Weak domestic wholesale and retail sales, as well as waning consumer interest in the toning category, contributed to falling profits for Skechers USA Inc. during the first quarter.
For the period ended March 31, the company reported a 79 percent decline in net earnings to $11.8 million, or 24 cents a diluted share, versus $56.3 million, or $1.15, in the year-ago quarter. Net sales declined to $476.2 million, from $492.8 million in the first quarter of last year.
COO and CFO David Weinberg said in a statement that the Manhattan Beach, Calif.-based company faced tough comparisons, going up against record earnings last year. However, he affirmed that the core business remains strong.
“We view our first-quarter 2011 sales of more than $475 million as a solid accomplishment and a testament to the strength of our core business,” he said. “However, the difficult comparison against a record first quarter 2010, which benefitted from strong toning sales, resulted in a 3.4 percent decrease in our first-quarter sales.”
Weinberg added that the company’s international wholesale business improved by 37 percent, and international retail sales increased 51 percent, but were offset by challenges in the domestic market.
“We believe the toning market is stabilizing as we continue to clear inventory and deliver fresh fitness styles,” Weinberg said. “We do expect a difficult comparison to continue as we are again against a record second quarter, especially given that international sales are historically stronger in the first quarter.”