Skechers USA, Inc. certainly looks as though its multi-brand strategy is starting to pay dividends as second quarter sales and earnings growth easily outpaced expectations on Wall Street. Consolidated net sales increased 12.5% to $263.9 million in the second quarter, compared to $234.7 million in last year's quarter.
Management said the company sold more in-line product, experienced less close-outs, shipped over 10% more pairs, and increased average selling prices by 2.6% quarter-on-quarter. The result was a 15% increase in the domestic wholesale business for the period. The domestic owned-retail business also saw a double-digit increase for the quarter. SKX added two domestic retail locations in Q2 for a total of 113 domestic doors at quarter-end.
The growth in the international business was apparently driven by a 13% increase in owned-retail, with the Canada stores accounting for the highest overall gains, thanks in part to a new store n Toronto. All other regions reported “strong gains” for the quarter. SKX reported a mid-single-digit increase in the international distributor business.
Gross margins improved 170 basis points to 42.3% of sales in Q2 from 40.6% in the year-ago period. Net income nearly doubled to $15.9 million, or 38 cents per diluted share, compared to net income of $8.3 million, or 21 cents per diluted share, in the second quarter of 2004. The consensus estimate was 25 cents per share.
Analysts pointed to broad-based growth across regions and brands, as well as higher fill-in sales, as an indicator of continued momentum for the company.
Based on expectations that the company will see double-digit increases in the domestic wholesale business in Q3, as well as a forecast for double-digit retail comps, SKX raised its EPS guidance for the third quarter to a range of 25 cents to 30 cents per diluted share on sales in the $270 million to $280 million range.
