Skechers Q1 sales and profit plummet due to coronavirus outbreak

First quarter sales at Skechers USA, Inc., decreased 2.7 percent to 1.24 billion dollars, as a result of a 6.8 percent decrease in its international business, which was partially offset by a 2.9 percent increase in the company’s domestic business. On a constant currency basis, the company’s total sales decreased 1.2 percent. Comparable same store sales in company-owned direct-to-consumer business decreased 8.1 percent, including a decrease of 4.7 percent in the United States and 16.6 percent internationally, reflecting the closure of the majority of its Skechers-owned stores since mid-March.

“We are in unprecedented times, facing difficult decisions daily as we navigate this global pandemic that has negatively impacted every business throughout our industry, and most others,” stated Robert Greenberg, Chief Executive Officer of Skechers, adding, “As our business begins to return to normal, we firmly believe that our retail partners and customers will look to a brand they trust that delivers comfort, innovation, style, and quality at a value.”

Highlights of Skechers’ Q1

The company said in a statement that its domestic wholesale business increased 9 percent, its company-owned direct-to-consumer business decreased 4.2 percent, and the international wholesale business decreased 8.4 percent adversely impacted by results in China, which was down 47 percent in the quarter and impacted by a significant return reserve to keep franchisee inventory levels clean with seasonally appropriate merchandise.

Gross margins in the quarter, the company added, decreased by approximately 220 basis points as a result of lower international gross margins. Earnings from operations decreased 121.1 million dollars or 73 percent to 44.8 million dollars. Net earnings were 49.1 million dollars and diluted earnings per share were 32 cents, while adjusted net earnings and adjusted diluted earnings per share were 59.9 million dollars and 39 cents, respectively.

Picture:Facebook/Skechers