Skechers USA saw three record quarters through the first nine months of 2007, but revenues dipped nearly a full percentage point in the fourth quarter due to weakness in the U.S. market and the shuttering of a couple of sub-brands.  The strong Q4 results for the year were the result of double-digit sales growth in the company’s international business, gains in the U.S. wholesale business, as well as double-digit sales growth in both the domestic and international owned-retail division and double-digit growth in the e-commerce division.  Net sales for the fourth quarter slipped 0.8% to $302.0 million from $304.5 million in the fourth quarter of 2006, led by a strong double-digit increase in the international wholesale businesses.  Net earnings for the fourth quarter declined 17.1% to $12.1 million, or 26 cents per diluted share, compared to net earnings of $14.6 million, or 33 cents per diluted share, in the fourth quarter of 2006.

The domestic wholesale business was up 7.5% for the full year, but decreased by 16% for the fourth quarter. Management said one of the issues with the domestic business was the comp against Q4 last year when sales had jumped 48% versus the prior year.  They said that retailers are booking closer to need and some also moved Q4 dollars into the early fist quarter.  The shift, while hurting the fourth quarter, also helped push backlog up over 29% at the end of the period.


International wholesale improved 42% for the fourth quarter and 46% for the year.  Subsidiary sales, which includes Canada, Brazil, Malaysia and 12 countries in Europe, improved by 70% for the quarter and over 53% for the year.   SKX said the improvements for the quarter came across nearly every one of their direct regions, including Italy and France.  Spain and the Benelux region had triple-digit growth while the company’s three largest subsidiaries, the U.K., Canada and Germany had double-digit growth.  The increase in the subsidiary business was also due to the addition of two subsidiaries, Brazil, which launched in the third quarter of 2007 and Malaysia, which transitioned from a distributor to a subsidiary earlier in the year.  Distributor sales improved by more than 30% for the quarter and nearly 38% for the year.   Skechers will re-open footwear distribution in Korea this quarter.


At year-end, 16 Skechers distributors had 63 Skechers retail stores open in 23 countries. 


Combined domestic and international retail sales were up 12% for the fourth quarter and over 18% for the full year, due to the combination of comp store sales increases and the net 36 store increase from the prior year.  There were a total of 191 domestic and international company-owned retail stores open at year-end, including 176 company-owned and operated retail stores in the U.S.  Skechers added 36 net new stores for the year.


Domestic retail sales increased 12% for the quarter and over 17% for the full year.   International retail sales improved almost 12% for Q4 and 20% for the full year. The positive international sales were said to be the result of improvement in each region, except Germany, which was impacted by the closing of the company’s Frankfurt store in January 2007.


Looking ahead, SKX expects first quarter 2008 net sales to be in the range of $385 million to $395 million and diluted earnings per share to be in the range of 57 cents to 62 cents.


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