Skechers Surpasses Zacks Estimate

Skechers USA Inc. (SKX - Analyst Report), the designer, marketer and distributor of footwear, recently reported its third quarter results that topped the Zacks Consensus Estimate.
 
Skechers’ quarterly earnings of 52 cents a share surpassed the Zacks Consensus Estimate of 34 cents, but fell 13.3% year over year from 60 cents delivered in the prior-year quarter. The company returned to profitability after posting a loss of 13 cents in the second quarter of this year.
 
Net sales for the quarter climbed 0.5% to $405.4 million driven by a high single-digit growth in international business and a double-digit improvement in retail operations as well as robust growth in online business. 
 
The sustained focus on new line of products, opening of additional Skechers retail stores and distribution channels, and the development of new international distribution agreements in India and Mexico, should facilitate the increase in sales and profitability.
 
The international wholesale business rose by 7% during the quarter, whereas domestic wholesale business fell by 10%. Total domestic and international retail sales surged 20% with a 7% rise in retail same-store sales.
 
Gross profit jumped 7.1% to $183.7 million, whereas gross profit margin expanded 280 basis points to 45.3% driven by fewer store closures and prudent inventory management. Cost of sales dipped 4.3% to $221.6 million.
 
Based on superior sales (compared to the previous two quarters), increased retail same-store sales, and growing operations in Brazil, China, Hong Kong and Chile, Skechers remains on track to deliver positive results in the fourth-quarter 2009 and 2010.
 
During the quarter, Skechers opened five retail stores, and plans to open six more in the remainder of the year with additional 20 to 25 retail stores planned for 2010. At the end of the quarter, the company had 244 company-owned retail stores.
 
The company also opened nine distributor-owned or licensed Skechers retail stores during the quarter. At the end of the quarter, there were 102 distributor-owned or licensed retail stores.
 
Skechers ended the quarter with cash and cash equivalents of $246.4 million with total long-term debt of $16.3 million and shareholders’ equity of $716.7 million. Capital expenditure for the quarter was nearly $4.3 million. Management expects capital expenditure for the remainder of the year in the range of $5 million to $7 million.