Skechers profits slashed more than 50% by coronavirus disruption
American footwear company Skechers USA, Inc. announced a 54.9% decline in its first-quarter net earnings on Thursday, as its operations suffered from disruptions resulting from the global coronavirus crisis.
For the first quarter ended March 31, 2020, the Manhattan Beach, California-based company reported total net earnings of $49.1 million, or $0.32 per diluted share, down from $108.8 million, or $0.71 per diluted share, in the same period in the previous year.
Skechers’ quarterly sales fell 2.7% (1.2% in constant currencies), from $1.28 billion to $1.24 billion, as a 6.8% decline in international sales was partially offset by a 2.9% rise in sales in the company’s domestic business.
Domestic wholesale revenues increased 9.0%, while the direct-to-consumer business saw a 4.2% decline. Comparable same store sales in the direct-to-consumer channel fell 8.1%, reflecting a 4.7% decline in the U.S. and a 16.6% decrease internationally.
Impacted by a hefty quarterly decline of 47% in China, Skechers’ international wholesale business posted a revenue decrease of 8.4%.
In a release, Skechers COO David Weinberg pointed out that before the coronavirus pandemic began to affect the economy, “Skechers business was on track for a new first quarter sales record.”
“We believe that our quarterly performance prior to the disruption is a testament to the strength of our product and brand, all of which leads us to believe that when markets reopen, people return to work and customers get back to shopping, Skechers will continue in its position as a leading footwear brand,” he added.
In order to deal with the disruption caused by the global health crisis, Skechers has implemented a range of measures, including drawing down on its senior unsecured credit facility, managing operating expenses, inventory levels and production orders, and postponing non-critical capital expenditures.
Due to the continuing uncertainty related to the ongoing health crisis, Skechers has not provided financial guidance for the second quarter or the full fiscal year 2020.
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