Skechers Net Rises, But Misses Guidance
NEW YORK – Footwear marketer Skechers USA registered a 44% increase in first-quarter profits, but the results fell short of analysts’ expectations and its shares traded down sharply in after-hours trading Wednesday.
The Manhattan Beach, Calif.-based firm also set forth second-quarter guidance below estimates.
In the three months ended March 31, net income rose to $23.9 million, or $0.52 a diluted share, $0.01 shy of the consensus estimate of $0.53. In the year-ago period, earnings were $16.6 million, or $0.38.
Net sales picked up 24.3% to $344.9 million from $277.6 million. Gross margin grew to 43.2% of sales from 42.7% a year earlier.
The company said it expects to earn between $0.41 and $0.46 a diluted share during the second quarter, versus analysts’ forecasts of $0.49. Sales in the quarter are expected to land between $350 million and $360 million.
The company said that its forecasts were based on a shift of sales into the third quarter and also investments in infrastructure necessitated by the firm’s growth towards annual sales of $1.3 billion to $1.4 billion.
“We believe the sales momentum we are seeing will continue into the second quarter based on key indicators including our double-digit backlog and strong retail comp sales,” said David Weinberg, chief operating officer of Skechers. “While we are projecting our second quarter sales to be a new quarterly record and are encouraged by our key indicators as well as strong shipments in April, we do believe the greater opportunity is in the third quarter when our back-to-school shipments may shift from June into July as they have done previously.”
Robert Greenberg, chief executive officer, said that the company would accelerate its marketing investments during the second quarter in preparation for what is expected to be a busy start to the second half of the year. “As a product and marketing driven company, we plan to continue to support our brands with increased advertising in the second quarter to capitalize on our growth and position us well for the third quarter when we plan on taking a more moderate approach to increasing our advertising spend,” he said.
The increase in second-quarter advertising expenditures is expected to be about $8 million.
In addition to the Skechers name, the company’s brand portfolio includes Zoo York and Avirex, and Ashlee Simpson, JoJo, Terrence Howard and NaS are on its roster of celebrity endorsers.
Results were released after the close of the equity markets on Wednesday, but shares fell more than 5% in the first hours of after-hours trading.