- Prachi Singh |
Skechers net sales for the first quarter, increased 9.6 percent to 1.073 billion dollars compared to first quarter 2016. The growth was, Skechers said, the result of a 16.8 percent increase in the company’s international wholesale business and a 12.8 percent increase in its company-owned global retail business, which included comparable same store sales increases of 2.9 percent.
“First quarter 2017 net sales represent a new quarterly record and the first time we exceeded 1 billion dollars in quarterly sales. 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,” said David Weinberg, COO and CFO of Skechers in a statement.
Gross profit improves, earnings decline
The company said negative currency translation impact on its gross margins in its international wholesale and international company-owned retail businesses was 6.1 million dollars. The company’s domestic wholesale net sales were relatively flat compared to the first quarter of last year.
Gross profit was 476.5 million dollars or 44.4 percent of net sales, compared to 432.2 million dollars or 44.2 percent of net sales, for the first quarter of last year. Earnings from operations were 124.4 million dollars, a decrease of 10.2 percent over the first quarter of 2016. Net earnings decreased 3.7 percent to 94 million dollars and diluted net earnings per share were 0.60 dollar.
The company’s gross margins were negatively impacted by approximately 6.1 million dollars due to negative foreign currency translations and approximately 900,000 dollars in pre-tax expenses related to foreign currency transaction losses during the first quarter of 2017. Skechers’ operations in the United Kingdom were significantly impacted by currency headwinds as its wholesale sales were up 6.1 percent for the first quarter in local currency but down 8.2 percent in US dollars.
Commenting on the company’s results, Robert Greenberg, Skechers Chief Executive added, “In 2005, we surpassed 1 billion dollars in annual sales, and now less than 12 years later, we had our first 1 billion dollars plus in quarterly sales. Our global footprint continues to grow with our ongoing success in Canada, Chile and China as well as in India, Australia and Turkey, and many other markets.”
At quarter end, there were 2,055 Skechers retail stores, including 1,471 third-party-owned locations, of which 551 are in China alone.
Expects Q2 sales to range between 950 to 975 mn dollars
Based on these key indicators, the company believes it will achieve net sales in the second quarter in the range of 950 million dollars to 975 million dollars, a second quarter sales record, and earnings per share of 0.42 dollar to 0.47 dollar. This projection includes flat to slightly positive sales increases in the company’s domestic wholesale business, and increases in its international business and company-owned retail stores.
The company expects its ongoing capital expenditures for 2017 to be approximately 40 million dollars to 45 million dollars, which includes corporate office upgrades and an additional 50 to 75 company-owned retail store openings and several store remodels, as well as an additional 25 million dollars for infrastructure primarily in its China joint venture.