Skechers USA, Inc. announced net sales for the third quarter of 2003 totaled $221.8 million compared to $261.1 million in the third quarter of 2002. Net loss for the quarter was $5.9 million versus net earnings of $14.1 million in the third quarter of the prior year. Net loss per diluted share was $0.15 on 37,925,000 shares outstanding compared to net earnings of $0.35 per diluted share on 41,962,000 diluted shares outstanding in the third quarter of 2002.
For the nine-month period ended September 30, 2003, net sales were $659.7 million compared to net sales of $762.7 million in the first nine months of the prior year. Net earnings for the nine months were $0.5 million, as compared to net earnings of $55.6 million in the first nine months of the prior year. Diluted earnings per share for the first nine months were $0.01 on 38,114,000 diluted shares outstanding versus diluted earnings per share of $1.39 on 41,004,000 diluted shares outstanding.
Gross profit for the third quarter of 2003 was $78.6 million compared to $108.8 million in the third quarter of last year. Gross margin was 35.5 percent compared to 41.7 percent in the third quarter of 2002. Gross profit for the first nine months of 2003 reached $258.6 million, or 39.2 percent of sales versus $317.1 million, or 41.6 percent of sales in the first nine months of the prior year.
“Our third quarter 2003 sales were higher than anticipated due to our aggressive approach in reducing our inventory levels, which resulted in lower gross margins and earnings for the third quarter,” began David Weinberg, chief financial officer of Skechers USA, Inc. “We believe it was prudent to assertively work through our inventories and we will continue to do so to achieve our year-end goals. Our balance sheet improved substantially from last quarter and we expect a continuation of this trend through the remainder of the year.”
“We are in the process of reviewing our cost structure in order to reduce overhead expenses,” continued Mr. Weinberg. “We believe that the major elements of a cost reduction program can be implemented by year-end 2003. While the cost-cutting measures will have minimal impact during the fourth quarter of 2003, we believe they should better position us to realize benefits during the first quarter of 2004.”
Robert Greenberg, Skechers chief executive officer, said: “In a decade, we built Skechers into a desired brand around the world by designing and marketing trend-right footwear for men, women and children of all ages and demographics. Now, as a leader in the lifestyle footwear industry, we will concentrate on the initiatives we have in place, including the new designer lines Michelle K and Mark Nason, along with the licensed lines 310 Footwear, an extension of the popular car specialists 310 Motoring, and Marc Ecko Footwear for men, women and kids, the coordinating shoe line for Ecko Red and Ecko Unltd. We should continue to deliver exceptional product through our diverse lines; sign additional licenses that reflect our brand and image; and support our customers with targeted advertising campaigns, including the exciting international campaign with world-renowned music superstar Christina Aguilera. We believe Skechers has incredible brand equity and will remain a viable player in the footwear industry, which should translate into successful licensing opportunities and improved sales over the long term.”
The Company now expects fourth quarter 2003 sales to be in the range of $155 million to $165 million and a loss per share of between $0.45 and $0.55 per share.
Skechers U.S.A., INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
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2003 2002 2003 2002
---------- ---------- ---------- ----------
Net sales $ 221,821 $ 261,147 $ 659,692 $ 762,748
Cost of sales 143,183 152,347 401,141 445,638
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Gross profit 78,638 108,800 258,551 317,110
Royalty income, net 1,404 107 2,129 532
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80,042 108,907 260,680 317,642
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Operating expenses:
Selling 20,626 32,574 67,084 72,636
General and
administrative 63,488 52,232 181,647 $ 150,717
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84,114 84,806 248,731 223,353
---------- ---------- ---------- ----------
Earnings (loss)
from
operations (4,072) 24,101 11,949 94,289
---------- ---------- ---------- ----------
Other income (expense):
Interest (2,136) (2,004) (6,671) (6,632)
Other, net (87) (280) (437) 246
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(2,223) (2,284) (7,108) (6,386)
---------- ---------- ---------- ----------
Earnings (loss)
before income
taxes (6,295) 21,817 4,841 87,903
Income taxes (435) 7,710 4,365 32,260
---------- ---------- ---------- ----------
Net earnings
(loss) $ (5,860)$ 14,107 $ 476 $ 55,643
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Net earnings (loss)
per share:
Basic $ (0.15)$ 0.38 $ 0.01 $ 1.50
========== ========== ========== ==========
Diluted $ (0.15)$ 0.35 $ 0.01 $ 1.39
