Exhibit 99.1
SKECHERS USA ANNOUNCES SECOND QUARTER AND SIX MONTH FINANCIAL RESULTS
MANHATTAN BEACH, CA. - July 24, 2003 - SKECHERS USA, INC. (NYSE: SKX), a global
leader in lifestyle footwear, today announced financial results for the second
quarter and six-month period ended June 30, 2003.
Net sales for the second quarter of 2003 totaled $229.3 million compared to
$256.7 million in the second quarter of 2002. Net loss for the quarter was $2.1
million versus earnings of $21.3 million in the second quarter of the prior
year. Net loss per diluted share was $0.06 on 37,782,000 shares outstanding
compared to net earnings of $0.52 per diluted share on 41,909,000 diluted shares
outstanding in the second quarter of 2002.
For the six-month period ended June 30, 2003, net sales were $437.9 million
compared to net sales of $501.6 million in the first six months of the prior
year. Net earnings were $6.3 million, as compared to net earnings of $41.5
million in the first six months of the prior year. Diluted earnings per share in
the first six months were $0.17 on 38,042,000 diluted shares outstanding versus
diluted earnings per share of $1.05 on 40,187,000 diluted shares outstanding.
Gross profit for the second quarter of 2003 was $89.6 million compared to $105.8
million in the second quarter of last year. Gross margin was 39.1 percent
compared to 41.2 percent in the second quarter of 2002. Gross profit for the
first six months of 2003 reached $179.9 million, or 41.1 percent of sales versus
$208.3 million, or 41.5 percent of sales in the first six months of the prior
year.
"Aggressive advertising expenses exacerbated by the difficult retail
environment, abnormal weather conditions and higher unemployment negatively
impacted our sales, margins and earnings in the second quarter of 2003," began
David Weinberg, chief financial officer of SKECHERS USA, Inc. "Further, as a
result of reduced earnings projections for fiscal year 2003, projected worldwide
tax benefits have decreased, adversely impacting second quarter earnings. The
fiscal year 2003 worldwide tax rate is projected to be approximately 43 percent.
"With respect to inventory levels, we diligently attempted to sell through
inventory with aggressive advertising to generate at-once orders during the
second quarter. We were not as successful as we had anticipated in this
endeavor," continued Mr. Weinberg. "Additionally, we were not able to achieve
our inventory goals due to early shipments of new inventory from the factories
during the second quarter. We will continue to work through our inventory
levels, which will have an adverse impact on margins in the short term. On a
positive note, at June 30, 2003, our total commitment to inventory, which
includes our units on hand and in production, was only 2.2 percent higher than
last year, we have seen sales pick up slightly in the latter part of the second
quarter, and we believe that inventory will be in-line by year-end 2003.
"Building our business in the newly launched European subsidiaries in Spain,
Portugal, Canada and the Benelux Region also impacted our net earnings,"
continued Mr. Weinberg, "but our product has been well-received by accounts and
consumers in the global countries where we directly manage our business as well
as in those areas handled by distributors. While growth has been slower than
anticipated, we expect these subsidiaries to be an integral part of our earnings
goals for the future, and we continue to believe international will be a key
growth area for SKECHERS."
Mr. Weinberg added: "In the domestic market, it is too early to make a
prediction on back-to-school sales, but we have received positive feedback from
most of our major accounts on several of our lines -
including key styles from SKECHERS Sport, SKECHERS USA and Somethin' Else from
SKECHERS. We are continuing to support the brand with a strong marketing and
advertising effort for the fall."
Robert Greenberg, SKECHERS chief executive officer, said: "SKECHERS' focus has
been and always will be developing exceptional lifestyle products that target
style-conscious men and women around the globe. Recently, we have expanded our
scope with licensed products that reflect our image. Consumers can shop for
SKECHERS Sport socks at major department stores now, for SKECHERS children's
apparel in department stores across the country in August, and in the late fall
for adult SKECHERS Sport watches as we grow SKECHERS into a head-to-toe
lifestyle brand. We believe the SKECHERS brand continues to be strong and
viable, which should provide us with the ability to grow our business in a
stronger retail environment."
The Company now expects third quarter 2003 sales to be in the range of $205
million to $215 million and a loss per share of $0.05 to diluted earnings per
share of $0.05.
Note that statements made by Mr. Weinberg and Mr. Greenberg may involve future
goals and targets, based upon current expectations. These comments are forward
looking, and actual results may differ materially.
SKECHERS USA, Inc., based in Manhattan Beach, California, designs, develops and
markets branded footwear for men, women and children. The Company offers a
balanced assortment of basic and fashionable merchandise, which is sold to
department stores and specialty retailers, as well as directly to consumers
through company-owned SKECHERS retail stores and e-commerce. A global concept,
the Company sells its product in more than 100 countries and territories
throughout the world. For further information on SKECHERS, please visit the
Company's web site at www.skechers.com or call the Company's information line at
877-INFO-SKX.
This announcement may contain forward-looking statements, which are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995, which can be identified by the use of forward-looking
terminology such as "may," "will," "believe," "belief," or other comparable
terminology. These forward-looking statements involve risks and uncertainties
that could cause actual results to differ materially from those projected in
forward-looking statements and reported results shall not be considered an
indication of the Company's future performance. Factors that might cause or
contribute to such differences include, among others, a decrease in sales during
the back-to-school or holiday selling season, change in consumer demands and
fashion trends, current political and economic conditions in the world,
potential disruptions in manufacturing related to overseas sourcing,
cancellation of order commitments and decreased demand by industry retailers,
the uncertain short and long-term effects of the severe acute respiratory
syndrome ("SARS") crisis in the Far East and other factors affecting retail
market conditions, including the factors addressed in the Company's annual
report on form 10K for the year ended December 31, 2002.
###
SKECHERS U.S.A., INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
(In thousands, except per share data)
Three Months Ended June 30, Six Months Ended June 30,
--------------------------------- --------------------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Net sales $ 229,277 100.0% $ 256,652 100.0% $ 437,871 100.0% $ 501,601 100.0%
Cost of sales 139,683 60.9% 150,866 58.8% 257,958 58.9% 293,291 58.5%
--------- --------- --------- ---------
Gross profit 89,594 39.1% 105,786 41.2% 179,913 41.1% 208,310 41.5%
Royalty income, net 454 0.2% 317 0.1% 725 0.2% 425 0.1%
--------- --------- --------- ---------
90,048 39.3% 106,103 41.3% 180,638 41.3% 208,735 41.6%
--------- --------- --------- ---------
Operating expenses:
Selling 28,838 12.6% 21,371 8.3% 45,961 10.5% 40,062 8.0%
General and administrative 61,073 26.6% 48,853 19.0% 118,655 27.1% $ 98,485 19.6%
--------- --------- --------- ---------
89,911 39.2% 70,224 27.4% 164,616 37.6% 138,547 27.6%
--------- --------- --------- ---------
Earnings from operations 137 0.1% 35,879 14.0% 16,022 3.7% 70,188 14.0%
--------- --------- --------- ---------
Other income (expense):
Interest (2,438) -1.1% (2,565) -1.0% (4,536) -1.0% (4,628) -0.9%
Other, net (36) 0.0% 483 0.2% (351) -0.1% 526 0.1%
--------- --------- --------- ---------
(2,474) -1.1% (2,082) -0.8% (4,887) -1.1% (4,102) -0.8%
--------- --------- --------- ---------
Earnings before income taxes (2,337) -1.0% 33,797 13.2% 11,135 2.5% 66,086 13.2%
Income tax provision (benefit) (211) -0.1% 12,539 4.9% 4,799 1.1% 24,550 4.9%
--------- --------- --------- ---------
Net earnings (loss) $ (2,126) -0.9% $ 21,258 8.3% $ 6,336 1.4% $ 41,536 8.3%
========= ========= ========= =========
Net earnings per share:
Basic $ (0.06) $ 0.57 $ 0.17 $ 1.12
========= ========= ========= =========
Diluted $ (0.06) $ 0.52 $ 0.17 $ 1.05
========= ========= ========= =========
Weighted average shares:
Basic 37,782 37,119 37,746 36,988
========= ========= ========= =========
Diluted 37,782 41,909 38,042 40,187
========= ========= ========= =========
SKECHERS U.S.A., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)
ASSETS
June 30, December 31
2003 2002
-------- --------
Current assets:
Cash and marketable securities $ 41,530 $124,830
-------- --------
Trade accounts receivable, net 154,865 97,419
Other receivables 7,447 7,761
-------- --------
Total receivables 162,312 105,180
-------- --------
Inventories 217,123 147,984
Deferred tax assets 703 703
Prepaid expenses and other current assets 13,784 14,779
-------- --------
Total current assets 435,452 393,476
Property and equipment, at cost, less accumulated
depreciation and amortization 86,760 83,666
Intangible assets, at cost, less applicable amortization 1,271 356
Other assets 6,606 5,658
-------- --------
$530,089 $483,156
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term borrowings 2,545 2,442
Accounts payable 127,360 88,578
Accrued expenses 12,815 15,696
-------- --------
Total current liabilities 142,720 106,716
-------- --------
Long-term borrowings, excluding current installments 118,160 117,204
Stockholders' equity 269,209 259,236
-------- --------
$530,089 $483,156
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Contact Information:
Company Contact:
SKECHERS USA, Inc.
David Weinberg, 310/318-3100
or
Investor Relations:
Integrated Corporate Relations
Brian Yarbrough, 562/256-7049