Casual footwear company Skechers USA, Inc. (SKX) announced financial results on Wednesday that blew past Wall Street expectations, catapulting its stock to record highs over the past two days.
For the second quarter ended June 30, net sales reached a record $800.5 million, up 36 percent compared to $587.1 million for the prior year second period.
Driving the growth in the second quarter were double-digit increases in the company’s three business channels: domestic wholesale, with an average price per pair increase of 9 percent; international wholesale, which includes 665 third-party owned Skechers retail stores; and the 461 company-owned Skechers domestic and international retail stores, with total comp store sales increases of 12.9% for the quarter.
Worldwide sales in company-owned retail stores increased by 23.7% for the quarter, with domestic sales growing by 21 percent and international sales by 35 percent. This included positive comp store sales of 13.1% domestically and 11.8% in international stores for a total of 12.9% comp store sales increases worldwide.
Now with 30 percent of total sales, Skechers expects international to grow at a faster rate than domestic wholesale and retail and become 50 percent of the total business in the next three to four years.
The second quarter also benefited from both pent-up demand resulting from US port issues in the first quarter, as well as a shift in back-to-school shipments due to increased demand in both domestic and international markets. This continued strong demand for our product worldwide also led to record net sales, earnings from operations, net earnings, and earnings per share in the second quarter.
Gross profit increased by 90 basis points to 46.8% of revenues, or $374.6 million.
Net income more than doubled, rising 129 percent to a record $79.8 million, or $1.55 per diluted share, compared to $34.8 million, or $.68 per diluted share for the prior year period, and handily beating analyst expectations of $.99 per share.
For the six months ended June 30, net sales were $1.57 billion rose 39 percent from net sales of $1.13 billion in the first six months of 2014. Gross profit for the first six months of 2015 was $707.1 million, or 45.1% of net sales, compared to $509.8 million, or 45 percent of net sales, for the first six months of 2014. Earnings from operations for the first six months of 2015 were $200.5 million, or 12.8% of net sales, compared to earnings from operations of $101.9 million, or nine percent of net sales, for the first six months of 2014.
Net income rose 39 percent to $135.9 million from $65.8 million in the same period last year. For the first six months of 2015, diluted net earnings per share were $2.65 based on 51.3 million weighted average common shares outstanding compared to diluted net earnings per share of $1.29 based on 50.9 million weighted average common shares outstanding for the first six months of 2014.
CEO Robert Greenberg said in a statement: “Skechers is clearly in the midst of the most exciting time in the Company’s 23-year history. The presentation has never looked as colorful, comfortable and successful thanks to our product and marketing, and resulting record sales, shipments and earnings. We just announced the signing of global pop singer Meghan Trainor, and together with Demi Lovato we are capturing the attention of 12 to 24 year olds worldwide…Our efforts in product and marketing also resulted in Skechers becoming the No. 2 athletic footwear brand and the No. 1 walking brand in the United States.”
While domestic wholesale remains the largest piece of the business, at 42 percent, the biggest growth in the second quarter came from our international segment, which gained 60 percent and now represents 30 percent of total sales.
With 1,126 Skechers retail stores worldwide, including the new markets of the Czech Republic, Nigeria and Alaska, the company’s global footprint is expanding steadily with additional Skechers stores already opened in the third quarter by our international distribution partners in Russia, Australia, Taiwan and Ireland, a joint venture store in India, and another six domestic and international company-owned stores.
Later this year the company will introduce Star Wars from Skechers shoes for boys and men, along with some developments in the Skechers Performance and athletic lifestyle divisions.