Skechers U.S.A., Inc. reported that third-quarter sales increased 15.9 percent to $2.35 billion, with a 16.4 percent increase internationally and a 15.3 percent increase domestically. On a constant-currency basis, sales increased 15.9 percent year-over-year (y/y).
Wholesale sales grew 20.6 percent, including year-over-year increases in AMER by 21.6 percent, EMEA by 30.9 percent, and APAC by 5.1 percent. Wholesale volume increased 21.2 percent y/y and average selling prices declined 0.5 percent y/y.
Direct-to-consumer sales grew 9.6 percent y/y, including year-over-year increases in EMEA of 28.0 percent, APAC of 10.0 percent, and AMER of 5.0 percent. Direct-to-consumer volume increased 10.7 percent y/y and average selling price declined 1.0 percent y/y.
“Strong consumer demand for Skechers across all distribution channels resulted in a new quarterly sales record of $2.35 billion,” said David Weinberg, COO of Skechers U.S.A., Inc. “Despite challenging market conditions in certain countries, we achieved 21 percent Wholesale growth, 10 percent direct-to-consumer growth, as well as 16 percent internationally and 15 percent domestically. By region, sales grew 30 percent in EMEA, driven by double-digit growth across all countries; 14 percent in the Americas, reflecting particularly strong sales in the United States and Canada; and 7 percent in Asia Pacific with double-digit increases in many countries. With the growing awareness and broad acceptance of our comfort technology products by our partners and consumers, we believe each of these regions represents continued growth opportunities for Skechers. We continue to invest in our operational capabilities and improve the customer experience while meeting the increased global demand for our products and positioning Skechers for profitable growth now and in the future.”
Gross margin was 52.1 percent of sales in the quarter, a decrease of 80 basis points y/y, due to lower average selling prices.
Operating expenses increased $130.9 million, or 15.2 percent, and as a percentage of sales decreased 30 basis points y/y to 42.2 percent. Selling expenses increased $32.9 million, or 18.4 percent, year-over-year, and as a percentage of sales increased 20 basis points to 9.0 percent. The increase was said to be due to higher demand creation expenditures. General and administrative expenses increased $98.0 million, or 14.4 percent, year-over-year and, as a percentage of sales, decreased 40 basis points to 33.2 percent. Increased expenses were said to be primarily driven by increased labor and facility costs, including rent and depreciation.
Earnings from operations increased $20.2 million, or 9.5 percent, to $233.4 million.
Net earnings were $193.2 million, or $1.26 per diluted share, in the quarter, compared with prior-year Q3 net earnings of $145.4 million, or 93 cents per diluted share.
The company’s effective income tax rate in the third quarter was 14.7 percent. The decrease was due to the release of certain allowances and other provision adjustments.
“Skechers’ record third-quarter financial performance underscores the strength of our global diversification and demand for our distinctive value proposition,” stated John Vandemore, CFO of Skechers U.S.A., Inc. “We delivered impressive international sales growth coupled with continued momentum in our domestic wholesale business. These results reinforce our confidence in achieving our goal of $10 billion in sales by 2026 and continued growth thereafter. As we move forward, we remain committed to investing in our brand, expanding our global presence, and meeting the evolving needs of our consumers.”
Image courtesy Skechers U.S.A., Inc.
