Skechers USA, Inc. broke the $300 million barrier for the first time in the third quarter, surpassing guidance for both sales and earnings. Management pointed to “double-digit” growth in kids for back-to-school; domestic wholesale growth of 22%; and “triple-digit growth” at 310, Rhino Red, Mark Nation, and the kids fashion lines; as well as reported 21% growth in international sales as factors for the strong quarterly results. Also on the conference call with analysts and the media, management said that total retail sales increased 19% in the quarter over the same period last year, with “double-digit comp increases.” Domestic retail grew “almost 18%” marking the 13th consecutive quarter of double-digit sales growth in the segment, while international retail sales increased “almost 30%.”
Net sales for the third quarter rose 21.4% to $331.1 million compared to $272.8 million for the same period in 2005. Gross margins increased 190 basis points to 44.2% of net sales from 42.3% of net sales in the third quarter of last year. SG&A expenses decreased 100 basis points to 34.2% of sales from 35.2% last year. The combination of expanded margins and diminished expenses helped to fuel a 75.7% increase on the bottom line to net earnings of $22.2 million, or 49 cents per diluted share, from $12.6 million, or 30 cents per diluted share last year. SKX had forecast Q3 diluted EPS in the 37 cents to 42 cents range on sales between $310 million and $320 million for the period.
SKX now expects fourth quarter sales to be in the range of $255.0 million to $265.0 million and diluted EPS of between 22 cents and 27 cents per share. For the full 2006 year, the company expects sales to be in the range of $1.16 billion and $1.17 billion and earnings per share between $1.49 and $1.54.
