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Skechers with record quarter sales

Jul 26, 2021 United States
Skechers with record quarter sales
The US-based footwear giant has reported second quarter results. Skechers announced sales increasing by 127.3%, as a result of a 147.3% increase in domestic sales and a 113.7% increase in international sales
“Skechers second quarter financial results exceeded expectations as we achieved record quarterly sales of over 1.6 billion US dollars, a 127.3% increase over the same period in 2020, and 31.7% increase over 2019. This growth, along with both record gross margin of 51.2% and record quarterly diluted earnings per share of 0.88 US dollars, was the result of triple-digit improvements in both our domestic and international businesses compared to second quarter 2020, and over 30% as compared to the second quarter of 2019. We accomplished these financial results even as we continued to face COVID-19 related challenges including delayed shipments and port constraints as well as temporary store closures in some key markets, including India, Canada, and parts of Europe and South America (...) As consumers began returning to a more normal lifestyle in many markets, demand increased for our comfort technology products, including in North America, across Europe, and in China, which achieved double-digit gains over both 2020 and 2019. Looking to the remainder of the year and into the next year, we remain confident in the strength of our brand and the relevance of our distinct product offering”, commented David Weinberg, Chief Operating Officer of Skechers.

Second Quarter Results

Sales increased 127.3% in te period, as a result of a 147.3% increase in domestic sales and a 113.7% increase in international sales. Domestic and international growth was driven by increases in both wholesale and direct-to-consumer, as COVID-19 restrictions eased over the prior year. On a constant currency basis, Skechers’ total sales increased by 117.5%.

Sales grew across all segments with increases to Domestic Wholesale of 205.7%, International Wholesale of 94.8%, and Direct-to-Consumer of 137.8%. Improvements in Domestic Wholesale were the result of higher unit sales volume. International Wholesale increases were driven by 150.2% growth in our European subsidiaries, led by the United Kingdom and Germany, 50.9% growth in China, and 122.3% growth in Distributor sales. Improvements in Direct-to-Consumer sales resulted from growth across both domestic and international retail stores, slightly offset by declines in domestic e-commerce sales. Direct-to-Consumer comparable same store sales increased 109.2%, driven by an increase of 95.6% domestically and 165.2% internationally.

Gross margin
increased 72 basis points to 51.2% primarily driven by increased Direct-to-Consumer gross margins, resulting from higher average selling prices and reduced promotional activity. Higher average selling prices were partially offset by the unfavourable channel mix impact from lower domestic e-commerce sales and higher Domestic Wholesale sales. Net earnings totaled 137.4 million US dollars and diluted earnings per share 0.88 US dollars.

Half Year Results

Year to date sales increased by 56.5%. Year to date domestic and international sales each grew 56.5% with the largest contribution derived from International Wholesale growth. On a constant currency basis, the company’s total sales increased 50.9%.

Sales grew across all segments
with increases to Domestic Wholesale of 52.2%, International Wholesale of 52.3%, and Direct-to-Consumer of 69.0%. Improvements in Domestic Wholesale were the result of higher unit sales volume. Improvements in International Wholesale were the result of growth in China of 88.4% and Europe of 32.9%. Direct-to-Consumer comparable same store sales increased 54.8%, driven by an increase of 59.4% domestically and 40.8% internationally.

Gross margin
increased 308 basis points to 49.5% primarily driven by increased gross margins in the Direct-to-Consumer segment, which was the result of increased average selling prices and reduced promotional activity. Net earnings in the period reached 235.9 million US dollars and diluted earnings per share 1.51 US dollars.

Outlook

For fiscal year 2021, Skechers is expecting sales between 6.15 billion US dollars and 6.25 billion US dollars. Third quarter sales should be in the region of 1.60 billion US dollars to 1.65 billion US dollars.

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