Led by double-digit improvements in its domestic wholesale segment with ongoing momentum its its performance division, Skechers USA, Inc. reported third-quarter revenues climbed 20.1 percent to $515.8 million. Earnings jumped 143.6 percent, to $26.8 million, or 53 cents a share.
The top-line growth was also supported by double-digit growth in its company-owned retail and e-commerce businesses, and a single-digit improvement in its international business.
In its domestic wholesale business, sales increased 30.1 percent or $52.4 million, reflecting an increase of 25.2 percent in pairs shipped, as well as an increase in the average price per pair of 3.9 percent, David Weinberg, Skechers’ COO and CFO, said on a conference call with analysts. Double-digit growth came in women's, kids and work with single-digit improvement in men's.
Among Skechers’ lifestyle lines, double-digit expansion was generated by men's and women's sport and BOBS, along with “significant sales” in its newer sport active line. Skechers’ boys and girls lines also had double-digit improvements.
In its performance division, Skechers saw “significant sales” in GOwalk and On The Go footwear for women and double-digit growth in its men's performance line. Its running lines garnered another three awards from running magazines in the quarter, bringing its total number of performance awards to 13. Skechers was also named the official footwear and apparel sponsor for the Houston Marathon while Meb Keflezighi, its main endorser on the performance side, will be competing again at the New York Marathon, a race he won in 2009.
Plans going forward include the expansion of BOBS into a year-round business, Relaxed Fit footwear for women and the takedown of Skechers GOrun Ride and GOwalk into kids.
“The demand for our product remains high,” said Weinberg. “Our third quarter was one of the strongest third quarters for incoming orders, and October is tracking to be one of our strongest Octobers for incoming orders as well, both positive signs for what we believe will be a strong holiday season and first quarter of 2014.”
Its total international subsidiary, joint venture and distributor sales increased 5.8 percent. Subsidiary and joint venture sales improved 16.1 percent, offset by a 17.3 percent decline in distributor sales, due to ongoing challenges around political, currency and economic issues in several countries, including Venezuela, Colombia, Egypt and Kenya.
In its subsidiary regions, double-digit increases came in two of its largest subsidiaries, Chile and Canada. Germany has rebounded and is showing growth while Brazil and France, two countries that have been underperformers, experienced double-digit growth. Spain and Italy were down but are seeing postiive backlogs. Japan, its newest subsidiary, showed decreases in the quarter, but bookings are strong and the region is expected to positively impact international sales in the next year or two.
In its joint-venture regions, triple-digit improvements were seen in China and double-digit improvements in Hong Kong, Malaysia and Singapore.
In its company-owned retail business, revenues increased 19.8 percent, with domestic sales improving 19.5 percent and international sales 22.2 percent. Comps advanced 17.3 percent domestically and 14.4 percent internationally for a combined increase of 16.9 percent.
Gross margins improved to 44.7 percent compared to 43.7 percent due to strong sellthroughs across all its divisions, reflected by double-digit gains in both its company-owned, international and domestic retail businesses, as well as its domestic wholesale division.
Domestic and international backlog were up 19.7 percent from the period last year. Added Weinberg, “We believe the momentum we are experiencing now will continue in 2014 based on our key performance indicators, positive reactions to our product from our accounts during meetings this month.”