Shares of the company were down more than 17 percent during Friday morning trading as Skechers reported net earnings of $65.1 million, down 2.2%. The company said earnings were negatively impacted by foreign currency translation and exchange losses of approximately $8.1 million.
Skechers Chief Financial Officer David Weinberg tried to turn investor’s attention to the company’s record third quarter net sales—up 10.1% to $942.4 million—but Skechers is a company that was growing by roughly 27 percent each quarter until this summer, when the company’s top line increased by just 9.6%.
To make matters worse, Skechers missed even the lowest end of its own guidance, which had called for third quarter net sales of $950-$975 million. On a per share basis, that amounted to 42 cents a share, lower than the 43 cents it reported during the same period last year, and well below the 47 cents Wall Street had been anticipating.
The company’s wholesale business didn’t escape unscathed either, this after Skechers had promised that a 5.4% dip last quarter was due to a shift in the Easter holiday pushing sales into the company’s Q1. But domestic wholesale slipped another 3.4% during the most recent quarter, which the company blamed on a sluggish retail environment.
“Impacting the company’s domestic wholesale business was the sluggish retail environment in the United States, which resulted in several retailers either closing doors or ceasing operations, widespread discounting on other normally full-priced brands, as well as a shorter back-to-school period,” said Skechers in its report.
The company’s guidance for its fourth quarter is in the range of $710-$735 million, which could indicate that Skechers has trouble believing it will top the $726.6 million in reported during its fourth quarter last year. If this were to happen, it would be the first time in more than four years Skechers delivered a year-over-year decline in net sales.