Skechers Tops Zacks Estimate – Analyst Blog

Skechers USA Inc. (SKX), the designer, marketer and distributor of footwear, recently delivered first-quarter 2010 results that topped the Zacks Consensus Estimate on the heels of innovative products, marketing campaigns, effective inventory management and improved consumer spending pattern.

 

This has helped the company post robust revenue growth across domestic and international wholesale and retail businesses, attain higher margins, and expand its global footprint. The quarterly sales and earnings reached a record level during the quarter.

 

Skechers’ quarterly earnings of $1.15 per share surpassed the Zacks Consensus Estimate of $1.02, and improved substantially from 18 cents delivered in the prior-year quarter.

 

Skechers, which competes with Deckers Outdoor Corporation (DECK), said that total net sales for the quarter soared 43.5% year over year to $492.8 million, driven by growth across wholesale, retail and online businesses.

 

The sustained focus on new lines of products, opening of additional Skechers retail stores and distribution channels, and the development of new international distribution agreements in India and Mexico, should increase sales and profitability. Moreover, with growing operations in Chile, Brazil, Hong Kong and China, we believe that international business will become a significant growth factor for the company’s sales.

 

International wholesale business rose 24% during the quarter, whereas domestic wholesale business surged 52%. Total domestic and international retail sales climbed 45% with a 30% rise in retail same-store sales. Revenue from the e-commerce business soared 143%.

 

Gross profit soared 89.3% to $237.4 million, whereas the gross profit margin expanded to 48.2% from 36.5% in the prior-year quarter, driven by strong sales, prudent inventory management, fewer store closures, higher-margin product mix and increase in price.

 

During the quarter, Skechers opened 4 company-owned retail stores, bringing the total store count at the end of the quarter to 250. During fiscal 2010, the company plans to open 20 to 25 stores more. The company also opened 10 distributor-owned or licensed Skechers retail stores during the quarter. At the end of the quarter, there were 118 distributor-owned or licensed retail stores.

 

Skechers ended the quarter with cash and cash equivalents of $325.9 million and shareholders’ equity of $818.6 million, with no long-term debt. Capital expenditures were nearly $6.6 million for the quarter.