Skechers USA Inc. today posted its second consecutive billion-dollar quarter with revenues that topped Wall Street’s expectations — although profits missed the mark.
The Manhattan Beach, Calif.-based casual athletic sneaker maker said its Q2 revenues increased 16.9 percent to $1 billion, surpassing analysts’ bets for revenues of $966.5 million. The growth, Skechers said, was the result of a 6.4 percent increase in the its domestic wholesale business; an 18.6 percent increase in international wholesale; and a 28 percent increase in its company-owned global retail business, which included comparable same-store-sales increases of 7.1 percent.
Meanwhile, a higher effective tax rate was at least partly to blame for a dip in year-over-year profits, according to the brand. Specifically, profits declined 19.7 percent to $59.5 million, or 38 cents per diluted share. Market watchers had expected earnings per diluted share of 44 cents. (The company’s quarterly effective tax rate in the second quarter was 16.1 percent, compared with 12.7 percent over the second quarter of 2016. Skechers expects its effective tax rate to be between 14 percent and 19 percent for fiscal 2017.)
Given the ongoing growth in the firm’s international business — which for the first six months represented 48 percent of the company’s total business — COO and CFO David Weinberg said Skechers is throwing more resources behind that sector, which is where it sees its largest opportunity for expansion.
“Investing in our brand and business is critical for both our short-term and long-term growth initiatives,” Weinberg said in a release. “This is evident in both the expansion of our company-owned global retail business, which had the highest net sales dollar and percentage gain, followed by our international wholesale business.”
Looking ahead, the company is calling for another billion-dollar quarter — predicting that it will achieve Q3 net sales in the range of $1.05 billion to $1.075 billion and EPS of 42 cents to 47 cents. This projection includes flat sales in the company’s domestic wholesale business and double-digit increases in its international wholesale business and its global company-owned retail stores.
“Our domestic and international growth in the quarter and in recent years was the result of our continued focus on developing innovative, comfortable and stylish footwear; determination to build the brand through marketing; investment in operations and logistics for the present and future; and the dedication of our highly talented and creative team,” said CEO Robert Greenberg.
As of 4:45 p.m. ET, Skechers shares were down 2 percent, to $27.75, in after-hours trading.