Skechers USA implemented cost cutting measures and tightened inventory levels in the second quarter, but a weak retail environment sunk the Manhattan Beach, CA footwear maker to a loss of $5.9 million, or 13 cents per share, as compared with a profit of $14.6 million, or 31 cents per share, in the year-ago period.


In a conference call with analysts, SKX management said the company has continued to manage expenses and inventory while strengthening its product offering and balance sheet. While skyrocketing up nearly five percentage points as a percent of sales, SG&A declined 4.9% to $130.7 million as compared to $137.4 million in the year-ago period.

Revenues sunk 15.7% to $299.0 million as compared to $354.6 million in the year-ago period.  Company CFO Fred Schneider attributed the decline to the “continued weakness in the global environment.”

Second quarter gross margins were 41.0% of sales, down 330 basis points from Q2 last year.  Management attributed the decrease to the “aggressive planned reduction of inventory levels from year-end.”

Domestic and international wholesale sales for Skechers each declined 20% due to the retail environment and the closing out of inventory. Management said the strengthening of the U.S. dollar has negatively impacted subsidiary sales, which were down nearly 14% on a dollar basis. The company said 93% of the decline was related to negative currency translations.

The company’s overall international distributor business was down by 30% on the second quarter, partially impacted by the company’s Chilean business converting from a distributor to a subsidiary, which deducted $4.2 million from what would have been distributor sales.  Those sales, however, boosted the overall International figures.
Combined domestic and retail sales were up 1.5% for the quarter with a negative comp of 6.6%.