News Column

SKECHERS Announces Fourth Quarter and Fiscal Year 2013 Financial Results

February 12, 2014

  • Fourth Quarter 2013 Net Sales Increased 13.9 Percent to $450.7 Million
  • Fourth Quarter 2013 Net Earnings of $14.2 Million
  • Fourth Quarter 2013 Diluted Earnings Per Share of $0.28
  • Fiscal Year 2013 Net Sales Increased 18.3 Percent to $1.846 Billion

    MANHATTAN BEACH, Calif.--(BUSINESS WIRE)-- SKECHERS USA, Inc. (NYSE:SKX) today announced financial results for the fourth quarter and fiscal year ended December 31, 2013.

    Net sales for the fourth quarter of 2013 were $450.7 million compared to $395.6 million in the fourth quarter of 2012. Gross profit for the fourth quarter of 2013 was $200.6 million or 44.5 percent of net sales compared to $168.5 million or 42.6 percent of net sales in the fourth quarter of 2012. Earnings from operations in the fourth quarter of 2013 were $17.1 million compared to earnings from operations of $8.0 million in the fourth quarter of 2012. The Company’s effective tax rate for the year-ended December 31, 2013, was 26.0 percent, which was down from the forecasted rate of 31.9 percent at the close of the third quarter 2013. This was due to increased international and slightly decreased domestic profitability. The Company expects improved international sales and profitability to continue to have a positive impact on its 2014 effective tax rate, which is expected to be between 25 percent and 30 percent.

    “The momentum we experienced in the first nine months of 2013 continued in the fourth quarter, which resulted in the second highest fourth quarter sales in the Company’s history and a 13.9 percent net sales increase for the period on top of last year’s fourth quarter net sales gain of 39.7 percent,” began David Weinberg, SKECHERS chief operating officer and chief financial officer. “The growth is related to the strong product successes we are experiencing across our men’s, women’s, and kids’ categories, which resulted in double-digit increases in our Company-owned retail and domestic wholesale businesses, and single-digit increases in our international and e-commerce businesses. Further indication of the strength of our product is the 12.8 percent comp store sales increases in our worldwide Company-owned retail stores during the fourth quarter.”

    Net earnings for the fourth quarter of 2013 were $14.2 million compared to net earnings of $4.0 million in the fourth quarter of 2012. Net earnings per diluted share in the fourth quarter of 2013 were $0.28 based on 50.7 million weighted average shares outstanding compared to $0.08 based on 50.3 million weighted average shares outstanding in the fourth quarter of 2012.

    Fiscal year 2013 net sales were $1.846 billion compared to net sales of $1.560 billion in 2012. Gross profit for 2013 was $818.8 million or 44.4 percent of net sales compared to $683.3 million or 43.8 percent of net sales in 2012. Earnings from operations for 2013 were $93.6 million compared to $22.3 million in 2012.

    Net earnings for 2013 were $54.8 million compared to $9.5 million in 2012. Net earnings per diluted share for fiscal year 2013 were $1.08 based on 50.6 million weighted average shares outstanding versus $0.19 based on 49.9 million weighted average shares outstanding in the prior year.

    Robert Greenberg, SKECHERS chief executive officer, commented: “Skechers has always been a product focused company, but in 2013, we challenged ourselves to deliver key styles from every one of our divisions. This more diversified product approach resulted in strong sales across our distribution channels. With our broad assortment of products, we weathered the unseasonably cold winter in the Midwest and Northeast thanks to one of our strongest boot collections, and the unseasonably warm weather in the West thanks to one of our strongest Sport collections. We were also honored as Brand of the Year for Skechers GO from Footwear News, and received the 2013 Excellence in Design Awards for Running and Kids footwear from Footwear Plus—two significant recognitions from leading trade magazines. The momentum we have been experiencing in the United States reached multiple markets around the world, resulting in sales improvements in Europe, Asia, the Middle East, Australia and South America. We supported our many divisions with a multi-level marketing campaign centered around television advertising. In the fourth quarter, these included campaigns with Brooke Burke-Charvet for both Relaxed Fit from Skechers and Bobs from Skechers campaigns, and two spots featuring sports icons Joe Montana and Mark Cuban for our men’s Relaxed Fit by Skechers footwear. This quarter, we launched a new commercial for Skechers GOrun Ride 3 featuring elite runner and Olympic medalist Meb, who won the Houston Half Marathon last month. Our focus is to continue to deliver innovative, in-demand footwear that consumers around the globe will seek out, and support our product with impactful marketing. We are confident we can achieve this efficiently and continue to profitably grow our business through 2014.”

    David Weinberg continued: “We believe 2013, with our second highest annual net sales ever, was the beginning of a growth trend for SKECHERS that we see continuing through 2014. Key performance indicators of this momentum are the approximately 30 percent increase in our combined worldwide backlogs at year-end, and our healthy January 2014 sales, including mid-single-digit comp store sales increases in our worldwide retail stores—in spite of the weather impacting a large portion of the United States. We are committed to maintaining this positive trend through product development, growth in our emerging and established international markets, deeper penetration in key domestic accounts, and the planned opening of 60 to 70 new Company-owned stores this year. With $372.0 million in cash as of year-end, in-line inventory and strong double-digit backlogs, we believe the momentum we experienced since the end of 2012 will continue through 2014, and we are comfortable with the consensus numbers currently reported for the first quarter and full year.”

    About SKECHERS USA, Inc.

    SKECHERS USA, Inc., based in Manhattan Beach, California, designs, develops and markets a diverse range of lifestyle footwear for men, women and children, as well as performance footwear for men and women. SKECHERS footwear is available in the United States via department and specialty stores, Company-owned SKECHERS retail stores and its e-commerce website, and in over 100 countries and territories through the Company’s international network of subsidiaries in Canada, Brazil, Chile, Japan, and across Europe, as well as through joint ventures in Asia and distributors around the world. For more information, please visit www.skechers.com, and follow us on Facebook (www.facebook.com/SKECHERS) and Twitter (twitter.com/SKECHERSUSA).

    This announcement contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, the Company’s future growth, financial results and operations, its development of new products, future demand for its products and growth opportunities, and its planned opening of new stores, advertising and marketing initiatives. Forward-looking statements can be identified by the use of forward looking language such as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “plan,” “project,” “will be,” “will continue,” “will result,” “could,” “may,” “might,” or any variations of such words with similar meanings. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in forward-looking statements. Factors that might cause or contribute to such differences include the resignation of the Company’s former independent registered public accounting firm, and its withdrawal of its audit reports with respect to certain of the Company’s historical financial statements; international, national and local general economic, political and market conditions including the ongoing global economic slowdown and market instability; entry into the highly competitive performance footwear market; sustaining, managing and forecasting costs and proper inventory levels; losing any significant customers, decreased demand by industry retailers and cancellation of order commitments due to the lack of popularity of particular designs and/or categories of products; maintaining brand image and intense competition among sellers of footwear for consumers; anticipating, identifying, interpreting or forecasting changes in fashion trends, consumer demand for the products and the various market factors described above; sales levels during the spring, back-to-school and holiday selling seasons; and other factors referenced or incorporated by reference in the Company’s annual report, as amended, on Forms 10-K and Form 10-K/A for the year ended December 31, 2012 and its quarterly report on Form 10-Q for the three months and nine months ended September 30, 2013. The risks included here are not exhaustive.The Company operates in a very competitive and rapidly changing environment. New risks emerge from time to time and the companies cannot predict all such risk factors, nor can the companies assess the impact of all such risk factors on their respective businesses or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, you should not place undue reliance on forward-looking statements as a prediction of actual results. Moreover, reported results should not be considered an indication of future performance.

                                 

    SKECHERS U.S.A., INC. AND SUBSIDIARIES

    CONDENSED CONSOLIDATED BALANCE SHEETS

    (Unaudited)

    (In thousands)

     

    December 31,

    2013

                       

    December 31,

    2012

    ASSETS
    Current Assets:
    Cash and cash equivalents $ 372,011 $ 325,826
    Trade accounts receivable, net 225,941 213,697
    Other receivables   10,599                       7,491
    Total receivables 236,540 221,188
    Inventories 358,168 339,012
    Prepaid expenses and other current assets 26,094 27,755
    Deferred tax assets   22,115                       26,531
    Total current assets 1,014,928 940,312
    Property, plant and equipment, at cost, less accumulated depreciation and amortization

    361,755

    362,446

    Goodwill and other intangible assets, less applicable amortization 2,377 3,242
    Deferred tax assets 9,950 16,387
    Other assets, at cost   19,560                       17,833
    Total non-current assets   393,642                       399,908
    TOTAL ASSETS $1,408,570                     $1,340,220
     
    LIABILITIES AND EQUITY
    Current Liabilities:
    Current installments of long-term borrowings $ 12,028 $ 11,668
    Short-term borrowings 87 2,425
    Accounts payable 258,183 241,525
    Accrued expenses   40,124                       36,923
    Total current liabilities 310,422 292,541
    Long-term borrowings, excluding current installments 116,488 128,517
    Other long-term liabilities   1,740                       73
    Total non-current liabilities   118,228                       128,590
    Total liabilities 428,650 421,131
    Stockholders’ equity:
    Skechers U.S.A., Inc. equity 930,322 875,969
    Noncontrolling interests   49,598                       43,120
    Total equity   979,920                       919,089
    TOTAL LIABILITIES AND EQUITY $1,408,570                     $1,340,220
     
     
               

    SKECHERS U.S.A., INC. AND SUBSIDIARIES

    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

    (Unaudited)

    (In thousands, except per share data)

     
    Three Months Ended December 31,Twelve Months Ended December 31,
    2013       2012       2013       2012
    Net sales $ 450,737       $ 395,617 $ 1,846,361       $ 1,560,321
    Cost of sales   250,092           227,153           1,027,569           876,995  
    Gross profit 200,645 168,464 818,792 683,326
    Royalty income   2,890           2,601           7,734           7,104  
      203,535           171,065           826,526           690,430  
    Operating expenses:
    Selling 33,496 31,086 153,491 134,920
    General and administrative 151,699 132,142 577,214 532,373
    Legal settlements (recoveries)   1,278           (123 )         2,212           818  
      186,473           163,105           732,917           668,111  
    Income from operations 17,062 7,960 93,609 22,319
    Other income (expense):
    Interest, net (2,696 ) (3,450 ) (11,049 ) (12,765 )
    Gain (loss) on disposal of assets 602 (14 ) 447 (216 )
    Other, net   1,509           2,138           (792 )         1,135  
      (585 )         (1,326 )         (11,394 )         (11,846 )
    Earnings before income taxes 16,477 6,634 82,215 10,473
    Income tax expense (benefit)   376           2,968           21,347           (39 )
    Net earnings 16,101 3,666 60,868 10,512
    Less: Net earnings (loss) attributable to noncontrolling interest   1,936           (290 )         6,080           1,000  
    Net earnings attributable to Skechers U.S.A., Inc. $ 14,165         $ 3,956         $ 54,788         $ 9,512  
     
     
    Net earnings per share attributable to Skechers U.S.A., Inc.:
    Basic $ 0.28         $ 0.08         $ 1.09         $ 0.19  
    Diluted $ 0.28         $ 0.08         $ 1.08         $ 0.19  
     
    Weighted average shares used in calculating earnings per share attributable to Skechers U.S.A., Inc.:
    Basic   50,463           49,980           50,363           49,495  
    Diluted   50,653           50,271           50,563           49,942  
     





    Company Contact:

    SKECHERS USA, Inc.

    David Weinberg

    Chief Operating Officer,

    Chief Financial Officer

    (310) 318-3100

    or

    Investor Relations:

    Addo Communications

    Andrew Greenebaum

    (310) 829-5400

    Source: SKECHERS USA, Inc.


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