Exhibit 99.1
SKECHERS USA ANNOUNCES THIRD QUARTER AND NINE MONTH FINANCIAL RESULTS
MANHATTAN BEACH, CA. - October 23, 2003 - SKECHERS USA, Inc. (NYSE: SKX), a
global leader in lifestyle footwear, today announced financial results for the
third quarter and nine-month period ended September 30, 2003.
Net sales for the third quarter of 2003 totaled $221.8 million compared to
$261.1 million in the third quarter of 2002. Net loss for the quarter was $5.9
million versus net earnings of $14.1 million in the third quarter of the prior
year. Net loss per diluted share was $0.15 on 37,925,000 shares outstanding
compared to net earnings of $0.35 per diluted share on 41,962,000 diluted shares
outstanding in the third quarter of 2002.
For the nine-month period ended September 30, 2003, net sales were $659.7
million compared to net sales of $762.7 million in the first nine months of the
prior year. Net earnings for the nine months were $0.5 million, as compared to
net earnings of $55.6 million in the first nine months of the prior year.
Diluted earnings per share for the first nine months were $0.01 on 38,114,000
diluted shares outstanding versus diluted earnings per share of $1.39 on
41,004,000 diluted shares outstanding.
Gross profit for the third quarter of 2003 was $78.6 million compared to $108.8
million in the third quarter of last year. Gross margin was 35.5 percent
compared to 41.7 percent in the third quarter of 2002. Gross profit for the
first nine months of 2003 reached $258.6 million, or 39.2 percent of sales
versus $317.1 million, or 41.6 percent of sales in the first nine months of the
prior year.
"Our third quarter 2003 sales were higher than anticipated due to our aggressive
approach in reducing our inventory levels, which resulted in lower gross margins
and earnings for the third quarter," began David Weinberg, chief financial
officer of SKECHERS USA, Inc. "We believe it was prudent to assertively work
through our inventories and we will continue to do so to achieve our year-end
goals. Our balance sheet improved substantially from last quarter and we expect
a continuation of this trend through the remainder of the year."
"We are in the process of reviewing our cost structure in order to reduce
overhead expenses," continued Mr. Weinberg. "We believe that the major elements
of a cost reduction program can be implemented by year-end 2003. While the
cost-cutting measures will have minimal impact during the fourth quarter of
2003, we believe they should better position us to realize benefits during the
first quarter of 2004."
Robert Greenberg, SKECHERS chief executive officer, said: "In a decade, we built
SKECHERS into a desired brand around the world by designing and marketing
trend-right footwear for men, women and children of all ages and demographics.
Now, as a leader in the lifestyle footwear industry, we will concentrate on the
initiatives we have in place, including the new designer lines Michelle K and
Mark Nason, along with the licensed lines 310 Footwear, an extension of the
popular car specialists 310 Motoring, and Marc Ecko Footwear for men, women and
kids, the coordinating shoe line for Ecko Red and Ecko Unltd. We should continue
to deliver exceptional product through our diverse lines; sign additional
licenses that reflect our brand and image; and support our customers with
targeted advertising campaigns, including the exciting international campaign
with world-renowned music superstar Christina Aguilera. We believe SKECHERS has
incredible brand equity and will remain a viable player in the footwear
industry, which should translate into successful licensing opportunities and
improved sales over the long term."
The Company now expects fourth quarter 2003 sales to be in the range of $155
million to $165 million and a loss per share of between $0.45 and $0.55 per
share.
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 a broad range of casual and fashionable footwear for men, women and
children. The Company has also granted select third party licenses for
SKECHERS-branded children's and junior's apparel, men's outerwear, timepieces,
and hosiery. SKECHERS footwear is available nationwide via department and
specialty stores, company-owned SKECHERS retail stores and its e-commerce Web
site, as well as in over 100 countries and territories through the Company's
global network of distributors and Canadian and European subsidiaries. Please
visit 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.
COMPANY CONTACT:
DAVID WEINBERG
Chief Financial Officer
SKECHERS USA, Inc.
(310) 318-3100
Investor Relations: Brian Yarbrough
Integrated Corporate Relations
(562) 256-7049
(Tables To Follow)
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SKECHERS U.S.A., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)
September 30, December 31
2003 2002
------------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 80,719 $ 124,830
--------- ---------
Trade accounts receivable, net 102,115 97,419
Other receivables 9,691 7,761
--------- ---------
Total receivables 111,806 105,180
--------- ---------
Inventories 150,695 147,984
Deferred tax assets 703 703
Prepaid expenses and other current assets 13,537 14,779
--------- ---------
Total current assets 357,460 393,476
Property and equipment, at cost, less accumulated
depreciation and amortization 87,870 83,666
Intangible assets, at cost, less applicable amortization 2,217 356
Other assets 5,593 5,658
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$ 453,140 $ 483,156
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term borrowings 3,475 2,442
Accounts payable 56,045 88,578
Accrued expenses 13,074 15,696
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Total current liabilities 72,594 106,716
--------- ---------
Long-term borrowings, excluding current installments 116,758 117,204
Stockholders' equity 263,788 259,236
--------- ---------
$ 453,140 $ 483,156
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SKECHERS U.S.A., INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
(In thousands, except per share data)
Three Months Ended September 30, Nine Months Ended September 30,
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2003 2002 2003 2002
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Net sales $ 221,821 $ 261,147 $ 659,692 $ 762,748
Cost of sales 143,183 152,347 401,141 445,638
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Gross profit 78,638 108,800 258,551 317,110
Royalty income, net 1,404 107 2,129 532
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80,042 108,907 260,680 317,642
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Operating expenses:
Selling 20,626 32,574 67,084 72,636
General and administrative 63,488 52,232 181,647 150,717
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84,114 84,806 248,731 223,353
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Earnings (loss) from operations (4,072) 24,101 11,949 94,289
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Other income (expense):
Interest (2,136) (2,004) (6,671) (6,632)
Other, net (87) (280) (437) 246
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(2,223) (2,284) (7,108) (6,386)
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Earnings (loss) before income taxes (6,295) 21,817 4,841 87,903
Income taxes (435) 7,710 4,365 32,260
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Net earnings (loss) $ (5,860) $ 14,107 $ 476 $ 55,643
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Net earnings (loss) per share:
Basic $ (0.15) $ 0.38 $ 0.01 $ 1.50
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Diluted $ (0.15) $ 0.35 $ 0.01 $ 1.39
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Weighted average shares:
Basic 37,925 37,539 37,807 37,174
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Diluted 37,925 41,962 38,114 41,004
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