Skechers USA narrowed its loss in its second quarter, to $1.8 million or 4 cents a share, from $29.9 million, or 62 cents, a year ago. Revenues were down 11.6 percent to $384.0 million compared to $434.4 million in the year-ago quarter. Ongoing inventory correction actions offset growth a its company-owned retail stores and in many of its heritage lines, as well as the Performance division.
“Results for second quarter 2012 show continued sales improvements with growth in our company-owned retail stores and in many of our heritage lines, as well as the new Skechers Performance Division,” said David Weinberg, chief operating officer and chief financial officer. “The focus at this time last year was the clearing of excess toning inventory which is now substantially complete and allows us to capitalize on the strength of our brand by selling more full priced product while offering new lifestyle and performance looks. This has resulted in an increase in average selling price per pair in our domestic wholesale business. In our company-owned Skechers domestic concept stores, which are the first to receive our new products, we achieved low single-digit positive comp store sales and a high single-digit percentage pair increase.”
For the six months ending June 30, 2012, net sales were $735.3 million compared to net sales of $910.6 million in the first six months of 2011. Net loss was $5.4 million or a loss of $0.11 per diluted share based on 49,281,000 weighted average common shares outstanding as compared to net a loss of $18.1 million or a loss of $0.38 per diluted share based on 48,292,000 weighted average common shares outstanding for the first six months of 2011.
Gross profit for the second quarter of 2012 was $171.3 million or 44.6 percent of net sales compared to $143.3 million or 33.0 percent of net sales for the second quarter of last year. Gross profit for the first six months of 2012 was $327.0 million or 44.5 percent of net sales versus $335.9 million or 36.9 percent of net sales for the first six months of 2011.
Robert Greenberg, Skechers chief executive officer, commented: “During the second quarter, Skechers celebrated its 20th anniversary, which gave us the opportunity to reflect on our accomplishments over the last two decades. As we look ahead, each day, new line, and business channel presents not only new challenges, but also new opportunities for the Company. We have recently entered the performance running market and received “Most Innovative” awards from both Competitor and Women's Running magazines for our first generation style. These are incredible achievements for our first performance style. We are supporting our Performance Division with the launch of new television and print campaigns, including the return of Mr. Quiggly, the French bulldog who starred in our Super Bowl commercial. We supported our kids' and lifestyle brands with advertising this Spring, and will be back with a comprehensive targeted campaign for Back to School season. We are also looking forward to the July 31 DVD release of Twinkle Toes: The Movie, which features the namesake character of one of our most successful kids' lines; the DVD will be available in our own stores as well as select major retailers nationwide. The enthusiasm for our product is being felt in our Skechers retail stores as our sales strengthen. The reaction has also been very positive to our Spring 2013 lifestyle and performance lines from our international distribution partners during our 20th Anniversary Conference in June, as well as from our domestic accounts. With a consistent focus on delivering fresh styles, we believe we will continue to find new opportunities to grow our business in the United States as well as around the world.”
Weinberg added: “We are continuing on the path we set last year of cleaning up our inventory and bringing forward new and relevant product in the diverse categories our brand represents. We believe that we will continue to see sales improvements in the second half of 2012, including in our international business, which was adversely affected by the Euro exchange rate in the quarter, as well as toning sales during this same period last year. Sales are strong in our retail business, and we are looking forward to new lines being delivered this quarter in our stores as well as to third party retailers. Our buy meetings we held throughout July with our largest accounts indicate we are on track for continued growth and expansion of shelf space. With improved gross margins, inventory levels in line with our expected sales levels, continued attention to managing our expenses, and a strong balance sheet, we expect a stronger second half as we build momentum into 2013.”
SKECHERS U.S.A., INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended June 30, Six Months Ended June 30,
2012 2011 2012 2011
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Net sales $ 384,001 $ 434,351 $ 735,275 $ 910,585
Cost of sales 212,659 291,021 408,237 574,645
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Gross profit 171,342 143,330 327,038 335,940
Royalty income 1,609 1,376 2,745 3,024
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172,951 144,706 329,783 338,964
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Operating expenses:
Selling 39,100 53,099 69,449 90,659
General and administrative 135,382 139,781 266,259 281,208
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174,482 192,880 335,708 371,867
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Loss from operations (1,531) (48,174) (5,925) (32,903)
Other income (expense):
Interest, net (3,256) (1,596) (5,977) (2,974)
Other, net 556 (1,128) 416 (1,335)
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(2,700) (2,724) (5,561) (4,309)
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Loss before income taxes (4,231) (50,898) (11,486) (37,212)
Income tax benefit (2,887) (20,846) (6,732) (19,313)
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Net loss (1,344) (30,052) (4,754) (17,899)
Less: Net earnings (loss) attributable to noncontrolling interest 438 (136) 694 209
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Net loss attributable to Skechers U.S.A., Inc. $ (1,782) $ (29,916) $ (5,448) $ (18,108)
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Net loss per share attributable to Skechers U.S.A., Inc.:
Basic $ (0.04) $ (0.62) $ (0.11) $ (0.38)
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Diluted $ (0.04) $ (0.62) $ (0.11) $ (0.38)
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Weighted average shares used in calculating loss per share
attributable to Skechers U.S.A., Inc.:
Basic 49,296 48,341 49,281 48,292
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Diluted 49,296 48,341 49,281 48,292
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