,394
--------- --------- --------- ---------
Other income (expense):
Interest, net (1,627) (2,272) (3,197) (4,309)
Other, net (204) (157) 1,347 (223)
--------- --------- --------- ---------
(1,831) (2,429) (1,850) (4,532)
--------- --------- --------- ---------
Earnings before income taxes 25,440 14,001 42,438 25,862
Income tax expense 9,523 5,659 16,254 10,474
--------- --------- --------- ---------
Net earnings $15,917 $8,342 $26,184 $15,388
========= ========= ========= =========
Net earnings per share:
Basic $0.40 $0.22 $0.66 $0.40
========= ========= ========= =========
Diluted $0.38 $0.21 $0.62 $0.39
========= ========= ========= =========
