Skechers Fourth Quarter Profit Soars 149%…

Skechers USA Inc. reported its twelfth consecutive quarter of year-over-year sales increases, and paired that streak with its eleventh consecutive quarter of net income gains. In addition, the company experienced “double-digit sales growth in all operating segments: domestic wholesale, international wholesale, and retail,” according to CFO Fred Schneider on a conference call with analysts. The company also beat what The Street was looking for by $6.5 million in sales and two cents in earnings per share. Meanwhile, things are looking just as rosy for the future as backlog was up 29% at the end of the year.

For the fourth quarter, sales increased 36.2% to $304.5 million as compared to $223.5 million in the fourth quarter of 2005. Domestic wholesale sales increased 48% over the fourth quarter last year and increased 22% for the full year. The fashion and street lines grew by “almost 90%” from the prior year. The 310 Motoring line saw triple-digit sales growth for the year, while Mark Ecko and Rhino Red each saw revenues jump by “more than 50%.” Kid’s in these lines and also in Kitson grew in the triple-digits. In Skechers Active, Skechers USA, and Skechers Sport for men lines, the company saw double-digit quarterly and annual sales gains.

Overall International sales increased 18% for the quarter and 12% for the year, with both the company’s subsidiaries and distributors growing at approximately the same rate. Management also noted that seven of the company’s eight distributors grew more than 30% for the year. The only distributor not to post sales gains was in Japan, which the company has been “working closely with” and is “beginning to see the effects with an improved backlog.”

England saw sales improve “almost 15%,” with backlog up “significantly.” France is “beginning to see some signs of life” with backlog up “upper-low-middle digits, whatever that would be,” said CEO David Weinberg. Canada was especially strong for Skechers, with sales up 30% and backlog “up higher than that at year-end.”

Owned-retail sales were up “almost 20% for the fourth quarter and almost 18% for the full year,” according to Weinberg, on a “combination of double-digit comp increases and a 20-store increase from the prior full year.” For the quarter, domestic retail sales were said to have increased “almost 19%,” which makes this quarter the fourteenth consecutive quarter of double-digit domestic retail sales gains. Comp sales at concept stores were up “mid-single digits,” while outlets saw a “low-double digits” gain and a “double-digits” improvement in international stores. Sales at international retail were up “more than 32%.” The company opened eight Skechers stores during the fourth quarter and three since the end of the year, giving the company 143 stores in the U.S. and 155 company-owned stores worldwide.

Gross margin improved to 42.0% from 41.6% in the quarter, boosted by “increased demand for in-line product [resulting] in fewer close-outs, discounts, and allowances.” Earnings vaulted 149% to $14.6 million, or 33 cents a share, from $5.9 million, or 14 cents, a year earlier.

Skechers, Inc. now expects first quarter 2007 net sales to be in the range of $325 million to $335 million and diluted earnings per share in the range of 50 cents to 55 cents. Analysts were looking for a 48-cent profit on sales of $328 million. Even further down the road, Weinberg commented that “the fashion brands should come out at a minimum of $150 million domestically.” The company also plans to open 20 to 25 Skechers stores during 2007.