Skechers announces record second quarter 2022 sales
Los angeles--(business wire)--skechers u.s.a., inc. (“skechers” or the “company”) (nyse:skx), the comfort technology company™ and a global footwear leader, today announced financial results for the second quarter ended june 30, 2022. second quarter highlights record quarterly sales of $1.87 billion, a year-over-year increase of 12.4% wholesale sales grew 18.3% direct-to-consumer sales grew 4.3% diluted earnings per share of $0.58 repurchased $24.2 million of common stock “skechers achieved a new quarterly sales record of $1.87 billion, a significant accomplishment especially given the macroeconomic headwinds, supply chain issues and covid-related restrictions in china during the period,” said david weinberg, chief operating officer of skechers. “the growth was the result of increases in sales of 15% in our domestic and 10% in our international businesses. growth was driven by sales increases of 21% in the americas and 8% in emea. in apac, where sales were flat due to covid-related restrictions in china, we saw strong growth in most other markets, particularly in india, south korea and malaysia. during the quarter, we focused on delivering our in-demand footwear direct to consumers and through our wholesale partners globally. while we remain cautious given the challenges across the globe, we believe our comfort technology footwear, impactful marketing and the strength of our brand will drive continued sales growth in the back half of the year.” “2022 is shaping up to be another remarkable year for skechers with two consecutive record sales quarters, the result of our talented team’s passion, determination and execution to evolve our product offering, inform the world of our exceptional comfort technologies, and effectively navigate the supply chain constraints,” began robert greenberg, chief executive officer of skechers. “in the second quarter, we delivered hands-free comfort footwear to a world now desiring more ease in their lives, expanded our skechers arch fit offering, and designed more fashion-focused styles as comfort at work and play is the new norm. further, we elevated our performance game with the launch of skechers viper court, a collection designed specifically for the fastest growing sport in america, pickleball, and saw major championship wins on the golf course with brooke henderson at this past weekend’s amundi evian championship in france and matt fitzpatrick at the u.s. open at brookline last month. we also signed several new ambassadors—specific to europe and asia, as well as a rising latin music artist and a global pop sensation, all to further strengthen brand awareness in key markets. this, our 30th year in business, is our strongest year yet from a sales, marketing and product perspective. we are in a unique position as a brand that delivers on comfort technology, style, innovation and quality with a global reach that includes 4,355 skechers stores. as a company, we are determined to outdo ourselves and reach further heights as we strive to meet our customers’ needs.” second quarter 2022 financial results three months ended june 30, change (in millions, except per share data) 2022 2021 $ % sales $ 1,867.8 $ 1,661.9 205.9 12.4 gross profit 897.6 853.6 44.0 5.2 gross margin 48.1 % 51.4 % (330 ) bps operating expenses 743.4 652.4 91.0 14.0 as a % of sales 39.8 % 39.3 % 50 bps earnings from operations 154.2 201.2 (47.0 ) (23.4 ) operating margin 8.3 % 12.1 % (390 ) bps net earnings $ 90.4 $ 137.4 (47.0 ) (34.2 ) diluted earnings per share $ 0.58 $ 0.88 (0.30 ) (34.1 ) second quarter sales increased 12.4% as a result of a 15.4% increase in domestic sales and a 10.0% increase in international sales, primarily driven by strength in wholesale sales. all segments experienced growth, with wholesale increasing 18.3% and direct-to-consumer increasing 4.3%. on a constant currency basis, sales increased 16.4%. wholesale sales growth of $176.1 million, or 18.3%, was led by increases in amer of 34.9%. wholesale volume increased 14.8% and average selling price increased 3.1%. direct-to-consumer sales growth of $29.8 million, or 4.3%, was led by increases in amer of 3.7%, emea of 13.5%, and apac of 2.7%. direct-to-consumer average selling price increased 5.3% and volume was essentially flat. gross margin was 48.1%, a decrease of 330 basis points, primarily driven by higher per unit freight costs partially offset by average selling price increases. operating expenses increased $91.0 million, or 14.0%, and as a percentage of sales, increased 50 basis points to 39.8% from 39.3% in the prior year. selling expenses increased $25.1 million, or 17.8%, due to higher global demand creation expenditures. general and administrative expenses increased $65.9 million, or 12.9%, primarily due to volume-driven increases in labor and warehouse and distribution expenses, as well as higher rent. earnings from operations decreased $47.0 million, or 23.4%, to $154.2 million. net earnings were $90.4 million and diluted earnings per share were $0.58, a decrease of 34.1% over the prior year. diluted earnings per share include an unfavorable impact of $0.11 due to declines in foreign exchange rates, primarily in emea. in the second quarter, the company’s effective income tax rate was 21.3%. “skechers continued the diligent execution of our long-term global growth strategy, achieving record quarterly sales primarily from continued strength in our wholesale segment,” stated john vandemore, chief financial officer of skechers. “despite pandemic-related lockdowns, disruptions in our global supply chain and macroeconomic volatility, we remain focused on our direct-to-consumer capabilities, distribution infrastructure and deepening connections with our consumers in order to drive long-term growth and shareholder value.” six months 2022 financial results six months ended june 30, change (in millions, except per share data) 2022 2021 $ % sales $ 3,687.4 $ 3,096.3 591.1 19.1 gross profit 1,721.7 1,539.3 182.4 11.9 gross margin 46.7 % 49.7 % (300 ) bps operating expenses 1,391.7 1,180.4 211.3 17.9 as a % of sales 37.7 % 38.1 % (40 ) bps earnings from operations 330.1 358.9 (28.8 ) (8.0 ) operating margin 9.0 % 11.6 % (260 ) bps net earnings $ 211.6 $ 235.9 (24.3 ) (10.3 ) diluted earnings per share $ 1.35 $ 1.51 (0.16 ) (10.6 ) year-to-date sales increased 19.1% reflecting a 21.4% increase in domestic sales and a 17.3% increase in international sales with the largest contribution derived from wholesale sales. both segments experienced increases, with wholesale increasing 25.4% and direct-to-consumer increasing 9.0%. on a constant currency basis, the company’s total sales increased 22.1%. wholesale sales growth of $484.3 million, or 25.4%, was led by increases in amer of 38.2% and emea of 24.0%. wholesale volume increased 18.8% and average selling price increased 5.9%. direct-to-consumer sales growth of $106.8 million, or 9.0%, was led by increases in amer of 6.8%, emea of 44.2%, which experienced covid restrictions in the prior year, and apac of 5.3%. direct-to-consumer average selling price increased 9.4% resulting from reduced promotions and higher prices. gross margin was 46.7%, a decrease of 300 basis points, primarily driven by higher per unit freight costs partially offset by average selling price increases. operating expenses increased $211.3 million or 17.9%. as a percentage of sales, operating expenses improved 40 basis points to 37.7%. selling expenses increased $42.0 million or 18.1%, primarily due to higher global demand creation expenditures. general and administrative expenses increased $169.3 million or 17.9%, primarily due to higher compensation costs, rent, and volume-driven global warehouse and distribution expenses. earnings from operations decreased $28.8 million to $330.1 million. net earnings were $211.6 million and diluted earnings per share were $1.35, a decrease of 10.6% over the prior year. diluted earnings per share include an unfavorable impact of $0.14 due to declines in foreign exchange rates, primarily in emea. the company’s effective income tax rate was essentially flat year-over-year at 20.6%. balance sheet cash, cash equivalents and investments totaled $946.4 million, a decrease of $94.0 million, or 9.0% from december 31, 2021, primarily as a result of changes in working capital and completing $49.2 million of share repurchases year-to-date. inventory was $1.56 billion, an increase of $92.9 million or 6.3% from december 31, 2021. increased inventory levels primarily reflect growth in amer. share repurchase during the second quarter, the company repurchased nearly 636,000 shares of its class a common stock for $24.2 million. year-to-date 2022, the company has repurchased almost 1.3 million shares of its class a common stock at a cost of $49.2 million. at june 30, 2022, approximately $450.8 million remained available under the company’s share repurchase program. outlook for the third quarter of 2022, the company believes it will achieve sales between $1.80 billion and $1.85 billion and diluted earnings per share of between $0.70 and $0.75. further, the company believes that for the fiscal year 2022, it will achieve sales between $7.2 billion and $7.4 billion and diluted earnings per share of between $2.60 and $2.70. store count number of stores december 31, 2021 opened closed(1) june 30, 2022 domestic stores 515 28 (17 ) 526 international stores 845 49 (58 ) 836 distributor, licensee and franchise stores 2,946 202 (155 ) 2,993 total skechers stores 4,306 279 (230 ) 4,355 (1) does not reflect temporary closures due to the covid-19 pandemic. second quarter 2022 conference call the company will host a conference call today at 4:30 p.m. et / 1:30 p.m. pt to discuss its second quarter 2022 financial results. the call can be accessed on the investor relations section of the company’s website at investors.skechers.com. for those unable to participate during the live broadcast, a replay will be available beginning july 26, 2022 at 7:30 p.m. et, through august 9, 2022, at 11:59 p.m. et. to access the replay, dial 844-512-2921 (u.s.) or 412-317-6671 (international) and use passcode: 13731127. about skechers u.s.a., inc. skechers u.s.a., inc., the comfort technology company™, based in southern california, designs, develops and markets a diverse range of lifestyle and performance footwear, apparel and accessories for men, women and children. the company’s collections are available in over 180 countries and territories through department and specialty stores, and direct to consumers through digital stores and 4,355 company- and third-party-owned physical retail stores. the company manages its international business through a network of wholly-owned subsidiaries, joint venture partners, and distributors. for more information, please visit about.skechers.com and follow us on facebook, instagram, twitter and tiktok. reference in this press release to “sales” refers to skechers’ net sales reported under gaap. this announcement contains forward-looking statements that are made pursuant to the safe harbor provisions of the private securities litigation reform act of 1995, section 27a of the securities act of 1933, as amended, and section 21e of the securities exchange act of 1934, as amended. these forward-looking statements may include, without limitation, skechers’ future domestic and international growth, financial results and operations including expected net sales and earnings, its development of new products, future demand for its products, its planned domestic and international expansion, opening of new stores and additional expenditures, and advertising and marketing initiatives. forward-looking statements can be identified by the use of forward-looking language such as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “plan,” “project,” “will,” “could,” “may,” “might,” or any variations of such words with similar meanings. any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in forward-looking statements. factors that might cause or contribute to such differences include the disruption of business and operations due to the covid-19 pandemic; delays or disruptions in our supply chain; international economic, political and market conditions including the effects of inflation around the world, the challenging consumer retail markets in the united states and the impact of russia’s invasion of ukraine; sustaining, managing and forecasting costs and proper inventory levels; losing any significant customers; decreased demand by industry retailers and cancellation of order commitments due to the lack of popularity of particular designs and/or categories of products; maintaining brand image and intense competition among sellers of footwear for consumers, especially in the highly competitive performance footwear market; anticipating, identifying, interpreting or forecasting changes in fashion trends, consumer demand for the products and the various market factors described above; sales levels during the spring, back-to-school and holiday selling seasons; and other factors referenced or incorporated by reference in skechers’ annual report on form 10-k for the year ended december 31, 2021 and its quarterly reports on form 10-q in 2022. taking these and other risk factors associated with the covid-19 pandemic into consideration, the dynamic nature of these circumstances means that what is stated in this press release could change at any time, and as a result, actual results could differ materially from those contemplated by such forward-looking statements. the risks included here are not exhaustive. skechers operates in a very competitive and rapidly changing environment. new risks emerge from time to time and we cannot predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. given these risks and uncertainties, you should not place undue reliance on forward-looking statements as a prediction of actual results. moreover, reported results should not be considered an indication of future performance. skechers u.s.a., inc. and subsidiaries condensed consolidated balance sheets (unaudited) as of as of (in thousands) june 30, 2022 december 31, 2021 assets current assets cash and cash equivalents $ 751,904 $ 796,283 short-term investments 105,099 98,580 trade accounts receivable, net 916,784 732,793 other receivables 55,039 80,043 inventory 1,563,907 1,470,994 prepaid expenses and other 177,236 193,547 total current assets 3,569,969 3,372,240 property, plant and equipment, net 1,225,529 1,128,909 operating lease right-of-use assets 1,168,385 1,224,580 deferred tax assets 452,747 451,355 long-term investments 89,423 145,590 goodwill 93,497 93,497 other assets, net 77,046 75,109 total non-current assets 3,106,627 3,119,040 total assets $ 6,676,596 $ 6,491,280 liabilities and equity current liabilities accounts payable $ 972,399 $ 876,342 accrued expenses 258,640 265,420 operating lease liabilities 223,230 225,658 current installments of long-term borrowings 73,414 76,967 short-term borrowings — 1,195 total current liabilities 1,527,683 1,445,582 long-term operating lease liabilities 1,049,330 1,094,748 long-term borrowings 253,260 263,445 deferred tax liabilities 9,712 11,820 other long-term liabilities 118,507 133,613 total non-current liabilities 1,430,809 1,503,626 total liabilities 2,958,492 2,949,208 stockholders’ equity preferred stock — — class a common stock 135 135 class b common stock 21 21 additional paid-in capital 402,360 429,608 accumulated other comprehensive loss (75,784 ) (48,323 ) retained earnings 3,089,530 2,877,903 skechers u.s.a., inc. equity 3,416,262 3,259,344 noncontrolling interests 301,842 282,728 total stockholders' equity 3,718,104 3,542,072 total liabilities and equity $ 6,676,596 $ 6,491,280 skechers u.s.a., inc. and subsidiaries condensed consolidated statements of earnings (unaudited) three months ended june 30, six months ended june 30, (in thousands, except per share data) 2022 2021 2022 2021 sales $ 1,867,804 $ 1,661,871 $ 3,687,398 $ 3,096,326 cost of sales 970,225 808,279 1,965,656 1,557,075 gross profit 897,579 853,592 1,721,742 1,539,251 operating expenses selling 166,609 141,470 274,818 232,795 general and administrative 576,812 510,912 1,116,862 947,578 total operating expenses 743,421 652,382 1,391,680 1,180,373 earnings from operations 154,158 201,210 330,062 358,878 other income (expense) (19,259 ) 2,158 (25,005 ) (12,016 ) earnings before income taxes 134,899 203,368 305,057 346,862 income tax expense 28,739 41,545 62,731 70,530 net earnings 106,160 161,823 242,326 276,332 less: net earnings attributable to noncontrolling interests 15,756 24,454 30,699 40,390 net earnings attributable to skechers u.s.a., inc. $ 90,404 $ 137,369 $ 211,627 $ 235,942 net earnings per share attributable to skechers u.s.a., inc. basic $ 0.58 $ 0.88 $ 1.36 $ 1.52 diluted $ 0.58 $ 0.88 $ 1.35 $ 1.51 weighted-average shares used in calculating net earnings per share attributable to skechers u.s.a., inc. basic 155,941 155,561 155,969 155,196 diluted 156,748 156,674 157,074 156,321 skechers u.s.a., inc. and subsidiaries supplemental financial information (unaudited) as previously announced, during the first quarter of 2022 skechers refined the way it views its business operations and decision-making and now presents its reportable segment results as wholesale and direct-to-consumer. prior period results have been recast to reflect current reportable segments. there was no impact to the consolidated financial results of the company as a result of this change. segment information three months ended june 30, change (in millions) 2022 2021 $ % wholesale sales $ 1,140.3 $ 964.2 176.1 18.3 gross profit 414.5 379.4 35.1 9.2 gross margin 36.3 % 39.4 % (300 ) bps direct-to-consumer sales $ 727.5 $ 697.7 29.8 4.3 gross profit 483.1 474.2 8.9 1.9 gross margin 66.4 % 68.0 % (160 ) bps total sales $ 1,867.8 $ 1,661.9 205.9 12.4 gross profit 897.6 853.6 44.0 5.2 gross margin 48.1 % 51.4 % (330 ) bps six months ended june 30, change (in millions) 2022 2021 $ % wholesale sales $ 2,391.6 $ 1,907.3 484.3 25.4 gross profit 869.4 749.0 120.4 16.1 gross margin 36.4 % 39.3 % (290 ) bps direct-to-consumer sales $ 1,295.8 $ 1,189.0 106.8 9.0 gross profit 852.3 790.3 62.0 7.9 gross margin 65.8 % 66.5 % (70 ) bps total sales $ 3,687.4 $ 3,096.3 591.1 19.1 gross profit 1,721.7 1,539.3 182.4 11.9 gross margin 46.7 % 49.7 % (300 ) bps additional sales information three months ended june 30, change (in millions) 2022 2021 $ % geographic sales domestic wholesale $ 521.0 $ 401.3 119.7 29.8 direct-to-consumer 319.5 327.0 (7.5 ) (2.3 ) total domestic sales 840.5 728.3 112.2 15.4 international wholesale 619.3 562.9 56.4 10.0 direct-to-consumer 408.0 370.7 37.3 10.1 total international sales 1,027.3 933.6 93.7 10.0 total sales $ 1,867.8 $ 1,661.9 205.9 12.4 regional sales americas (amer) $ 1,033.9 $ 855.2 178.7 20.9 europe, middle east & africa (emea) 374.5 348.1 26.4 7.6 asia pacific (apac) 459.4 458.6 0.8 0.2 total sales $ 1,867.8 $ 1,661.9 205.9 12.4 china sales $ 254.9 $ 316.9 (62.0 ) (19.6 ) distributor sales $ 128.4 $ 96.7 31.7 32.8 six months ended june 30, change (in millions) 2022 2021 $ % geographic sales domestic wholesale $ 1,059.6 $ 778.5 281.1 36.1 direct-to-consumer 559.0 554.4 4.6 0.8 total domestic sales 1,618.6 1,332.9 285.7 21.4 international wholesale 1,332.0 1,128.8 203.2 18.0 direct-to-consumer 736.8 634.6 102.2 16.1 total international sales 2,068.8 1,763.4 305.4 17.3 total sales $ 3,687.4 $ 3,096.3 591.1 19.1 regional sales americas (amer) $ 1,980.8 $ 1,580.9 399.9 25.3 europe, middle east & africa (emea) 815.7 643.5 172.2 26.8 asia pacific (apac) 890.9 871.9 19.0 2.2 total sales $ 3,687.4 $ 3,096.3 591.1 19.1 china sales $ 527.9 $ 567.5 (39.6 ) (7.0 ) distributor sales $ 225.4 $ 176.9 48.5 27.4 skechers u.s.a., inc. and subsidiaries reconciliation of gaap earnings financial measures to corresponding non-gaap financial measures (unaudited) three months ended june 30, 2022 2021 change (in millions, except per share data) reported gaap measure constant currency adjustment adjusted for non- gaap measures reported gaap measure $ % sales $ 1,867.8 $ 65.9 $ 1,933.7 $ 1,661.9 271.8 16.4 cost of sales 970.2 38.5 1,008.7 808.3 200.4 24.8 gross profit 897.6 27.4 925.0 853.6 71.4 8.4 operating expenses 743.4 23.3 766.7 652.4 114.3 17.5 earnings from operations 154.2 4.1 158.3 201.2 (42.9 ) (21.3 ) other income (expense) (19.3 ) 16.2 (3.1 ) 2.2 (5.3 ) n/m income tax expense 28.7 1.3 30.0 41.5 (11.5 ) (27.7 ) less: noncontrolling interests 15.8 0.5 16.3 24.5 (8.2 ) (33.5 ) net earnings $ 90.4 $ 18.5 $ 108.9 $ 137.4 (28.5 ) (20.7 ) diluted earnings per share $ 0.58 $ 0.11 $ 0.69 $ 0.88 (0.19 ) (21.6 ) six months ended june 30, 2022 2021 change (in millions, except per share data) reported gaap measure constant currency adjustment adjusted for non- gaap measures reported gaap measure $ % sales $ 3,687.4 $ 93.0 $ 3,780.4 $ 3,096.3 684.1 22.1 cost of sales 1,965.7 57.0 2,022.7 1,557.0 465.7 29.9 gross profit 1,721.7 36.0 1,757.7 1,539.3 218.4 14.2 operating expenses 1,391.7 30.0 1,421.7 1,180.4 241.3 20.4 earnings from operations 330.1 6.0 336.0 358.9 (22.9 ) (6.4 ) other income (expense) (25.1 ) 18.7 (6.4 ) (12.1 ) 5.7 (47.1 ) income tax expense 62.7 1.3 64.0 70.5 (6.5 ) (9.2 ) less: noncontrolling interests 30.7 0.2 30.9 40.4 (9.5 ) (23.5 ) net earnings $ 211.6 $ 23.2 $ 234.7 $ 235.9 (1.2 ) (0.5 ) diluted earnings per share $ 1.35 $ 0.14 $ 1.49 $ 1.51 (0.02 ) (1.3 )
