Skechers reached a new quarterly sales record in the third quarter of $1.095 billion. The company surpassed its previous record in the first quarter earlier this year by $22 million.
Skechers COO and CFO David Weinberg credits the growth from three distribution channels, including double-digit increases in company-owned Skechers retail business worldwide and its international subsidiary and joint venture businesses, as well as a single-digit increase in international distributor and domestic wholesale businesses.
“The strong international growth, including the continued strength in China, the resurgence of the United Kingdom and growth across all of Europe combined with our strong international retail business, resulted in international wholesale and retail representing 53 percent of our total sales in the third quarter,” Weinberg said.
Gross Profit: For the third quarter of 2017, gross profit was $520 million, or 47.5% of net sales, compared to $430 million, or 45.6% of net sales, for the third quarter of 2016.
Sales: Quarterly net sales increased 16.2% to $1.095 billion compared to third quarter 2016. The growth was the result of a 25.7% increase in the company’s international wholesale business, a 1.4% increase in its domestic wholesale business, and an 18.6% increase in its company-owned global retail business with total comp store sales increases of 4.4%. The increase in its company-owned retail business, which included sales growth of 9.5% in its domestic channel and a domestic comp store sales increase of 3.1%, came despite temporary store closures in Texas and Florida, and continued store closures in Puerto Rico due to the recent hurricanes. The company reported net sales last year of $1.5 million for the days corresponding to the days closed this year due to the hurricanes.
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Earnings: Net earnings increased 41.8% to $92.3 million, and diluted net earnings per share for the third quarter were $0.59, compared with $0.42 in the prior year. The company’s effective tax rate for the third quarter was 9.4% compared to 24.2% over the third quarter of 2016. The company expects its effective tax rate for fiscal 2017 to be approximately 13 percent, which is lower than the expected rate of 15 percent at the end of the second quarter. The 9.4% tax rate for the quarter is primarily a result of this lower estimate in the expected tax rate for fiscal 2017.
Exec’s Take: “We remain committed to investing in the brand, product, infrastructure, and all areas that will drive further growth opportunities,” Weinberg added. “Our international business continues to have the highest growth potential—both with emerging international markets such as those in South America as well as India, and our established business across Asia. To further build our brand globally, we grew our Company-owned store base worldwide to 623 locations, including 187 international stores. Combined with the third-party Skechers stores, there were 2,428 Skechers stores around the world at quarter end.”