Skechers USA, Inc. reported fiscal year 2007 net sales increased 15.7% to $1.394 billion as compared to net sales of $1.205 billion in 2006. Net earnings for 2007 were $75.7 million versus net earnings of $71.0 million in 2006. For fiscal year 2007, diluted earnings per share were $1.63 based on 46,741,000 weighted average shares outstanding versus diluted earnings per share of $1.59 based on 46,139,000 weighted average shares outstanding in the prior year.


Net sales for the fourth quarter of 2007, however, slipped 0.8% to $302.0 million from $304.5 million in the fourth quarter of 2006. Net earnings for the fourth quarter of 2007 declined 17.1% to $12.1 million from net earnings of $14.6 million in the fourth quarter of 2006. Net earnings per diluted share in the fourth quarter of 2007 were 26 cents based on 46,639,000 weighted average shares outstanding as compared to net earnings per diluted share of 33 cents based on 46,564,000 weighted average shares outstanding in the fourth quarter of 2006.


“We are pleased with our record annual sales of just under $1.4 billion and three record sales quarters and increased profitability during 2007, the result of successfully growing our business worldwide,” stated Fred Schneider, chief financial officer of SKECHERS. “Our international business grew significantly during the fourth quarter, which offset the closing of some underperforming brands and a decrease in our domestic business resulting from the slow U.S. retail climate, enabling us to deliver nearly flat fourth quarter revenues. In this challenging domestic retail environment, many of our accounts are booking closer to season and moving shipments from the fourth quarter to the early part of the first quarter. This shift has contributed to our strong double-digit backlog going into the first quarter, which does not have the benefit from the lines we discontinued.”


Gross profit for 2007 was $600.0 million compared to $523.3 million in 2006. Gross margin for 2007 was 43.0% versus 43.4% for 2006. Gross profit for the fourth quarter of 2007 was $127.3 million compared to $127.9 million in the fourth quarter of 2006. Gross margin in the fourth quarter 2007 was 42.1% versus 42.0% for the fourth quarter of 2006.


Robert Greenberg, the Company’s chief executive officer, commented: “We are extremely proud to close our 15th year of business just shy of $1.4 billion in annual sales. SKECHERS has truly become a global brand with new ventures in Brazil and China – two areas with tremendous potential, operations in over 100 countries, and more than 250 SKECHERS retail stores around the world. 2007 marked the launch of our nano liteTM molded footwear Cali Gear by SKECHERS, which we believe has great opportunities in the U.S. and abroad. We continued to support each of our SKECHERS and fashion brands with an aggressive marketing approach that included in-store, TV, outdoor and print. In 2007, our marketing featured several celebrities: Ashlee Simpson for SKECHERS, JoJo for Rhino Red, and most recently a Red by Marc Ecko television and print campaign featuring High School Musical stars Vanessa Hudgens and Ashley Tisdale, which will continue this year. In 2008, we are looking forward to continuing to build our brands – including the recent addition of BEBE SPORT footwear supported by the image of Eva Longoria in the sporty fashion shoes – and believe we have more room to grow both our SKECHERS and fashion lines. We believe that 2008 will be another year of strong global growth, and we look forward to breaking new records and exploring new opportunities for growth.”


“We believe that our continuous marketing efforts have helped build and establish each of our brands and positively impacted 2007 sales. We are in a very strong position in terms of our product offering, marketing efforts and operations with plans to grow our distribution capabilities with a new 1.8 million-square-foot, single facility,” added David Weinberg, chief operating officer of SKECHERS. “In 2008, we are focusing on growing our established lines, launching BEBE SPORT, capitalizing on our brand in the international marketplace and exploring additional expansion opportunities overseas. We are also looking to grow our U.S. retail operations with another 25 to 30 new stores this year and continuing to support our international distributors and subsidiaries. Although the U.S. retail environment has been soft for many of our partners as well as in some of our own stores, we believe our momentum will continue in 2008 as our current backlog is up 29 percent year-over-year, and we are experiencing strong shipments in the first quarter.”


The company announced that it 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.


 






































































































































































































































































































































SKECHERS U.S.A., INC.


CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS


(Unaudited)


(In thousands, except per share data)

 
Three Months Ended December 31, Twelve Months Ended December 31,
  2007     2006     2007     2006  
 
Net sales $ 302,041 $ 304,494 $ 1,394,181 $ 1,205,368
Cost of sales   174,789     176,561     794,192   682,022  
Gross profit 127,252 127,933 599,989 523,346
Royalty income   787     1,202     4,179   4,114  
  128,039     129,135     604,168   527,460  
Operating expenses:
Selling 21,079 22,935 126,527 109,886
General and administrative   89,823     82,818     364,711   305,030  
  110,902     105,753     491,238   414,916  
Earnings from operations   17,137     23,382     112,930   112,544  
 
Other income (expense):
Interest, net 1,434 (80 ) 5,277 (876 )
Other, net   (31 )   652     98   980  
  1,403     572     5,375   104  
Earnings before income taxes 18,540 23,954 118,305 112,648
Income tax expense   6,445     9,372     42,619   41,654  
Net earnings $ 12,095   $ 14,582   $ 75,686 $ 70,994  
 
 
Net earnings per share:
Basic $ 0.26   $ 0.35   $ 1.67 $

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Teresa Hartford

Teresa Hartford Group Publisher & Creative Director | SGB Media teresa@sgbonline.com | 704.651.5741

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