Analysts cheered momentum for Skechers USA Inc. after the firm beat expectations in its first quarter on Wednesday.
Sterne Agee analyst Sam Poser said the company is clearly on the upswing. “The product mix is as balanced as we have seen it in years. Demand remains robust and [if] inventory and spending remain under control … this is the beginning of something new.”
Christopher Svezia, analyst at Susquehanna Financial, noted that the Manhattan Beach, Calif.-based firm is seeing demand outstrip supply of its product, which will push revenue growth and profitability into the third quarter from the second.
Scott Krasik, analyst at BB&T Capital Markets, agreed: “Timing shifts impact the second quarter, but the [longer-term] growth message is the same.”
In a conference call with analysts, David Weinberg, Skechers’ EVP, CFO and COO, said the firm saw double-digit gains in every business channel. He added he was encouraged by “the continuing positive comp-sales increases we are experiencing within our Skechers stores, which are the first to receive new product, and the double-digit sales gains in our men’s, women’s and kids’ divisions for domestic wholesale.”
Weinberg also said demand was strong for both performance and lifestyle product, with the only exception being sandals, which did not fare well due to the cooler temperatures in much of the country.
“We are looking forward to delivering new styles across our diverse product platform through the remainder of this quarter and into back-to-school. We are encouraged by our April meetings with our key accounts, who gave us both positive feedback on our current product in the market, the product they have on order and future plans,” he added.
In the U.S., domestic wholesale in the first quarter surged 44 percent, while e-commerce increased 24 percent.
Going forward, Skechers said it remains cautious about several European countries due to the challenging economic environment, including Spain and Italy, the latter of which saw a small improvement in the quarter. But it is still upbeat on the Americas, due to growth in Canada and Brazil.
Asia continues to be a key driver of international sales, with its joint ventures in China, Hong Kong and Southeast Asia all seeing double-digit improvements.
For the first quarter ended March 31, Skechers earned a net income of $6.7 million, or 13 cents a share, reversing its loss of $3.7 million, or 7 cents, in the same period a year ago.
Revenue rose 28.6 percent to $451.6 million, from $351.3 million.
Skechers ended the period with $264.7 million in cash and cash equivalents, and $125.5 million in long-term debt.