Despite early warnings of the coronavirus’ potential impact on its business, Skechers USA Inc. has posted first-quarter earnings that met forecasts and sales that exceeded expectations.
The Manhattan Beach, Calif.-based company posted adjusted earnings per share of 39 cents on profits of $49.1 million — a drop of 45.1% from the prior year but in line with analysts’ bets. Revenues also fell 2.7% to $1.24 billion, versus market watchers’ predictions of $1.22 billion, which were likely tempered amid COVID-19 concerns.
While its international business recorded a 6.8% decline, sales were partially offset by a 2.9% increase at the shoemaker’s domestic arm. Domestic wholesale improved 9%, but direct-to-consumer slid 4.2% and international wholesale sank 8.4% — the latter of which was “adversely impacted” by Skechers’ performance in China, down 47% in the quarter.
“Despite an extremely strong end to 2019 and equally strong beginning to 2020, we did see a meaningful slowdown in markets impacted by the COVID-19 pandemic,” observed CFO John Vandemore.
Over the past few weeks, Skechers has tapped its credit facility and deferred non-critical capital expenditures, as well as reduced operating expenses, inventory levels and production orders to help strengthen its balance sheet. At the end of the quarter, its cash and equivalents totaled $1.37 billion.
Many of the performance and lifestyle footwear retailer’s stores around the world remain closed, particularly in North America and some European markets. For the three-month period ended March 31, same-store sales in its company-owned direct-to-consumer business were down 8.1%, including a respective 4.7% and 16.6% decline in the U.S. and internationally.
“We are in unprecedented times, facing difficult decisions daily as we navigate this global pandemic that has negatively impacted every business throughout our industry and most others,” CEO Robert Greenberg said. “Our priority is the health and welfare of our global team, and we’re taking swift and decisive actions that will ensure Skechers remains a go-to brand as we also prepare for the reopening of markets around the world.”
Skechers opted against providing an outlook for the full year due to the uncertainties around the outbreak. At market close, its stock was up 1.09% to $25.