Skechers USA, Inc. reported that net sales for the third quarter of 2004 rose 16.2% to $257.7 million compared to $221.8 million in the third quarter of 2003. Net earnings for the quarter were $6.0 million, or 15 cents per diluted share, versus a net loss of $5.9 million, or 15 cents per diluted share, in the third quarter of the prior year.

Gross profit for the third quarter of 2004 was $104.6 million compared to $78.6 million in the third quarter of last year. Gross margin was 40.6 percent compared to 35.5 percent in the third quarter of 2003.

“The improvement that we experienced in the first half of the year continued through the back-to-school season, as we saw on-going strength in our distribution channels,” stated David Weinberg, chief financial officer of Skechers USA, Inc. “We are particularly pleased with the solid sell-through rates with key accounts, positive comp store sales, and significantly increased sales year over year in our international business. We believe these important indicators show the current acceptance of our men's, women's and children's lines through our distribution channels, as well as point to future successes.”

Mr. Weinberg continued: “With consistently on-target product and continued management of our expenses, we are pleased with the performance of our business in 2004 and its direction as we head into 2005. We believe we are in a strong financial position and poised for growth in the coming year with in-line inventory, increased domestic and international backlogs, and cash on the balance sheet in excess of $132.5 million at the close of the third quarter.”

Robert Greenberg, Skechers' chief executive officer, said: “Consumers and retailers around the world have embraced our brands during both the 2004 spring and back-to-school seasons. This can be attributed to our trend-right and diverse footwear offering supported by targeted advertising campaigns and solid execution. Our brand recognition internationally continues to grow as we further penetrate existing markets with the new Christina Aguilera campaign. And with numerous areas for potential growth domestically — including our licensing division and the 310 Motoring, Marc Ecko and new children's fashion footwear lines, we believe we will continue to build on our success and further execute our strategy of growing the Company into an increasingly profitable business.”

The Company now expects fourth quarter sales to be in the range of $175 million to $185 million and a loss per share of between $0.07 and $0.12 on approximately 39 million basic shares outstanding, assuming an effective tax rate of 47.2 percent. Note that the fourth quarter loss, calculated on basic shares, will be $0.03 to $0.08 on a full year, fully diluted basis. For the full year, the Company expects sales to be in the range of $888 million to $898 million and earnings per share of between $0.45 and $0.50 on approximately 44 million fully diluted shares outstanding, assuming an effective tax rate of 47.2 percent.

“Historically, Skechers' first three quarters have been stronger than the fourth,” added Mr. Weinberg. “While we expect this trend to continue, we believe fourth quarter sales will increase slightly above the same period last year and we forecast gross margins of approximately 40 percent, which we feel is appropriate for our business. Also, in line with our quarterly sales trend and based on our key indicators, we expect first quarter 2005 sales to increase over first quarter 2004.”

                         SKECHERS U.S.A., INC.
             CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

                              (unaudited)
                 (In thousands, except per share data)


                                Three Months Ended  Nine Months Ended
                                   September 30,      September 30,
                                 -----------------  -----------------
                                   2004     2003      2004     2003
                                 -----------------  -----------------

Net sales                        $257,658 $221,821  $713,850 $659,692
Cost of sales                     153,067  143,183   424,129  401,141
                                 -----------------  -----------------

          Gross profit            104,591   78,638   289,721  258,551

Royalty income, net                 1,073    1,404     3,546    2,129
                                 -----------------  -----------------

                                  105,664   80,042   293,267  260,680
                                 -----------------  -----------------

Operating expenses:
  Selling                          24,139   20,626    60,968   67,084
  General and administrative       64,576   63,488   184,897  181,647
                                 -----------------  -----------------
                                   88,715   84,114   245,865  248,731
                                 -----------------  -----------------

   Income from operations          16,949   (4,072)   47,402   11,949
                                 -----------------  -----------------

Other income (expense):
  Interest                         (1,986)  (2,136)   (6,295)  (6,671)
  Other, net                         (248)     (87)     (530)    (437)
                                 -----------------  -----------------
                                   (2,234)  (2,223)   (6,825)  (7,108)
                                 -----------------  -----------------

   Income (loss) before income
    taxes                          14,715   (6,295)   40,577    4,841

Income tax provision (benefit)      8,678     (435)   19,152    4,365
                                 -----------------  -----------------

          Net earnings (loss)      $6,037  $(5,860)  $21,425     $476
                                 =================  =================


   Net earnings (loss) per share:
      Basic                         $0.16   $(0.15)    $0.56    $0.01
                                 =================  =================
      Diluted                       $0.15   $(0.15)    $0.53    $0.01
                                 =================  =================