Skechers USA, Inc. saw the fourth quarter mark the company’s eighth consecutive quarter of year-over-year sales increases. In addition, the company’s domestic retail business saw its tenth consecutive quarter of double-digit year-over-year sales growth. The company is running on all cylinders and the future is looking bright with backlog up 13.6% at year-end and management announcing plans for a new footwear line during a conference call with analysts.

Net sales for the fourth quarter of 2005 increased 8.2% to $223.5 million as compared to $206.5 million in the fourth quarter of 2004. The sales increase was fueled by a domestic wholesale increase of “just over 7%,” double-digit sales growth in the domestic retail business, and triple-digit growth from the two designer lines, Michelle K and Mark Nason. International sales were up 3% for the quarter and 5% for the year with sales increases at the subsidiary business up “more than 15%” for the year, held back by basically flat sales through the distributor business for both the quarter and year. International company-owned retail stores saw sales grow 5% for the year.

Fourth quarter gross margin was 41.6% of sales, up 190 basis points from 39.7% last year. SG&A expenses decreased 410 basis points as a percentage of net sales to 36.0% for the fourth quarter from 40.1% during the same quarter last year. Net earnings for the quarter nearly tripled to $5.9 million, or 14 cents per diluted share, versus net earnings of $2.1 million, or five cents per diluted share, last year.

Management announced during the analyst call that the company will expand its relationship with Mark Ecko to include a footwear line for his Zoo York brand. The launch is planned for 2006 with distribution to core skate shops, an area that Skechers sees itself as under-penetrated, along with select specialty and athletic stores for back-to- school.

SKX now expects first quarter 2006 net sales to be in the range of $270 million to $280 million and diluted EPS in the range of 29 cents to 34 cents per share.

Skechers, Inc.
Full Year Results
(in $ mm) 2005 2004 Change
Total Sales $1,007 $920.3 9.4%
GM % 41.8% 40.3% +150 bps
SG&A % 34.9% 35.7% -90 bps
Net Income $44.7  $23.6  +89.9%
Diluted EPS $1.06 59¢ +79.7%
Inventories* $136.2  $149.8  -9.1%
Accts Rec* $134.6  $120.5  +11.7%
*at year-end