Skechers USA, Inc. reported that net sales for the second quarter of 2004 rose 2.4% to $234.7 million compared to $229.3 million in the second quarter of 2003. Net earnings for the quarter were $8.3 million, or 21 cents per diluted share, versus a net loss of $2.1 million, or six cents a diluted share, in the second quarter of the prior year. The results for the quarter bested analyst estimates of 17 cents per diluted share.
For the six-month period ended June 30, 2004, net sales were $456.2 million compared to net sales of $437.9 million in the first six months of the prior year. Net earnings were $15.4 million, compared to net earnings of $6.3 million in the first six months of the prior year. Diluted earnings per share in the first six months were $0.39 on 42,829,000 diluted shares outstanding versus diluted earnings per share of $0.17 on 38,042,000 diluted shares outstanding last year.
Gross profit for the second quarter of 2004 was $95.4 million compared to $89.6 million in the second quarter of last year. Gross margin was 40.7 percent compared to 39.1 percent in the second quarter of 2003. Gross profit for the first six months of 2004 reached $185.1 million, or 40.6 percent of sales versus $179.9 million, or 41.1 percent of sales in the first six months of the prior year.
“Our positive momentum from the first quarter continued into the second quarter, leading to increased sales, higher margins and earnings above second quarter consensus,” stated David Weinberg, chief financial officer of Skechers USA, Inc. “We believe the improvement is also a result of the strong response to our in-season styles throughout our distribution channels as evidenced by our positive comp store sales and solid sell-through rates in both our Company-owned retail stores and with key accounts. Along with the sales improvement, we continued to manage both inventory and expenses, resulting in an increased quarter-end cash balance in excess of $127 million. These indicators, along with increased backlog both domestically and internationally, give us confidence as we begin the second half of the year.”
Mr. Weinberg continued: “Through the dedication and focus of an experienced management team, we believe we have built a leading global lifestyle brand. By prudently developing and executing our recently launched and upcoming initiatives and supporting our existing business segments through pervasive advertising, we remain committed to our goals of gaining share of the global footwear market, increasing sales and profitability, and rewarding stockholders over the long term.”
Robert Greenberg, Skechers' chief executive officer, said: “For 12 years, our dedication to designing, developing and marketing stylish and core footwear that will receive broad acceptance in the marketplace has not wavered. We are intent on further developing existing lines by updating proven styles and introducing fresh trend-right styles that are natural extensions of the brands, and also launching three new unique lines — Rhino Unlimited, Rhino Red and 310 Motoring, which we believe will grow our customer base and shelf space. In 2004, our goal also has been on growing our licensing division, increasing profitability in our retail stores, and building our international business. We are pleased with the results for the first six months, and we believe the remainder of the year will continue to be positive if the current trends continue.”
The Company now expects third quarter 2004 sales to be in the range of $235 million to $245 million and diluted earnings per share of $0.15 to $0.20.
SKECHERS U.S.A., INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
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2004 2003 2004 2003
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Net sales $234,704 $229,278 $456,192 $437,871
Cost of sales 139,281 139,683 271,062 257,958
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Gross profit 95,423 89,595 185,130 179,913
Royalty income, net 1,033 454 2,421 725
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96,456 90,049 187,551 180,638
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Operating expenses:
Selling 20,738 28,838 36,828 46,458
General and administrative 59,288 61,053 120,329 118,149
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80,026 89,891 157,157 164,607
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Income from operations 16,430 158 30,394 16,031
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Other income (expense):
Interest (2,272) (2,438) (4,309) (4,535)
Other, net (157) (56) (223) (360)
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(2,429) (2,494) (4,532) (4,895)
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Income (loss) before income
taxes 14,001 (2,336) 25,862 11,136
Income tax provision (benefit) 5,659 (211) 10,474 4,800
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Net earnings (loss) $8,342 $(2,125) $15,388 $6,336
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Net earnings (loss) per share:
Basic $0.22 $(0.06) $0.40 $0.17
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Diluted $0.21 $(0.06) $0.39 $0.17
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