For Immediate Release

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

SKECHERS ANNOUNCES FOURTH QUARTER AND FISCAL YEAR 2016
FINANCIAL RESULTS

MANHATTAN BEACH, CA. – February 9, 2017 – SKECHERS USA, Inc. (NYSE:SKX), a global footwear leader, today announced financial results for the fourth quarter and year ended December 31, 2016.

Quarterly and Fiscal Year Highlights

Record fourth quarter net sales of $764.3 million, an increase of 5.8 percent, and record annual net sales of $3.56 billion, an increase of 13.2 percent
Earnings from operations of $28.3 million for the fourth quarter and $370.5 million for the year
Net earnings of $6.7 million for the fourth quarter and $243.5 million for the year
Diluted earnings per share of $0.04 for the fourth quarter and $1.57 for the year

“Skechers achieved new fourth quarter and full-year net sales records, exceeding our fourth quarter guidance range of $710 million to $735 million,” began David Weinberg, chief operating officer and chief financial officer. “The strong quarterly growth was primarily the result of a 17.1 percent increase in our international wholesale business, led by China with an increase of 48.5 percent. In addition, our global Company-owned retail business grew 13.9 percent on a store base of 571 at year-end. Combined with our third-party owned stores, we had 2,012 Skechers stores worldwide at year-end, creating a global network that includes more than 500 locations in China, more than 60 in each of India, Mexico and Saudi Arabia, and over 50 in each of Australia, Malaysia, South Korea and Taiwan.”

Fourth Quarter Financial Results
Quarterly net sales increased 5.8 percent to $764.3 million compared to fourth quarter 2015. The growth was the result of a 17.1 percent increase in the Company’s international wholesale business and a 13.9 percent increase in its Company-owned global retail business which included comparable same store sales increases of 3.6 percent. Additionally, the negative currency translation impact on its gross margins in its international wholesale and international Company-owned retail businesses for the fourth quarter was $18.4 million. The net sales increases were offset by a decrease of 11.8 percent in the Company’s domestic wholesale business, which included a 4.6 percent decrease due to the launch of the Star Wars footwear collection in the fourth quarter of 2015.

Gross profit for the fourth quarter was $356.2 million, or 46.6 percent of net sales, compared to $329.9 million, or 45.6 percent of net sales, for the fourth quarter of last year. Historically, gross margins for its retail segment are the highest, followed by gross margins for international subsidiary sales and then domestic wholesale sales, with gross margins for its international distributor sales being the lowest. The slightly higher gross margin during the quarter was due to a combination of increased international subsidiary revenues and margins, reduced domestic wholesale and international distributor sales and margins, which were offset by lower retail margins.

Fourth quarter selling expenses increased $1.6 million to $59.5 million, or 7.8 percent of sales, compared to $57.9 million, or 8.0 percent of sales, in the fourth quarter of the prior year. The increase was primarily due to increased international advertising expenses.

General and administrative expenses for the fourth quarter increased $52.3 million to $273.4 million, or 35.8 percent of sales, compared to $221.1 million, or 30.6 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 $15.3 million associated with the Company’s 53 additional domestic and international retail stores, and $27.0 million to support its international growth, of which $19.0 million was due to increased costs in China, $2.8 million for the transition of its South Korean distributor to a joint venture, $2.3 million in support of its new Latin America subsidiary, and $3.2 million in Japan. Domestic wholesale general and administrative expenses increased $10.0 million during the fourth quarter primarily due to increased headcount in the United States to support its brand worldwide. 

“We are in our 25th year of business, have a well-established brand and prominent position in the United States, and have grown our international business to 46.1 percent of our 2016 sales,” added Mr. Weinberg. “As we plan for our international business to grow to 50 percent of our total sales in the near future, we transitioned several of our international distributors to joint ventures or subsidiaries in key regions in 2016 and the few years prior, and have been investing in the infrastructure and marketing to support the current and planned growth. In the fourth quarter, these investments were primarily in China, Korea Japan and Latin America, which are regions that we believe will represent great growth opportunities.

Earnings from operations were $28.3 million, a decrease of 48.3 percent over the fourth quarter of 2015.

Net earnings decreased 77.4 percent to $6.7 million, while diluted net earnings per share for the fourth quarter were $0.04, compared with $0.19 for the fourth quarter in the prior year. The Company’s annual effective tax rate for 2016 increased to 20.6 percent from 19.9 percent as of September 30, 2016, which increased its fourth quarter 2016 effective tax rate to 31.5 percent and reduced its earnings per share by $0.02. In addition, the Company’s gross margins were negatively impacted by approximately $18.4 million due to negative foreign currency translations and an additional $4.6 million in pre-tax expenses related to foreign currency transaction losses during the fourth quarter of 2016. Further, the Company’s business in the United Kingdom was significantly impacted by currency headwinds as its wholesale sales were flat during the fourth quarter in local currency but down 17.9 percent in U.S. dollars.

2016 Financial Results
Net sales were $3.56 billion, gross profit was $1.63 billion or 45.9 percent of net sales, and earnings from operations were $370.5 million or 10.4 percent of net sales. Net earnings were $243.5 million and diluted net earnings per share were $1.57 per share.

Robert Greenberg, SKECHERS chief executive officer, commented: “With record annual sales of over $3.56 billion, 2016 was another significant growth year for Skechers. We remained the number two sport footwear brand in the United States, and the number one walking brand, work brand, and dress/comfort casual brand*, and received the 2016 Plus Award for Children’s Design from Footwear Plus. We believe we are continuing to increase market share around the globe as we experience the strongest growth coming from our international businesses. Our continued growth and strong market position is due to aggressively revamping our product lines to include more youthful, relevant and innovative styles, while still creating comfort footwear that our broad consumer base finds appealing. We expect that 2017, Skechers’ 25th year of business, will be an even more remarkable in terms of product and sales. Our speed to market and ability to react and deliver as trends arise gives us the flexibility to pivot as necessary. When it comes to design, we are focused on the domestic market as well as our international markets as we provide a product offering that resonates around the world. We are looking forward to delivering our new collections across all our divisions for men, women and kids—included lighted footwear, a new line from our Skechers Performance Division, and a new product line perfect for the Millennials and Post-Millennials—and believe that we will remain a leading global footwear company.”

Balance Sheet
At year end, cash and cash equivalents was $718.5 million, an increase of $210.5 million, or 41.4 percent over last year.

Total inventory, including inventory in transit, was $700.5 million, an $80.3 million increase, or 12.9 percent, over December 31, 2015, in line with the Company’s incoming order rate, backlogs, and growing retail and wholesale business.

Working capital was $1.2 billion versus $971.2 million at December 31, 2015.

Mr. Weinberg continued: “We ended 2016 with positive domestic and international backlogs, and the highest incoming order rate for our domestic wholesale, subsidiary and distributor businesses in our history for both the fourth quarter and full year. Already in 2017, we’ve achieved mid-single-digit comps in January and high single-digit comps for the first week of February in our Company-owned retail stores on a worldwide basis. Based on these key indicators, combined with the many new products delivering later this year—including the domestic launch of You by Skechers in the second quarter—we believe the remainder of the year is on a favorable growth track, and we are well positioned for another record year.”

Outlook

Despite an all-time net sales record in the first quarter of 2016 and Easter falling into the second quarter in 2017, the Company believes it will achieve flat to slightly positive sales in its domestic wholesale business, and increases in its international business and Company-owned retail stores. The Company expects net sales in the range of $1.050 billion to $1.075 billion and earnings per share of $0.50 to $0.55 for the first quarter of 2017.

The Company expects its ongoing capital expenditures for 2017 to be approximately $50 million to $55 million, which includes corporate office upgrades and an additional 70 to 90 Company-owned retail store openings and several store remodels, and an additional $25 million for infrastructure primarily in its China joint venture.

Fourth Quarter and Full Year 2016 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 fourth quarter and full year 2016 financial results. The call can be accessed on the Investor Relations section of the Company’s the website at www.skx.com. For those unable to participate during the live broadcast, a replay will be available beginning February 9, 2017, at 7:30 p.m. ET, through February 23, 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: 13652980.

*SportsOneSource, January 5, 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 2,012 SKECHERS Company-owned and third-party-owned retail stores, and the Company’s 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 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 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 Company’s annual report on Form 10-K for the year ended December 31, 2015 and its quarterly report on Form 10-Q for the three months ended September 30, 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.

###

1

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

(Unaudited)
(In thousands)

                 
    December 31,   December 31,
    2016   2015
ASSETS
               
Current Assets:
               
Cash and cash equivalents
  $ 718,536   $ 507,991
Trade accounts receivable, net
  326,844   343,930
Other receivables
  19,191   18,661
 
               
Total receivables
  346,035   362,591
Inventories
  700,515   620,247
Prepaid expenses and other current assets
  62,680   57,363
 
               
Total current assets
  1,827,766   1,548,192
Property, plant and equipment, net
  494,473   435,907
Deferred tax assets
  26,043   17,825
Other assets
  45,388   37,954
 
               
Total non-current assets
  565,904   491,686
 
               
TOTAL ASSETS
  $ 2,393,670   $ 2,039,878
 
               
LIABILITIES AND EQUITY
               
Current Liabilities:
               
Current installments of long-term borrowings
  $ 1,783   $ 15,653
Accounts payable
  520,437   473,983
Short-term borrowings
  6,086   59
Accrued expenses
  93,424   87,318
 
               
Total current liabilities
  621,730   577,013
Long-term borrowings, net of current installments
  67,159   68,942
Deferred tax liabilities
  412   8,507
Other long-term liabilities
  18,855   9,682
 
               
Total non-current liabilities
  86,426   87,131
Total liabilities
  708,156   664,144
Stockholders’ equity:
               
Skechers U.S.A., Inc. equity
  1,603,633   1,327,556
Noncontrolling interests
  81,881   48,178
 
               
Total equity
  1,685,514   1,375,734
 
               
TOTAL LIABILITIES AND EQUITY
  $ 2,393,670   $ 2,039,878
 
               

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,
    2016   2015   2016   2015
Net sales
  $ 764,290   $ 722,683   $ 3,563,311   $ 3,147,323
Cost of sales
  408,078   392,829   1,928,715   1,723,315
 
                               
Gross profit
  356,212   329,854   1,634,596   1,424,008
Royalty income
  4,983   3,921   13,885   11,745
 
                               
 
  361,195   333,775   1,648,481   1,435,753
 
                               
Operating expenses:
                               
Selling
  59,502   57,934   257,129   235,586
General and administrative
  273,431   221,133   1,020,834   849,343
 
  332,933   279,067   1,277,963   1,084,929
 
                               
Earnings from operations
  28,262   54,708   370,518   350,824
Other expense:
                               
Interest, net
  (1,472 )   (1,969 )   (5,084 )   (10,006 )
Other, net
  (4,640 )   (2,141 )   (5,950 )   (7,321 )
 
                               
 
  (6,112 )   (4,110 )   (11,034 )   (17,327 )
 
                               
Earnings before income tax expense
  22,150   50,598   359,484   333,497
Income tax expense
  6,981   12,108   74,125   72,450
 
                               
Net earnings
  15,169   38,490   285,359   261,047
Less: Net earnings attributable to noncontrolling interests
  8,505   9,042   41,866   29,135
 
                               
Net earnings attributable to Skechers U.S.A., Inc.
  $ 6,664   $ 29,448   $ 243,493   $ 231,912
 
                               
Net earnings per share attributable to Skechers U.S.A., Inc.:
                               
Basic
  $ 0.04   $ 0.19   $ 1.58   $ 1.52
 
                               
Diluted
  $ 0.04   $ 0.19   $ 1.57   $ 1.50
 
                               
Weighted average shares used in calculating earnings per share attributable to Skechers U.S.A., Inc.:
                               
Basic
  154,658   153,346   154,169   152,847
 
                               
Diluted
  155,405   154,570   155,084   154,200
 
                               

3


The following information was filed by Skechers Usa Inc (SKX) on Thursday, February 9, 2017 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.

View differences made from one year to another to evaluate Skechers Usa Inc's financial trajectory

Compare SEC Filings Year-over-Year (YoY) and Quarter-over-Quarter (QoQ)
Sample 10-K Year-over-Year (YoY) Comparison

Compare this 10-K Annual Report to its predecessor by reading our highlights to see what text and tables were  removed  ,   added    and   changed   by Skechers Usa Inc.

Continue

Never Miss A New SEC Filing Again


Real-Time SEC Filing Notifications
Screenshot taken from Gmail for a new 10-K Annual Report
Last10K.com Member Feature

Receive an e-mail as soon as a company files an Annual Report, Quarterly Report or has new 8-K corporate news.

Continue

We Highlighted This SEC Filing For You


SEC Filing Sentiment Analysis - Bullish, Bearish, Neutral
Screenshot taken from Wynn's 2018 10-K Annual Report
Last10K.com Member Feature

Read positive and negative remarks made by management in their entirety without having to find them in a 10-K/Q.

Continue

Widen Your SEC Filing Reading Experience


Increased Reading Area for SEC Filings
Screenshot taken from Adobe Inc.'s 10-Q Quarterly Report
Last10K.com Member Feature

Remove data columns and navigations in order to see much more filing content and tables in one view

Continue

Uncover Actionable Information Inside SEC Filings


SEC Filing Disclosures
Screenshot taken from Lumber Liquidators 10-K Annual Report
Last10K.com Member Feature

Read both hidden opportunities and early signs of potential problems without having to find them in a 10-K/Q

Continue

Adobe PDF, Microsoft Word and Excel Downloads


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshots of actual 10-K and 10-Q SEC Filings in PDF, Word and Excel formats
Last10K.com Member Feature

Export Annual and Quarterly Reports to Adobe PDF, Microsoft Word and Excel for offline viewing, annotations and analysis

Continue

FREE Financial Statements


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshot of actual balance sheet from company 10-K Annual Report
Last10K.com Member Feature

Get one-click access to balance sheets, income, operations and cash flow statements without having to find them in Annual and Quarterly Reports

Continue for FREE

Intrinsic Value Calculator


Intrinsic Value Calculator
Screenshot of intrinsic value for AT&T (2019)
Last10K.com Member Feature

Our Intrinsic Value calculator estimates what an entire company is worth using up to 10 years of financial ratios to determine if a stock is overvalued or not

Continue

Financial Stability Report


Financial Stability Report
Screenshot of financial stability report for Coco-Cola (2019)
Last10K.com Member Feature

Our Financial Stability reports uses up to 10 years of financial ratios to determine the health of a company's EPS, Dividends, Book Value, Return on Equity, Current Ratio and Debt-to-Equity

Continue

Get a Better Picture of a Company's Performance


Financial Ratios
Available Financial Ratios
Last10K.com Member Feature

See how over 70 Growth, Profitability and Financial Ratios perform over 10 Years

Continue

Log in with your credentials

or    

Forgot your details?

Create Account