Inventory Drags Down Skechers in Q2

Inventory Drags Down Skechers in Q2
A Skechers retail store.

Skechers USA Inc. suffered a bigger-than-estimated loss in the second quarter.

For the period ended June 30, the firm lost $29.9 million, or 62 cents a share, while analysts were expecting a loss of 34 cents a share. In the same period a year earlier, the firm earned a net income of $40.2 million, or 82 cents.

Total revenue fell 14 percent to $434.4 million, from $504.9 million, while the cost of goods rose 9 percent.

“We aggressively reduced our excess toning inventory during the second quarter by selling 2 million pairs of our original Shape-ups for a loss of $21 million,” David Weinberg, COO and CFO of Skechers, said in a statement.

“We made a decision to accelerate the clearance on early-generation Shape-ups product to eliminate the overhang of excess inventory. The impact of these two transactions was a loss of 31 cents a share and a reduction of gross margin to 33 percent, which otherwise would have been 41.5 percent,” he added.

Weinberg added that the back half will pose more challenges, but also present growth opportunities in both the international and retail businesses.

Skechers ended the quarter with cash and cash equivalents of $250.8 million, and long-term debt of $81.1 million.