For Immediate Release

         
          Company Contact:  
David Weinberg
Chief Operating Officer,
Chief Financial Officer
SKECHERS USA, Inc.
(310) 318-3100
          Investor Relations:  
Andrew Greenebaum
Addo Communications
(310) 829-5400

SKECHERS ANNOUNCES FOURTH QUARTER AND
FISCAL YEAR 2015 FINANCIAL RESULTS
Record Annual Sales of $3.147 Billion
Record Fourth Quarter 2015 Net Sales of $722.7 Million, an Increase of 26.8 Percent
Fourth Quarter 2015 Earnings from Operations of $54.7 Million, an Increase of 65.7 Percent
Fourth Quarter 2015 Net Earnings of $29.4 Million
Fourth Quarter 2015 Diluted Earnings Per Share of $0.19

MANHATTAN BEACH, CA. – February 10, 2016 – SKECHERS USA, Inc. (NYSE:SKX), a global footwear leader and the second largest athletic footwear brand in the United States, today announced financial results for the fourth quarter and year ended December 31, 2015. All share and per share information has been retroactively adjusted for the three-for-one stock split that was effective on October 15, 2015.

Net sales for the fourth quarter of 2015 were $722.7 million compared to $569.7 million in the fourth quarter of 2014. Gross profit for the fourth quarter of 2015 was $329.9 million or 45.6 percent of net sales compared to $257.6 million or 45.2 percent of net sales in the fourth quarter of 2014.

“Skechers achieved record fourth quarter sales of more than $722 million in 2015. This resulted in earnings from operations of $54.7 million in the fourth quarter, which is an increase of 65.7 percent from the same prior year period, and record annual revenues of $3.147 billion for 2015, an increase of 32.4 percent compared to 2014,” began David Weinberg, SKECHERS chief operating officer and chief financial officer. “The fourth quarter growth was across our key product lines for men, women and kids, which led to high single-digit gains in our domestic wholesale business, and double-digit increases in our international wholesale and Company-owned retail stores businesses. Also in the fourth quarter, our international business grew to 41 percent of our total sales, bringing it closer to our goal of 50 percent within the next two to three years.”

Net earnings for the fourth quarter of 2015 were $29.4 million compared to net earnings of $21.9 million in the fourth quarter of 2014. Net earnings per diluted share in the fourth quarter of 2015 were $0.19 based on 154.6 million weighted average shares outstanding compared to $0.14 based on 154.1 million weighted average shares outstanding in the fourth quarter of 2014. Our annual effective tax rate for 2015 increased slightly to 21.7 percent from 21.3 percent as of September 30, 2015, which increased our fourth quarter 2015 effective tax rate to 23.9 percent and reduced our earnings per share by $0.01. In addition, the Company’s gross margins were negatively impacted by approximately $8.1 million due to negative foreign currency translations and an additional $2.0 million in other expenses related to foreign currency transaction losses during the fourth quarter of 2015.  

Fiscal year 2015 net sales were a record $3.147 billion compared to net sales of $2.378 billion in 2014. Gross profit for 2015 was $1.424 billion or 45.2 percent of net sales compared to $1.072 billion or 45.1 percent of net sales in 2014. Earnings from operations for 2015 were $350.8 million compared to $209.1 million in 2014.

Net earnings for 2015 were $231.9 million compared to $138.8 million in 2014. Net earnings per diluted share for fiscal year 2015 were $1.50 based on 154.2 million weighted average shares outstanding compared to $0.91 based on 153.1 million weighted average shares outstanding in the prior year.

Robert Greenberg, SKECHERS chief executive officer, commented: “Surpassing $3 billion in annual sales is a remarkable accomplishment and to achieve this growth across both our domestic and international businesses speaks to the global strength of the Skechers brand. In the United States, we are the number two footwear brand and the number one walking and work brand, and we were named the 2015 Company of the Year and received the Athleisure Design Excellence award by Footwear Plus magazine. Our accelerated international growth is an indicator of the global acceptance of our product and marketing, which now includes icons Ringo Starr and Sugar Ray Leonard as well as pop superstars Demi Lovato and Meghan Trainor. While we continue to take increased shelf space within our existing accounts worldwide, the Skechers retail store count has also grown to more than 1,300 Company-owned and third-party owned locations at year-end. Pivotal to this growth has been continued product innovation and expansion into more categories enabling us to appeal to an even broader demographic. As the title sponsor of the Skechers Performance Los Angeles Marathon and the official running sponsor of the European Ironman, we are reaching elite athletes and running enthusiasts like never before. With Demi Lovato’s social media posts about Skechers, we are also resonating with hundreds of thousands of savvy teenagers around the world. Our cast of characters remains a focus for our kids advertising, while also capturing the tweens with takedowns of our popular adult sport styles. As we continue to focus on comfort, style and quality in every shoe design, we are expanding our business within both existing doors and into new accounts and countries as well. With an additional 330 to 340 Skechers retail stores opening worldwide this year, we estimate there will be more than 1,650 Skechers stores by the end of 2016, of which approximately 575 stores will be Company-owned. Looking at 2016, we plan to continue to grow worldwide and believe we will see strong double-digit and, in some cases, triple-digit gains in countries around the world.”

Mr. Weinberg added: “The record net sales growth we achieved for 2015—both the gains of 22 percent in our domestic wholesale channel and 59 percent in our international distributor and subsidiary business channel over 2014—is very significant given the sluggish domestic retail environment in the back half of 2015, as well as declining currencies in several key countries. The improvements in our wholesale and Skechers retail businesses were due to the continued strong demand for our fresh product and our impactful marketing.”

Mr. Weinberg continued: “As we look at the coming year, we believe our Company-owned retail stores are on target with mid- to high-single digit retail comps in January and we are continuing to gain market share. We have had a very strong start to the first quarter with January sales up approximately 35 percent compared to January 2015 as well as a strong first week of February. Our backlogs are up 9.5 percent at December 31, 2015, which were impacted by some distributors pulling forward orders from January to December. During the fourth quarter, our distributor sales increased 91.6 percent as compared to the same period last year. Additionally, our incoming order rate in January was also very strong with both our domestic wholesale and European subsidiary businesses ordering closer to season, which is resulting in increasingly improved backlogs for the first quarter. It is important to note that our backlog does not include Company-owned Skechers retail stores—of which we have 68 more stores than in the prior year, as well as our joint ventures in Asia, including China, which we expect will have very strong double-digit growth in 2016. Our inventories are up approximately 36.7 percent from the prior year end with fourth quarter 2015 net sales that increased 27 percent, and our financial position is strong with $508.0 million in cash and cash equivalents. To further position the Company for continued growth, we have improved efficiencies in our distribution centers, which allowed for us to ship more than 2.3 million pairs from our European distribution center in January 2016, an improvement of more than 100 percent from the same period last year. With the anticipated completion of the final expansion phase of our European distribution center in May, we will have more than a million square feet of space. With the strong start to the first quarter and the broad acceptance of our brand worldwide, we see significant potential to continue to grow our international business in 2016 by investing in our product, marketing and infrastructure. We remain comfortable with the majority of the analysts’ current consensus range of $885 million to $920 million in net sales and $0.50 to $0.55 in earnings per share for the first quarter.”

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 120 countries and territories worldwide via department and specialty stores, more than 1,340 SKECHERS Company-owned and third-party retail stores, and the Company’s e-commerce website. The Company manages its international business through a network of global distributors, joint venture partners in Asia, and 13 wholly-owned subsidiaries in Brazil, Canada, Chile, Japan, Latin America and throughout Europe. 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 Company’s 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 and opening of new stores, the completion of the Company’s European distribution center, 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; entry into the highly competitive performance footwear market; 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; 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 Company’s annual report on Form 10-K for the year ended December 31, 2014 and its quarterly report on Form 10-Q for the quarter ended September 30, 2015. 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.

###

1

SKECHERS U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)
(In thousands)

                 
    December 31,   December 31,
    2015   2014
ASSETS
               
Current Assets:
               
Cash and cash equivalents
  $ 507,991   $ 466,685
Trade accounts receivable, net
  343,930   272,103
Other receivables
  18,661   16,510
 
               
Total receivables
  362,591   288,613
Inventories
  620,247   453,837
Prepaid expenses and other current assets
  57,363   57,015
Deferred tax assets
  22,275   18,864
 
               
Total current assets
  1,570,467   1,285,014
Property, plant and equipment, net
  435,907   373,183
Other assets
  41,034   16,721
 
               
Total non-current assets
  476,941   389,904
 
               
TOTAL ASSETS
  $ 2,047,408   $ 1,674,918
 
               
LIABILITIES AND EQUITY
               
Current Liabilities:
               
Current installments of long-term borrowings
  $ 15,653   $ 101,407
Accounts payable
  473,983   352,815
Short-term borrowings
  59   1,810
Accrued expenses
  87,318   49,705
 
               
Total current liabilities
  577,013   505,737
Long-term borrowings, net of current installments
  68,942   15,081
Other long-term liabilities
  25,719   19,993
 
               
Total non-current liabilities
  94,661   35,074
Total liabilities
  671,674   540,811
Stockholders’ equity:
               
Skechers U.S.A., Inc. equity
  1,327,556   1,075,249
Noncontrolling interests
  48,178   58,858
 
               
Total equity
  1,375,734   1,134,107
 
               
TOTAL LIABILITIES AND EQUITY
  $ 2,047,408   $ 1,674,918
 
               

2

SKECHERS U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)
(In thousands, except per share data)

                                 
    Three Months Ended December 31,   Twelve Months Ended December 31,
    2015   2014   2015   2014
Net sales
  $ 722,683   $ 569,722   $ 3,147,323   $ 2,377,561
Cost of sales
  392,829   312,093   1,723,315   1,305,656
 
                               
Gross profit
  329,854   257,629   1,424,008   1,071,905
Royalty income
  3,921   2,179   11,745   9,107
 
                               
 
  333,775   259,808   1,435,753   1,081,012
 
                               
Operating expenses:
                               
Selling
  57,934   40,198   235,586   181,018
General and administrative
  221,133   186,598   849,343   690,923
 
  279,067   226,796   1,084,929   871,941
 
                               
Earnings from operations
  54,708   33,012   350,824   209,071
Other income (expense):
                               
Interest, net
  (1,969 )   (3,093 )   (10,006 )   (11,629 )
Other, net
  (2,141 )   (1,230 )   (7,321 )   (6,062 )
 
                               
 
  (4,110 )   (4,323 )   (17,327 )   (17,691 )
 
                               
Earnings before income tax expense
  50,598   28,689   333,497   191,380
Income tax expense
  12,108   2,833   72,450   39,184
 
                               
Net earnings
  38,490   25,856   261,047   152,196
Less: Net earnings attributable to noncontrolling interests
  9,042   3,935   29,135   13,385
 
                               
Net earnings attributable to Skechers U.S.A., Inc.
  $ 29,448   $ 21,921   $ 231,912   $ 138,811
 
                               
Net earnings per share attributable to Skechers U.S.A., Inc.:
                               
Basic
  $ 0.19   $ 0.14   $ 1.52   $ 0.91
 
                               
Diluted
  $ 0.19   $ 0.14   $ 1.50   $ 0.91
 
                               
Weighted average shares used in calculating earnings per share attributable to Skechers U.S.A., Inc.:
                               
Basic
  153,346   152,092   152,847   151,839
 
                               
Diluted
  154,570   154,066   154,200   153,079
 
                               

3


The following information was filed by Skechers Usa Inc (SKX) on Wednesday, February 10, 2016 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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