In a Nutshell: After Skechers reported a record Q4 in early February, the jury was out regarding how the footwear retailer would continue to perform as the pandemic grew in scope.
Although the company admitted there was a “meaningful slowdown” in markets affected by the crisis, a strong start to the year and growth in e-commerce made all the difference in Q1.
“We are learning that during the crisis consumers still want comfort, quality and value in a brand they trust,” Skechers chief operating officer David Weinberg said in a statement on Thursday. “We are seeing this in accelerated sales in our company-owned e-commerce platforms, which grew over 70 percent in the first quarter, but have increased in excess of 250 percent month-to-date.”
Sales have been strong in areas where stores have recently reopened, Skechers said, including Germany, Scandinavia and Austria.
Skechers turned its attention to inventory during the quarter after posting a 33 percent increase over the comparable period in 2019 due to “unexpected cessation” of wholesale shipping and retail operations.
Weinberg said the company would look to review its product commitment around the world to bring it in line with forecasted demand.
Sales: Skechers recorded $1.24 billion in sales during the first quarter, a decrease of 2.7 percent over Q1 in 2019 but above the $1.22 billion estimated by Wall Street analysts.
Domestic wholesale sales increased by 9 percent and international wholly-owned subsidiaries increased sales by 9.4 percent.
International wholesale, highly affected by the coronavirus pandemic, was down 47 percent. Skechers said this was also affected by a significant return reserve to ensure its franchisees can offer seasonally appropriate product.
Earnings: Adjusted earnings per share came in at 39 cents in the first quarter, in line with Wall Street expectations.
Adjusted net earnings reached $59.9 million while earnings from operations fell precipitously to $44.8 million, a loss of $121.1 million over the previous year and a 73 percent drop.
CEOs Take: Skechers CEO Robert Greenberg said the health and well-being of company employees remained his top concern following the shutdown of a large number of Skechers retail locations.
Looking ahead, Greenberg said Skechers was in a good position to deliver growth and successful product that will resonate in uncertain times.
“We know from the triple-digit growth we are experiencing so far in this month in our e-commerce business and the positive sales trajectory of our recovering business in China, that Skechers’ product continues to resonate with consumers,” Greenberg said. “As our business begins to return to normal, we firmly believe that our retail partners and customers will look to a brand they trust that delivers comfort, innovation, style, and quality at a value.”