
Skechers reported strong international sales that led to a record-breaking fourth quarter and full-year sales.
In a Nutshell: Skechers stock rose by more than 12 percent on Friday after the company released its quarterly details prior to market close on Thursday afternoon as news of its double-digit revenue bump circulated.
However, Skechers executives remained cautious of the possible financial impact related to the coronavirus, given that a significant portion of revenue comes from the Greater China region.
“We are deeply concerned by the health crisis in China, and for the well-being of our employees, partners, vendors and consumers in the region,” Skechers CEO Robert Greenberg said in a statement. “We continue to monitor this situation and its potential disruption to our global business.
“The Skechers brand is strong in China, and we remain confident in our long-term prospects in the country,” he added.
Skechers has closed a “significant number” of stores in the region, and this, coupled with below-average comparable-store sales, is factored into its FY20 estimates.
The footwear company significantly increased inventory in response to stronger demand, boosting stock by $206.6 million to $1.07 billion in the fourth quarter. Skechers also inflated its store count by opening 47 net new locations in the quarter, for a worldwide total of 3,547 doors.
Sales: In Q4, Skechers reported record sales of $1.33 billion—up 23.1 percent over the previous year’s Q4 and above the $1.24 billion predicted by Wall Street. International sales rose by 31.2 percent and represented a full 59.3 percent of that revenue, another record for the company.
Domestic sales climbed 13 percent in the quarter and same-store sales followed suit with a 9.9 percent increase. Digital sales were up 19.4 percent.
For the full year, sales grew to $5.22 billion, up 12.5 percent over the previous fiscal year. International sales again padded this growth, up 20.2 percent, while domestic sales ticked up 3.3 percent throughout the course of the year.
Skechers expects sales in the range of $1.4 billion to $1.425 billion in the first quarter but warned the coronavirus outbreak may dictate the company’s performance.
Earnings: On net earnings of $59.5 million, Skechers reported diluted EPS of 39 cents for the fourth quarter, in line with Wall Street expectations. For the full year, Skechers’ earnings reached $2.25 per share on net earnings of $346.6 million.
For the first quarter of FY20, Skechers anticipates diluted EPS of 70 cents to 75 cents.
CEOs Take: “2019 was a remarkable year for Skechers as we achieved four quarters of record sales, culminating in annual sales of over $5.2 billion—a significant milestone,” Greenberg said. “Our mission, as always, is to deliver style, comfort and innovation to the world. Our continued growth along with the 27 product and brand awards we received in 2019 are evidence that we accomplished our goal.”