Skechers posted its seventh consecutive quarter of net sales increases and its sixth quarter of net income gains with owned-retail comprising approximately 20% of total business, but gave guidance for the fourth quarter and full year that was below analysts’ expectations, causing the company’s stock to tumble.

Net sales for the quarter rose 5.9% to $272.8 million from $257.7 million last year. Gross margin improved 200 basis points to 42.3% of sales, but the improvement was rather backhanded as it came on an “overall decrease” in international distributor sales. Net earnings jumped 110% to $12.6 million, or 30 cents per diluted share, compared to $6.0 million, or 15 cents per diluted share, in the prior year.

The Domestic Wholesale business was up “more than 5%.” Management is particularly excited about the 310 Motoring release of rapper The Game’s shoe (formerly the Hurricane) to Foot Locker and Finish Line at the end of December, which it sees as having “as significant a potential as any single product [they’ve] brought to the market place.”

The International business, which is comprised of company-owned subsidiaries as well as international distributors, saw a mixed bag of results as five out of eight subsidiaries posted double-digit sales increases, especially in Germany and Spain, but the distributor business suffered from an “overall decrease.” The UK subsidiary was the only region said to be down, with France coming in relatively flat. As for the distributor decrease, the company is not worried, citing a double-digit backlog increase, which should see the business flat for the year.

The Retail business posted its tenth consecutive quarter of double-digit sales increases, with all three store formats – Skechers, Skechers Outlets, and Factory Stores – posting double-digit comp gains. The company opened seven stores during the quarter with another expected in Q4, bringing SKX’ retail footprint to 133 doors by year-end. Plans include 10-15 more stores in 2006, with a fourth SoHo Lab opening in San Diego’s Gas Lamp District.

SKX sees Q4 sales in the $210 million to $220 million range and DEPS between 2 cents and 7 cents. Full year sales are expected in the $993 million to $1 billion range and DEPS between 94 cents and 99 cents.