UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): | April 20, 2017 |
SKECHERS U.S.A., INC.
__________________________________________
(Exact name of registrant as specified in its charter)
Delaware | 001-14429 | 95-4376145 |
_____________________ (State or other jurisdiction |
_____________ (Commission |
______________ (I.R.S. Employer |
of incorporation) | File Number) | Identification No.) |
228 Manhattan Beach Boulevard, Manhattan Beach, California | 90266 | |
_________________________________ (Address of principal executive offices) |
___________ (Zip Code) |
Registrants telephone number, including area code: | (310) 318-3100 |
Not Applicable
______________________________________________
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 2.02 Results of Operations and Financial Condition.
On April 20, 2017, the Company issued a press release announcing its results of operations and financial condition for the three months ended March 31, 2017. A copy of the press release is attached hereto as exhibit 99.1 and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
The following exhibit is furnished as part of this report:
99.1 Press Release dated April 20, 2017.
The information in this current report and the exhibit attached hereto is being furnished and shall not be deemed "filed" for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The Information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended. The furnishing of the Information in this Current Report is not intended to, and does not, constitute a representation that such furnishing is required by Regulation FD or that the Information this Current Report contains is material investor information that is not otherwise publicly available.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
SKECHERS U.S.A., INC. | ||||
April 20, 2017 | By: |
/s/ David Weinberg
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Name: David Weinberg | ||||
Title: Chief Operating Officer |
Exhibit Index
Exhibit No. | Description | |
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99.1
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Press Release dated April 20, 2017. |
FOR IMMEDIATE RELEASE
Company Contact: | David Weinberg Chief Operating Officer, Chief Financial Officer SKECHERS USA, Inc. (310) 318-3100 |
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Investor Relations: | Andrew Greenebaum (310) 829-5400 |
SKECHERS ANNOUNCES FIRST BILLION-DOLLAR-PLUS QUARTER
Companys First Quarter 2017 Financial Results
Set Quarterly Net Sales Record
MANHATTAN BEACH, CA. April 20, 2017 SKECHERS USA, Inc. (NYSE:SKX), a global footwear leader, today announced financial results for the first quarter 2017.
First Quarter Highlights
Record net sales of $1.073 billion, an increase of 9.6 percent
Diluted earnings per share of $0.60
First quarter 2017 net sales represent a new quarterly record and the first time we exceeded $1 billion in quarterly sales. We are particularly proud of the growth in the quarter considering the tough comparison to 2016, which included the benefit of an additional day in February and Easter falling in March, began David Weinberg, chief operating officer and chief financial officer. The growth was the result of double-digit increases in both our international distributor and subsidiary/joint venture businesses, as well as in our global Company-owned Skechers retail business. Further, in our domestic wholesale business, we shipped 4.5 percent more pairs than in the first quarter of 2016 but average price per pair decreased by 4.8 percent primarily due to stronger sales in our lower-priced lines including BOBS from Skechers and our sandal business.
First Quarter Financial Results
Quarterly net sales increased 9.6 percent to $1.073 billion compared to first quarter 2016. The
growth was the result of a 16.8 percent increase in the Companys international wholesale business
and a 12.8 percent increase in its Company-owned global retail business which included comparable
same store sales increases of 2.9 percent. Additionally, the negative currency translation impact
on its gross margins in its international wholesale and international Company-owned retail
businesses for the first quarter was $6.1 million. The Companys domestic wholesale net sales were
relatively flat compared to the first quarter of last year.
Gross profit for the first quarter was $476.5 million, or 44.4 percent of net sales, compared to $432.2 million, or 44.2 percent of net sales, for the first quarter of last year.
First quarter selling expenses increased $19.9 million to $73.8 million, or 6.9 percent of sales, compared to $53.9 million, or 5.5 percent of sales, in the first quarter of the prior year. The increase was primarily due to increased international advertising and selling expenses.
General and administrative expenses for the first quarter increased $40.1 million to $282.5 million, or 26.3 percent of sales, compared to $242.3 million, or 24.8 percent of sales, in the prior year. The year-over-year quarterly increase was primarily due to Skechers focus on long-term global growth, including $13.2 million associated with the Companys 59 additional domestic and international retail stores, and $18.3 million to support its international growth, of which $9.3 million was due to increased costs in China, $3.4 million for the transition of its South Korean distributor to a joint venture, $1.7 million in support of its new Latin America subsidiary, and $3.4 million in Japan. Domestic wholesale general and administrative expenses in the first quarter increased $8.6 million year-over-year primarily due to increased headcount in the United States to support its brand worldwide.
Skechers international business, including retail, grew to 51.3 percent of our total sales in the first quarter due to the strength of our brand in numerous markets, added Mr. Weinberg. While we see opportunities in the United States to increase our business, we believe international markets continue to present the strongest opportunity for growth. To meet this growth in our international business, we continue to invest in our infrastructure and marketing to support the current and planned global expansion.
Earnings from operations were $124.4 million, a decrease of 10.2 percent over the first quarter of 2016.
Net earnings decreased 3.7 percent to $94.0 million, and diluted net earnings per share were $0.60. The Companys quarterly effective tax rate in the first quarter was 14.0 percent compared to 21.8 percent over the first quarter of 2016. The Company expects its effective tax rate to be between 14 percent and 19 percent in 2017. In addition, the Companys gross margins were negatively impacted by approximately $6.1 million due to negative foreign currency translations and approximately $900,000 in pre-tax expenses related to foreign currency transaction losses during the first quarter of 2017. The Companys operations in the United Kingdom were significantly impacted by currency headwinds as its wholesale sales were up 6.1 percent for the first quarter in local currency but down 8.2 percent in U.S. dollars.
Robert Greenberg, SKECHERS chief executive officer, commented: In 2005, we surpassed $1 billion in annual sales, and now less than 12 years later, we had our first $1 billion plus in quarterly sales. The key to our success then and now is the drive, dedication and talent of the many people behind this great brand. We look very good from a product standpointwith innovative, comfortable and beautiful footwear and now appareland in our marketing as wellwith lifestyle campaigns featuring Rob Lowe, Meghan Trainor, Joe Montana, Howie Long, Sugar Ray Leonard, Brooke Burke-Charvet and Kelly Brook. Our success in performance footwear can be seen in our title sponsorship of the Skechers Performance Los Angeles Marathon, in the Pan-European Ironman where we are the footwear sponsor, and in our many pro golfers, including American medalist Matt Kucher, Canadian Brooke Henderson, Scotlands Russell Knox, Spaniard Belen Mozo, and American Wesley Bryan, who just earned his first PGA Tour victory.
Mr. Greenberg continued: Our global footprint continues to grow with our ongoing success in Canada, Chile and China as well as in India, Australia and Turkey, and many other markets. This success is in part due to the expansion of Skechers retail stores around the world. At quarter end, there were 2,055 Skechers retail stores, including 1,471 third-party-owned locations, of which 551 are in China alone. Weve come a long way since our first billion dollar year, and our first retail store in Manhattan Beach, but we plan to accomplish much more in product design, marketing and distribution. In the United States, we are the No. 1 Casual, Work, and Walking brand and the No. 2 All Footwear for Women*, and we believe we can reach these coveted positions in numerous other countries around the world. As weve begun showing our Spring 2018 lines to accounts this week, Im looking forward to delivering our back-to-school product in June and July, and continuing to profitably grow Skechers this year and in the coming years.
Balance Sheet
At year end, cash and cash equivalents was $607.8 million, an increase of $164.0 million, or 37.0
percent over March 31, 2016.
Total inventory, including inventory in transit, was $585.8 million, an increase of $84.0 million or 16.7 percent over March 31, 2016, and a decrease of $114.7 million or 16.4 percent over December 31, 2016. The increase over last year is primarily due to international and is in line with the Companys backlogs, and growing retail and international wholesale business.
Working capital was $1.32 billion at March 31, 2017 versus $1.07 billion at March 31, 2016.
Mr. Weinberg continued: We ended the first quarter with low double-digit increases in backlog on a worldwide basis, with all of our business units up a minimum of mid-single digits. Already in April, weve achieved high-single digit comps in our Company-owned retail stores, which benefited from Easter falling in April, and successfully launched YOU by Skechers in our stores and on skechers.com.
Outlook
Based on these key indicators, the Company believes it will achieve net sales in the second quarter in the range of $950 million to $975 million, which would be a second quarter sales record, and earnings per share of $0.42 to $0.47. This projection includes flat to slightly positive sales increases in the Companys domestic wholesale business, and increases in its international business and Company-owned retail stores.
The Company expects its ongoing capital expenditures for 2017 to be approximately $40 million to $45 million, which includes corporate office upgrades and an additional 50 to 75 Company-owned retail store openings and several store remodels, as well as an additional $25 million for infrastructure primarily in its China joint venture.
First Quarter 2017 Conference Call
The Company will host a conference call today at 1:30 p.m. PT / 4:30 p.m. Eastern Time to discuss
its first quarter 2017 financial results. The call can be accessed on the Investor Relations
section of the Companys the website at www.skx.com. For those unable to participate during
the live broadcast, a replay will be available beginning April 20, 2017, at 7:30 p.m. ET, through
May 4, 2017, at 11:59 p.m. ET. To access the replay, dial 844-512-2921 (U.S.) or 412-317-6671
(International) and use passcode: 13658499.
*SportsOneSource, April 1, 2017
About SKECHERS USA, Inc.
SKECHERS USA, Inc., based in Manhattan Beach, California, designs, develops and markets a diverse
range of lifestyle footwear for men, women and children, as well as performance footwear for men
and women. SKECHERS footwear is available in the United States and over 160 countries and
territories worldwide via department and specialty stores, more than 2,055 SKECHERS Company-owned
and third-party-owned retail stores, and the Companys e-commerce websites. The Company manages its
international business through a network of global distributors, joint venture partners in Asia and
the Middle East, and wholly-owned subsidiaries in Canada, Japan, throughout Europe and Latin
America. For more information, please visit skechers.com and follow us on Facebook
(facebook.com/SKECHERS) and Twitter (twitter.com/SKECHERSUSA).
This announcement contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, the Companys 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 be, will continue, will result, 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 international economic, political and market conditions including the uncertainty of sustained recovery in Europe; 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 the Companys annual report on Form 10-K for the year ended December 31, 2016. The risks included here are not exhaustive. The Company operates in a very competitive and rapidly changing environment. New risks emerge from time to time and the companies cannot predict all such risk factors, nor can the companies assess the impact of all such risk factors on their respective businesses 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.
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SKECHERS U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
March 31, 2017 | December 31, | |||||||
2016 | ||||||||
ASSETS |
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Current Assets: |
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Cash and cash equivalents |
$ | 607,813 | $ | 718,536 | ||||
Trade accounts receivable, net |
551,598 | 326,844 | ||||||
Other receivables |
20,504 | 19,191 | ||||||
Total receivables |
572,102 | 346,035 | ||||||
Inventories |
585,814 | 700,515 | ||||||
Prepaid expenses and other current assets |
60,568 | 62,680 | ||||||
Total current assets |
1,826,297 | 1,827,766 | ||||||
Property, plant and equipment, net |
502,658 | 494,473 | ||||||
Deferred tax assets |
26,059 | 26,043 | ||||||
Other assets |
50,697 | 45,388 | ||||||
Total non-current assets |
579,414 | 565,904 | ||||||
TOTAL ASSETS |
$ | 2,405,711 | $ | 2,393,670 | ||||
LIABILITIES AND EQUITY |
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Current Liabilities: |
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Current installments of long-term borrowings |
$ | 1,788 | $ | 1,783 | ||||
Accounts payable |
423,902 | 520,437 | ||||||
Short-term borrowings |
6,303 | 6,086 | ||||||
Accrued expenses |
81,590 | 93,424 | ||||||
Total current liabilities |
513,583 | 621,730 | ||||||
Long-term borrowings, net of current installments |
68,775 | 67,159 | ||||||
Deferred tax liabilities |
431 | 412 | ||||||
Other long-term liabilities |
20,408 | 18,855 | ||||||
Total non-current liabilities |
89,614 | 86,426 | ||||||
Total liabilities |
603,197 | 708,156 | ||||||
Stockholders equity: |
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Skechers U.S.A., Inc. equity |
1,707,156 | 1,603,633 | ||||||
Noncontrolling interests |
95,358 | 81,881 | ||||||
Total equity |
1,802,514 | 1,685,514 | ||||||
TOTAL LIABILITIES AND EQUITY |
$ | 2,405,711 | $ | 2,393,670 | ||||
SKECHERS U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In thousands, except per share data)
Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
Net sales |
$ | 1,072,808 | $ | 978,794 | ||||
Cost of sales |
596,310 | 546,642 | ||||||
Gross profit |
476,498 | 432,152 | ||||||
Royalty income |
4,230 | 2,625 | ||||||
480,728 | 434,777 | |||||||
Operating expenses: |
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Selling |
73,809 | 53,878 | ||||||
General and administrative |
282,496 | 242,349 | ||||||
356,305 | 296,227 | |||||||
Earnings from operations |
124,423 | 138,550 | ||||||
Other expense: |
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Interest, net |
(1,077 | ) | (1,122 | ) | ||||
Other, net |
696 | 2,779 | ||||||
(381 | ) | 1,657 | ||||||
Earnings before income tax expense |
124,042 | 140,207 | ||||||
Income tax expense |
17,407 | 30,568 | ||||||
Net earnings |
106,635 | 109,639 | ||||||
Less: Net earnings attributable to noncontrolling interests |
12,640 | 12,027 | ||||||
Net earnings attributable to Skechers U.S.A., Inc. |
$ | 93,995 | $ | 97,612 | ||||
Net earnings per share attributable to Skechers U.S.A., Inc.: |
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Basic |
$ | 0.61 | $ | 0.63 | ||||
Diluted |
$ | 0.60 | $ | 0.63 | ||||
Weighted average shares used in calculating earnings per
share attributable to Skechers U.S.A., Inc.: |
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Basic |
155,097 | 153,745 | ||||||
Diluted |
155,927 | 154,818 | ||||||