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Skechers U.S.A. Inc. Reports Operating Results (10-Q)

August 09, 2012 | About:
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10qk

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Skechers U.S.A. Inc. (SKX) filed Quarterly Report for the period ended 2012-06-30.

Skechers Usa Inc has a market cap of $960.4 million; its shares were traded at around $19.87 with and P/S ratio of 0.6.

Highlight of Business Operations:

Gross profit for the three months ended June 30, 2012 increased $28.0 million to $171.3 million as compared to $143.3 million for the three months ended June 30, 2011. Gross profit as a percentage of net sales, or gross margin, increased to 44.6% for the three months ended June 30, 2012 from 33.0% for the same period in the prior year. Our domestic wholesale segment gross profit increased $31.4 million, or 83.5%, to $69.0 million for the three months ended June 30, 2012 compared to $37.6 million for the three months ended June 30, 2011. Domestic wholesale margins increased to 38.8% in the three months ended June 30, 2012 from 17.3% for the same period in the prior year. The increase in domestic wholesale margins was attributable to sales of more full price product due to our clearing of toning inventory during the second quarter of 2011.

Gross profit for our retail segment increased $3.5 million, or 5.4%, to $66.6 million for the three months ended June 30, 2012 as compared to $63.1 million for the three months ended June 30, 2011. Gross margins for all stores were 59.3% for the three months ended June 30, 2012 as compared to 59.2% for the three months ended June 30, 2011. Gross margins for our domestic stores were 60.2% for the three months ended June 30, 2012 as compared to 59.5% for the three months ended June 30, 2011. Gross margins for our international stores were 54.0% for the three months ended June 30, 2012 as compared to 57.7% for the three months ended June 30, 2011. The decrease in international retail margins was primarily due to the difficult retail environment in Europe.

General and administrative expenses decreased by $4.4 million, or 3.1%, to $135.4 million for the three months ended June 30, 2012 from $139.8 million for the three months ended June 30, 2011. As a percentage of sales, general and administrative expenses were 35.3% and 32.2% for the three months ended June 30, 2012 and 2011, respectively. The $4.4 million decrease in general and administrative expenses was primarily attributable to reduced warehouse and distribution costs at our distribution center, which included reduced temporary help costs of $3.0 million and lower professional service fees of $3.5 million, that was offset by $3.2 million of additional depreciation expense due to operating an additional 39 retail stores and our distribution center and distribution center equipment. Rent expense increased by $5.0 million, primarily from 39 additional stores, and a $3.2 million adjustment related to percentage and deferred rent. In addition, the expenses related to our distribution network, including purchasing, receiving, inspecting, allocating, warehousing and packaging of our products, totaled $25.1 million and $30.2 million for the three months ended June 30, 2012 and 2011, respectively.

Gross profit for the six months ended June 30, 2012 decreased $8.9 million to $327.0 million as compared to $335.9 million for the six months ended June 30, 2011. Gross profit as a percentage of net sales, or gross margin, increased to 44.5% for the six months ended June 30, 2012 from 36.9% for the same period in the prior year. Our domestic wholesale segment gross profit increased $17.0 million, or 16.4%, to $120.9 million for the six months ended June 30, 2012 compared to $103.9 million for the six months ended June 30, 2011. Domestic wholesale margins increased to 38.8% in the six months ended June 30, 2012 from 24.2% for the same period in the prior year. The increase in domestic wholesale margins was primarily attributable to sales of more full price product due to our clearing of toning inventory during the prior year period.

General and administrative expenses decreased by $14.9 million, or 5.3%, to $266.3 million for the six months ended June 30, 2012 from $281.2 million for the six months ended June 30, 2011. As a percentage of sales, general and administrative expenses were 36.2% and 30.9% for the six months ended June 30, 2012 and 2011, respectively. The $14.9 million decrease in general and administrative expenses was primarily attributable to reduced warehouse and distribution costs at our distribution center, which included reduced temporary help costs of $8.8 million and lower outside service fees of $2.3 million, that were offset by $5.6 million of additional depreciation expense due to operating an additional 39 retail stores and our distribution center and distribution center equipment. Rent expense increased by $4.8 million, primarily from 39 additional stores, and a $3.2 million adjustment related to percentage and deferred rent. In addition, the expenses related to our distribution network, including purchasing, receiving, inspecting, allocating, warehousing and packaging of our products, totaled $53.8 million and $66.8 million for the six months ended June 30, 2012 and 2011, respectively.

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