Skechers Posts 11.6% Q1 Net Sales Jump

SKECHERS USA, Inc. recorded an 11.6% increase in net sales for the first quarter to $384.9 million from $344.9 million for the same period in 2007. Net earnings for the quarter were a record $32.8 million versus net earnings of $23.9 million for the first quarter of 2007. Diluted earnings per share were 70 cents compared to 52 cents last year.

“Our first quarter sales of $384.9 million represent a new first quarter record and the second highest quarter in the Company’s history,” began David Weinberg, chief operating officer of SKECHERS. “The record revenue and earnings were primarily the result of growth across our international wholesale and retail businesses. Our domestic wholesale, retail and e-commerce divisions also grew year over year in spite of negative comp store sales experienced by our retail stores. We are particularly gratified with our strong and broad-based improvement given the challenging U.S. retail environment.”

Gross profit for the first quarter of 2008 was $172.2 million or 44.7% of net sales compared to $149.0 million or 43.2% of net sales in the first quarter of last year.

“Our improved margins, record earnings and record quarterly earnings per share of $0.70, which is substantially above our first quarter guidance of $0.57 to $0.62, is primarily due to the high double-digit growth in our international subsidiary business, a lower tax rate resulting from our international growth, as well as the favorable impact of the exchange rates experienced during the quarter,” stated Fred Schneider, SKECHERS chief financial officer. “Our balance sheet continues to be very strong, enabling us to continue to invest in our growth. While we are cautiously optimistic that the liquidity will be restored for our auction rate securities in the short term, we felt it was prudent to classify them to a long-term asset during the quarter.”

“As we approach our 16th year in business, we are ready to drive our message to every fashion-savvy consumer in every metropolis around the world,” commented Robert Greenberg, SKECHERS’ chief executive officer. “We have multiple unique lines comprised of more than 2,500 trend-right and reasonably priced styles. We are able to successfully meet the needs of a diverse consumer base in the United States and internationally by marketing our product through multiple mediums and several channels of distribution. We believe our fashionable product, broad diversification, and willingness to support our business through both marketing and execution makes us the right brand for our consumers. We are pleased with our consistent growth and record earnings, and look to the coming year with an eye on further developing our domestic and international business in our existing markets and building our brand in the recently launched Brazil and China arenas, as well as growing our company-owned store base by another 20 to 25 locations – including our first in Scotland, which is opening this week. Our goal is to continue to ensure that SKECHERS remains a must-have brand.”

Mr. Weinberg continued: “We believe the sales momentum we are seeing will continue into the second quarter based on key indicators including our backlog and strong shipments to date this quarter. While we are encouraged by our key indicators, we remain cautious about the coming year and therefore are providing a broader guidance range for the second quarter. This guidance reflects the difficult retail environment, which has resulted in many retailers requesting product shipping closer to their need.”

The company now expects second quarter 2008 net sales to be in the range of $350 million to $365 million and diluted earnings per share in the range of 30 cents to 38 cents.