Skechers sales up 10.9% to $1.259 bn in Q2 2019

July 22, 2019 - United States Of America

Skechers USA, a global footwear leader, has recorded sales of $1.259 billion, an increase of 10.9 per cent in Q2 2019 ending June 30, 2019. The international sales increased 19.8 per cent representing 55.7 per cent of total sales. Comparable same store sales grew 4.9 per cent, including increases of 4.2 per cent domestically and 6.7 per cent internationally.

By segments, the company’s international wholesale business increased 18.2 per cent, its company-owned global direct-to-consumer business increased 14.4 per cent, and the Ccompany’s domestic wholesale business decreased 3.8 per cent. Comparable same store sales in company-owned stores and e-commerce increased 4.9 per cent, including 4.2 percent in the US and 6.7 per cent internationally, said the company in a media statement.

Gross margins decreased as a result of promotional efforts to clear seasonal merchandise in select international markets. This was partially offset by higher domestic margins from improved retail pricing and product mix in our direct-to-consumer and domestic wholesale businesses.

“As the world continues to become closer and digital becomes a critical means of communicating and embracing trends to tell your brand’s story, it’s no longer what is happening in one market that matters; it’s what’s happening across all markets. We’re continuing to strategically view our business with a global lens as trends are traveling faster,” said Robert Greenberg, chief executive officer of Skechers. “Specifically, many of our key product styles are introduced at virtually the same time around the world, with nuances in certain markets, giving us the ability to replicate our success around the globe. In the second quarter, we saw this with the broad acceptance of our women’s and men’s sport and streetwear lines, as well as with the resurgence of our Gowalk collection and our fresh new Skech-Air styles. Our focus continues to be on comfort, innovation, style and quality as we design our diverse collection. Our efforts in the Skechers Performance division resulted in three awards in the second quarter—Gear of the Year from Outside Magazine for Skechers GO Run 7 Hyper, and Best of Outdoor Retailer from Shape and Editors’ Choice Outdoor Retailer from Runner’s World for our Skechers GO Run Maxroad 4 Hyper. Our efforts also paid off with total sales increases of 10.9 per cent, the result of a 19.8 per cent increase in our international business and a 1.5 per cent increase in our domestic business. Now in the third quarter, we are delivering our back-to-school and fall offerings, and believe we have fresh styles in our core accounts that will drive growth, while we also deliver some unique and limited-edition styles in select doors that will create additional excitement for the Skechers brand.”

“Skechers’ record second quarter sales are a testament to the demand and strength for our brand and products,” said David Weinberg, chief operating officer of Skechers. “We experienced growth in every region, with the biggest dollar increases coming from India, the Middle East and China, as well as in Mexico with the conversion of the business to a joint venture. In our direct-to-consumer channels, we saw monthly sales increases in the quarter, an upward trend that’s continuing in July. Based on feedback from recent account meetings, we are seeing a similar trend within our domestic wholesale business in June and July and continue to believe we’ll have a stronger back half of the year. To support this growth, we are investing in our global infrastructure—including our ecommerce platforms and distribution centers, and designing and developing new products for 2020. As we look forward to the back-to-school and holiday selling seasons, we believe our momentum will continue worldwide.”

For the six-month period, sales of the company grew 6.3 per cent. By segments, the company’s international wholesale business increased 12.9 per cent, its company-owned direct-to-consumer business increased 11 per cent and its domestic wholesale business decreased 7.7 per cent. The company’s international business grew 14.2 per cent while its domestic business decreased by 2.5 per cent.

Gross margins decreased as a result of promotional efforts to clear seasonal inventory in select international markets.

“In the second quarter, we continued to successfully execute against our strategy by growing both our international and direct to consumer businesses,” said John Vandemore, chief financial officer of Skechers. “Our product continues to resonate worldwide, and we are committed to investing in our global infrastructure and operational capabilities to meet consumer demand for the Skechers brand. This includes the construction of our first distribution center in China, the expansion of our North American distribution capabilities, the upgrade of our European logistics centre and the further development of our direct-to-consumer offerings, both in e-commerce and in our retail stores. These strategic investments will benefit both our future sales growth and provide us an opportunity to execute against our long-term operating margin targets.”

For the third quarter of 2019, the company believes it will achieve sales in the range of $1.325 billion to $1.350 billion, and diluted earnings per share of $0.65 to $0.70. The guidance is based on expected growth in each of the company’s three segments. (PC)