Skechers saw third quarter sales fall sharply, but the numbers were better than the company’s previous guidance due primarily to the company’s “aggressive approach” to reduce inventories that cut into margins and pushed the company into the loss column.

The company said they received “positive sell-through data at retail” for Back-to-School from some of their larger customers, but that information did not result in any “significant re-order business” for the brand. The company readily admitted that the orders that were received were “largely close-out merchandise rather than in-line merchandise”. The result was an Average Selling Price fell 18.6%

SKX is now looking closely at expenses across the board and will be making a number of cuts. The street buzz is that the ax is already falling in the sales organization, The company will also be reviewing advertising and marketing budget, but said the goal is to “reduce costs without diminishing consumer impact”. SKX said it will lower production and trade-show expenses and curtail the expansion of retail stores. The cuts are expected to have little impact in Q4, but are expected to benefit the company in long run.

Skechers is now estimating a Q4 loss per share in the 45 cents to 55 cents range on sales of $155 million to $165 million, compared to $180.8m in the year-ago period. Skechers reported a loss of 23 cents in the fourth quarter last year.

SKX shares fell 12.1% for the week to close at $6.81 on Friday.


  • Operating expenses were 37.9%, up from 32.5% in Q3 LY
  • Selling expenses reduced to 9.3% of sales, compared to 12.5% of sales in Q3 LY
  • Advertising expense 6.9% of sales, compared to 10.5% in Q3 2002

>>> At least the Christina Aguilera deal seems to be working out. Just don’t do any skates…