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Skechers Surpasses Sales Forecasts, Yet Profits Disappoint Q2

Skechers reported second quarter net sales of $1.026 billion, an increase of 16.9%, topping analyst predictions of $965.7 million.

Meanwhile, net earnings dropped 19.7% to $59.5 million, or $0.38 per diluted share, less than analysts’ predictions of $0.45 per share. The brand saw gross margins of 47.6% for the second quarter.

“Second quarter net sales exceeded our expectations setting another record quarter, and making the first half of 2017 a new record with sales surpassing $2 billion,” said Skechers COO and CFO David Weinberg. Weinberg attributed the growth across three distribution channels, with double-digit growth in company-owned global Skechers retail business, small growth in domestic wholesale business and a double-digit increase in international distributors.  According to Weinberg, the wholesale business shipped 11.4% more pairs while the average price per pair decreased 4.5%.

Quarterly net sales grew 16.9% to $1.026 billion, which the company attributed to a 6.4% increase in its domestic wholesale business, a 18.6% increase in international wholesale business and a 28 percent increase in its company-owned global retail business which included comparable same store sales growth of 7.1%.

“Investing in our brand and business is critical for both our short-term and long-term growth initiatives. This is evident in both the expansion of our Company-owned global retail business, which had the highest net sales dollar and percentage gain, followed by our international wholesale business,” said Weinberg. “Given the increases in our international business, which for the first six months represented 48 percent of our total business, we believe the greatest opportunity for expansion is internationally, and we are investing in our infrastructure and marketing to support this progress.”

Based on its second quarter performance, Skechers believes it will reach net sales in the third quarter around $1.075 billion, a potential third quarter sales record for the brand. The company predicts earnings per share of $0.42 to $0.46 for the third quarter. The projections include flat sales increases in domestic wholesale business, and double-digit increases in international wholesale business and global company-owned retail stores.