Skechers USA, Inc. announced that fiscal year 2003 net sales were $835.0 million, as compared to net sales of $943.6 million in 2002. Net loss for 2003 was $11.9 million versus net earnings of $47.0 million in 2002. For fiscal year 2003, net loss per diluted share was $0.31 on 37,840,000 weighted average shares outstanding versus diluted earnings per share of $1.20 on 40,854,000 weighted average shares outstanding in 2002.
Net sales for the fourth quarter of 2003 were $175.3 million compared to $180.8 million in the fourth quarter of 2002. Net loss for the quarter was $12.3 million versus a net loss of $8.6 million in the comparable period of 2002. Net loss per diluted share in the fourth quarter was $0.33 on 37,939,000 diluted weighted average shares outstanding compared to a net loss per diluted share of $0.23 on 37,568,000 diluted weighted average shares outstanding in the fourth quarter of 2002.
Gross profit in 2003 was $317.7 million, or 38.0 percent of sales, compared to $386.7 million, or 41.0 percent of sales in 2002. Gross profit for the fourth quarter of 2003 was $59.1 million compared to $69.6 million in the fourth quarter of 2002. Gross margin in the fourth quarter 2003 was 33.7 percent versus 38.5 percent in the fourth quarter of 2002. Also included in operating results for the fourth quarter and year-end 2003 are approximately $620,000 of non-cash impairment charges relating to the write down of store assets at three of our Company-owned retail stores.
David Weinberg, the Company's chief financial officer, stated: “While 2003 proved to be a difficult year for Skechers, we are pleased with our accomplishments and new initiatives that we believe will position us for growth in the future. The accomplishments include: the introduction of two new product lines, Michelle K Sport for women and Mark Nason for men, in Fall 2003; the signing of several key licensing agreements, three of which are for apparel that will launch at retail in Fall 2004; the successful launch of children's apparel in Fall 2003; entering into a license agreement with Ecko Unlimited to serve as the licensee for Mark Ecko/Rhino Red Footwear; purchasing the intellectual property rights to 310 Motoring and launching the 310 Footwear line; the opening of 31 retail locations, including six in Europe, one in Times Square, and the first Michelle K store in Los Angeles.
“We are also extremely pleased with our financial position at year-end 2003,” continued Mr. Weinberg. “Our balance sheet has improved significantly with more than $100 million in cash and lower inventory levels. Our year end December 2003 inventory balance of $137.9 million was 6.8 percent lower than our inventory at December 2002, and significantly lower than our June 30, 2003 balance of $217.1 million. We continue to believe it was prudent to be aggressive on clearing our inventory during the second half of 2003 so we could end the year with inventories current and on plan. While this assertive approach negatively affected gross margins, inventory levels are below our targeted goal, and lower than our inventory levels at the end of last year despite the increase in the number of retail stores and our international expansion. As such, we believe we are financially set to take on 2004.”
Robert Greenberg, the Company's chief executive officer, stated: “2003 was a transition year for Skechers as we further developed our existing product lines, launched new footwear lines and created unique head-to-toe lifestyle brands through licensing. I believe that the diverse styles we created for Spring 2004 will be embraced by consumers and I am anticipating an equally enthusiastic response to our upcoming Fall 2004 offerings. In addition to our current lines, we are expanding our footwear offering with the launch of Marc Ecko Footwear for men, Rhino Red for women and 310 Motoring for men in Spring 2004, and the upcoming children's lines Marc Ecko Boys, Rhino Red Girls and Michelle K Girl for Fall 2004. With these lines coming to market this year, along with key licensed products — including apparel for juniors and the Michelle K brand, 2004 should be a strong year for Skechers.”
The Company now expects first quarter sales to be in the range of $190 million to $200 million and earnings per share in the range of $.05 to $0.10 per diluted share.
SKECHERS U.S.A., INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------- -------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Net sales $175,284 $180,834 $834,976 $943,582
Cost of sales 116,149 111,271 517,290 556,909
--------- --------- --------- ---------
Gross profit 59,135 69,563 317,686 386,673
Royalty income, net 2,041 613 4,170 1,145
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61,176 70,176 321,856 387,818
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Operating expenses:
Selling 17,569 21,638 84,653 94,274
General and administrative 57,393 60,165 239,150 210,889
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74,962 81,803 323,803 305,163
--------- --------- --------- ---------
Income (loss) from
operations (13,786) (11,627) (1,947) 82,655
--------- --------- --------- ---------
Other income (expense):
Interest (2,168) (2,295) (8,839) (8,927)
Other, net 740 1,360 413 1,613
--------- --------- --------- ---------
(1,428) (935) (8,426) (7,314)
--------- --------- --------- ---------
Income (loss) before income
taxes (15,214) (12,562) (10,373) 75,341
Income tax provision (benefit) (2,871) (3,955) 1,494 28,305
--------- --------- --------- ---------
Net earnings (loss) $(12,343) $(8,607) $(11,867) $47,036
========= ========= ========= =========
Net earnings (loss) per
share:
Basic $(0.33) $(0.23) $(0.31) $1.26
========= ========= ========= =========
Diluted $(0.33) $(0.23) $(0.31) $1.20
