Skechers USA, Inc. announced financial results for the first quarter ended March 31, 2005. Net sales for the first quarter of 2005 rose 11.2% to $246.2 million compared to $221.5 million in the first quarter of 2004. Net earnings for the quarter were $10.3 million versus net earnings of $7.0 million in the first quarter of the prior year. Net earnings per diluted share were 25 cents on 44,317,000 shares outstanding compared to net earnings per diluted share of 18 cents on 42,448,000 diluted shares outstanding in the first quarter of 2004.
Gross profit for the first quarter of 2005 was $101.2 million compared to $89.7 million in the first quarter of last year. Gross margin was 41.1% for the first quarter of 2005 compared to 40.5% in the first quarter of 2004. Selling, general and administrative expenses declined slightly to 34.3% of net sales in the first quarter of 2005 compared to 34.8% of net sales in the first quarter of 2004.
“Our reported net sales of $246.2 million for the first quarter of 2005 represent our highest first quarter revenues in the Company's nearly 13-year history, and the fifth consecutive quarter of year-over-year top-line increases,” began David Weinberg, chief financial officer of Skechers USA, Inc. “For the first quarter, the growth has come through our trend-right product and expanded distribution of our new lines. A reflection of this growth is our double digit sales increases in both our domestic wholesale and international businesses as well as strong comp sales in our retail division. Additionally, the improvements in our business have come both profitably and efficiently, thereby increasing our gross margins and strengthening our financial position.”
Robert Greenberg, Skechers chief executive officer, said: “Last year we experienced the beginning of a resurgence for our product as we saw accounts and consumers embrace our new offering and our sales improve quarter over quarter. We are very pleased that the momentum that began a year ago has continued into 2005 as we again experienced increased product acceptance and improved sales quarter over quarter. Key Spring 2005 styles in each of our Skechers product lines produced double digit sell-throughs and remain strong going into the second quarter. Our fashion brands, including the newly launched Marc Ecko Footwear and 310 Motoring, are rapidly finding their place in the market, experiencing accelerated sales as the word spreads and our account base grows for these uniquely branded lines. To support our SKECHERS and fashion brands, we launched targeted marketing campaigns that included print, television and outdoor mediums. The campaigns for each line have their own unique look — be it international superstar Christina Aguilera for Skechers, a product shot for Mark Nason, or a lifestyle ad featuring a customized luxury car and a guy relaxing in a pair of 310 Motoring shoes. The result of our fresh flow of product and marketing efforts is stronger sales of in-line merchandise and better sell-throughs with our accounts. We have built a relevant brand through the strength of our image, product and marketing, along with the efforts of our skilled management team. We will continue to concentrate on our key initiatives and key areas of business in an effort to positively impact sales and earnings.”
The company now expects second quarter 2005 sales to be in the range of $245 million to $255 million and earnings per share in the range of 21 cents to 26 cents per diluted share. It is important to note, however, that historically Skechers' back-to-school shipping period occurs in June and July over both its second and third quarters, which has caused sales to shift between the two quarters; the timing of when goods ship is determined by the delivery schedules set by the Company's wholesale accounts.
SKECHERS U.S.A., INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In thousands, except per share data)
Three Months Ended March 31,
2005 2004
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Net sales $246,219 $221,488
Cost of sales 145,039 131,781
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Gross profit 101,180 89,707
Royalty income, net 340 1,388
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101,520 91,095
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Operating expenses:
Selling 18,173 16,090
General and administrative 66,330 61,041
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84,503 77,131
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Earnings from operations 17,017 13,964
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Other income (expense):
Interest, net (1,570) (2,037)
Other, net 1,551 (66)
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(19) (2,103)
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Earnings before income taxes 16,998 11,861
Income tax expense 6,731 4,815
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Net earnings $10,267 $7,046
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Net earnings per share:
Basic $0.26 $0.18
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Diluted $0.25 $0.18
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