Skechers net sales exceeded the $1-bn mark in Q1 for the first time, setting a new quarterly record – an increase of 9.6% over Q1 2016 to $1.073-bn.
“We are particularly proud of the growth in the quarter considering the tough comparison to 2016, which included the benefit of an additional day in February and Easter falling in March,” says Skechers COO and CFO David Weinberg.
The growth is attributed to double-digit increases in the company’s international wholesale business (16.8%) and in its own global retail business (12.8%), which includes comparable same store sales increases of 2.9%.
Gross profit was $476.5-m (44.4% of net sales) – an increase of roughly 10% over the previous year’s $432.2-m for the same period.
Skechers’ selling expenses increased to $73.8-m – 6.9% of its sales – as a result of increased international advertising and selling expenses. General administrative expenses also increased – now $282.5-3 and 26.3% of sales. This is due to its focus on long-term global growth.
“Skechers’ international business, including retail, grew to 51.3% of our total sales in the first quarter due to the strength of our brand in numerous markets,” says Weinberg. He believes that although the US offers opportunity for them to increase their business, the international markets present the strongest opportunity for growth, which is why they will continue to invest in infrastructure and marketing to support their current and planned global expansion.
Earnings from operations and net earnings dropped 10.2 and 3.7% to $124.4-m and 94-m respectively.
“In 2005, we surpassed $1-bn in annual sales and now, less than 12 years later, we had our first $1-bn plus in quarterly sales,” says Skechers CEO Robert Greenberg. “The key to our success then and now is the drive, dedication and talent of the many people behind this great brand.” He goes on to point out that the brand looks good from a product and marketing standpoint, with “innovative, comfortable and beautiful footwear, and now apparel”. Skechers also supports the product with campaigns featuring the likes of Rob Lowe, Meghan Trainor, Joe Montana, etc. and its success in performance footwear can be seen in its sponsorship of the Skechers Performance Los Angeles Marathon, the Pan-European Ironman and pro golfers such as Matt Kucher, Brooke Henderson, Russell Knox, Belen Mozo, and Wesley Bryan.
Skechers’ global footprint continues to grow with its ongoing success in Canada, Chile and China as well as in India, Australia and Turkey, and many other markets, says Greenberg. He attributes the success to the expansion of Skechers retail stores on a global scale. At the end of Q1 Skechers had 2 055 retail stores, including 1 471 third-party-owned locations – 551 of which are in China alone.
For Q2, Skechers expects to see net sales in the range of $950-m to $975-m, which would be a second quarter sales record. The projection includes low to slightly positive sales increases in its domestic wholesale business, and increases in its international business and company-owned retail stores.
Skechers is locally distributed by Brand Folio LLC.