Skechers announces Q2 losses
US-based footwear brand Skechers has announced its financial results for the second quarter ended June 30, 2011.
Second quarter 2011 net sales were $434.4 million compared to $504.9 million for the second quarter of 2010. Second quarter 2011 net loss was $29.9 million compared to net earnings of $40.2 million for the second quarter of 2010.
“Second quarter results were impacted by several factors,” said David Weinberg, COO and CFO. “First, we were up against a record second quarter in 2010, and we aggressively reduced our excess toning inventory during the second quarter by selling two million pairs of our original Shape-ups for a loss of $21 million. We also recorded a $4.4 million reserve for additional product, which we believe reflects net realisable value. We made a decision to accelerate the clearance on early generation Shape-ups product in order to eliminate the overhang of excess inventory. We believe this will expand the sales of our new toning and performance product, which are showing positive results at retail.
“We feel this was a big step in reaching our goals for the year, which include right-sizing our inventory, bringing new product to market, and getting our overhead in line with anticipated sales for 2012.”
For the six months ended June 30, 2011, net sales were $910.6 million compared to net sales of $997.6 million in the first six months of 2010. Net loss was $18.1 million as compared to net earnings of $96.5 million for the first six months of 2010.
Gross profit for the second quarter of 2011 was $143.3 million compared to $237.6 million in the second quarter of last year.
Robert Greenberg, Skechers CEO said: “Every business faces challenges as they grow and at this time last year we were experiencing record growth and were the leaders in an explosive new category of footwear. Recently we have leveraged our experience and learning in the toning category to develop new footwear in both our core lifestyle lines and in our rapidly evolving performance division. This product was delivered to our own retail stores in the second quarter and began reaching our key accounts in June and July. The initial sell throughs have been strong, and we believe will accelerate as the marketing begins for back to school.
“We are pleased with our international sales, which grew by double digits, and our retail business, which remains steady with new stores opening in the United States and around the world. We believe Skechers continues to be a brand in demand globally, and there are many opportunities to grow our business in the coming years.”
Mr Weinberg added: “We believe that while the second half of 2011 will pose more challenges, we also see growth opportunities in both the international and retail businesses. We are pleased with the reception of our new product offerings for men, women and kids delivering in our stores and to accounts now.”
