Skechers USA Inc. continued its double-digit gains in revenues and profits in the third quarter — still, the figures weren’t quite as high as Wall Street’s bullish bets for the firm.
The firm’s stock was down in after-hours trading on the heels of the lower-than-expected earnings release.
The Manhattan Beach, Calif.-based company’s profits climbed 30.3 percent in Q3 while its revenues rose 27 percent to $856.2 million. Market watchers had betted on revenues of around $876.5 million and earnings per diluted share of 55 cents — the company’s diluted EPS totaled 43 cents per share.
“The continued quarterly sales records, including our highest quarterly sales in the company’s 23-year history in the third quarter, is a testament to the strength of our brand and the innovative product we continue to develop and deliver,” said Robert Greenberg, Skechers CEO, in a release. “The company continued its positive sales trend in the third quarter with double-digit gains in our international subsidiary, distributor and joint venture operations, including a triple-digit increase in China.”
The CEO added that a “sluggish macro domestic retail environment and declining currency in several key markets” did impact Skechers’ sales in the quarter. But he remains upbeat and plans to continue the firm’s retail expansion, opening an additional 12 to 17 company-owned Skechers stores and another 45 to 55 stores, opened through its international distributor and franchise partners, by the end of the year.
Skechers COO and CFO David Weinberg noted that the company’s comp sales grew 10.4 percent while international wholesale, domestic wholesale and global retail drove overall sales gains.
“Driving the quarterly revenue were net sales increases of 11.8 percent in our domestic wholesale business, 52.9 percent in our international wholesale business, and 20.9 percent in our company-owned global retail business,” Weinberg said. “Of note, the gains in our business came despite the impact of negative foreign currency exchange rates in Brazil, Canada and Chile, and a rather sluggish domestic retail environment where we still achieved an increase in average price per pair of 6.8 percent during the third quarter in our domestic wholesale business.”
Net Income: Net earnings for the third quarter, ending Sept. 30, 2015, were $66.6 million compared to net earnings of $51.1 million in the third quarter of 2014, an increase of 30.3 percent.
EPS: Diluted net earnings per share were 43 cents compared to diluted net earnings per share of 33 cents in the same year-ago quarter.
Net Revenue: Net sales were $856.2 million compared to $674.3 million for the third quarter of 2014, a 27 percent increase.
Hit, Miss or Beat: Skechers missed Wall Street’s estimates for the third quarter. Analysts polled by Yahoo Finance had predicted EPS of 55 cents and revenues of $876.5 million.
Executive Insights: “Given our double digit retail comps, increase in backlogs of approximately 28 percent and market share gains, we believe consumer demand remains strong for our footwear categories worldwide. With the improved efficiencies in our distribution centers and our solid financial position, including, $510.7 million in cash and cash equivalents, the company is well positioned for continued growth. While we are comfortable with the analysts’ current consensus for fourth quarter revenue and earnings, we see the significant potential in the first quarter of 2016 and the entire year by investing in our product, marketing and infrastructure.” — Robert Greenberg in a release
*All share and per share information has been retroactively adjusted for the three-for-one stock split that was effective on October 15, 2015.