Record second-quarter sales drive Skechers earnings beat
Fresh off the announcement of a new collaboration with Line Friends, Skechers USA, Inc. has reported record sales of $1.259 billion in the second quarter ended June 30, 2019, up 10.9% from the $1.135 billion reported in the prior-year period – progress which set the California-based footwear company up for a comfortable earnings beat after a disappointing Q1. In constant currencies, sales rose 13.7%.
Net earnings for the quarter totaled $75.2 million, a 66% increase from Q2 2018’s $45.3 million, while diluted earnings per share were $0.49, up 69% from $0.20.
According to MarketWatch, Wall Street analysts polled by FactSet had expected Skechers to report $0.33 a share on sales of $1.22 billion.
The company’s sales growth was pushed mainly by international sales, which increased 19.8% (25.2% in constant currencies) and represented 55.7% of Skechers’ total quarterly sales. The company’s domestic market fared less well, although it did manage a 1.5% increase, a strong improvement from the decline of 6.3% seen in the region in Q1.
Comparable same-store sales grew 4.9% in the quarter, reflecting increases of 6.7% internationally and 4.2% in the US.
Broken down by channel, the company’s international wholesale business saw sales growth of 18.2%, while its company-owned global direct-to-consumer business recorded an increase of 14.4%. Skechers’ domestic wholesale business, however, reported a decline of 3.8%.
“We experienced growth in every region, with the biggest dollar increases coming from India, the Middle East and China, as well as in Mexico with the conversion of the business to a joint venture,” said Skechers COO David Weinberg in a release. “In our direct-to-consumer channels, we saw monthly sales increases in the quarter, an upward trend that’s continuing in July. Based on feedback from recent account meetings, we are seeing a similar trend within our domestic wholesale business in June and July and continue to believe we’ll have a stronger back half of the year.”
Weinberg further noted that, to support further growth, Skechers will be making significant investments in infrastructure, including e-commerce platforms and distribution centers.
Year to date, the company’s net sales rose 6.3% to $2.535 billion, up from $2.385 billion in the same six-month period in the previous year. Net earnings were $183.9 million, a 12.9% increase from $162.9 million.
For the third quarter of 2019, Skechers expects to see sales of between $1.325 billion and $1.350 billion. Diluted earnings per share are predicted to be in the range of $0.65 to $0.70.
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