SKECHERS Announces Fourth Quarter and Fiscal Year 2012 Financial Results

Wed Feb 13, 2013 4:00pm EST

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* Fourth Quarter 2012 Net Sales Increased over 39 Percent to $395.6 Million
* Fiscal Year 2012 Net Sales of $1.560 Billion

MANHATTAN BEACH, Calif.--(Business Wire)--
SKECHERS USA, Inc. (NYSE:SKX), a global leader in lifestyle footwear, today
announced financial results for the fourth quarter and fiscal year ended
December 31, 2012. 

Net sales for the fourth quarter of 2012 were $395.6 million compared to $283.2
million in the fourth quarter of 2011. Earnings from operations in the fourth
quarter of 2012 were $8.0 million compared to a loss from operations of $103.1
million in the fourth quarter of 2011. Net earnings for the fourth quarter of
2012 were $4.0 million compared to a net loss of $57.7 million in the fourth
quarter of 2011. Net earnings per diluted share in the fourth quarter of 2012
were $0.08 based on 50.3 million weighted average shares outstanding compared to
net loss per diluted share of $1.18 based on 48.9 million weighted average
shares outstanding in the fourth quarter of 2011. Gross profit for the fourth
quarter of 2012 was $168.5 million compared to $112.6 million in the fourth
quarter of 2011. Gross margin in the fourth quarter 2012 was 42.6 percent versus
39.8 percent for the fourth quarter of 2011. Income tax expense was $3.0 million
or 44.7 percent for the fourth quarter of 2012. 

"For the 2012 fourth quarter, sales increased more than 39 percent over the same
period in 2011 as we saw improvements across all of our revenue channels,
including a 72 percent increase in our domestic wholesale business," began David
Weinberg, chief operating officer and chief financial officer. "This strong
domestic wholesale growth plus low double-digit positive comp store sales in our
company-owned SKECHERS retail stores and a 30 percent increase in our
international business are evidence of the broad acceptance of our new product
offerings. With each of our new and established lines driving sales,
domestically, both our men's and kids` divisions experienced double-digit
growth, while our women's division saw triple-digit growth." 

Fiscal year 2012 net sales were $1.560 billion compared to net sales of $1.606
billion in 2011. Earnings from operations for 2012 were $22.3 million compared
to a loss from operations of $133.8 million in 2011. Net earnings for 2012 were
$9.5 million compared to a net loss of $67.5 million in 2011. Net earnings per
diluted share for fiscal year 2012 were $0.19 based on 49.9 million weighted
average shares outstanding versus a diluted loss per share of $1.39 based on
48.5 million weighted average shares outstanding in the prior year. Gross profit
for 2012 was $683.3 million compared to $623.7 million in 2011. Gross margin for
2012 was 43.8 percent versus 38.8 percent for 2011. 

Robert Greenberg, SKECHERS chief executive officer, commented, "2012 was a
remarkable year for SKECHERS. We grew our existing product divisions, broadened
our offering to consumers with several new product lines, established an
award-winning performance division and further grew our heritage business. We
have taken a more focused approach to growing our product offering, added
features and technologies that consumers desire, and supported these efforts
with effective marketing. In the fourth quarter alone, we supported our Skechers
GOwalk, Daddy`s Money and SKCH+3 product lines with new commercials, as well as
commercials for our Bobs from Skechers line with Brooke Burke, and our Relaxed
Fit by Skechers styles with three spots featuring sports icons Mark Cuban, Joe
Montana and Tommy Lasorda. To date in this quarter, we aired a new Skechers
GOrun2 commercial during the Super Bowl, as well as a new Relaxed Fit Joe
Montana spot. The recent highlights for our product and marketing are many,
including receiving eight awards from noted running and fitness publications for
our performance footwear, and elite runner Meb achieving his personal best in
Skechers GOrun, becoming the fastest American marathon runner and placing fourth
at the 2012 Olympics. Our focus and execution have translated into a strong
fourth quarter, and as we continue to grow our businesses around the world, we
believe this positive momentum will continue and we will experience a strong
first half of 2013." 

Mr. Weinberg added, "2012 marked a return to profitability with growth in all of
our revenue channels in the fourth quarter. With backlogs up double digits for
our combined domestic and international wholesale businesses, and a strong start
to the first quarter, we are confident that our growth trend will continue in
2013. We are looking forward to our Fall/Winter 2013 domestic and international
trade shows later this month, delivering fresh Spring product around the world,
and opening 30 to 35 new Company-owned SKECHERS retail stores this year. With a
cash position of $325.8 million and inventory levels in line with our projected
growth, we believe we are well positioned for growth across all our platforms." 

ABOUT SKECHERS USA, Inc.

SKECHERS USA, Inc., based in Manhattan Beach, California, designs, develops and
markets a diverse range of footwear for men, women and children under the
SKECHERS name, as well as under several uniquely branded names. SKECHERS
footwear is available in the United States via department and specialty stores,
Company-owned SKECHERS retail stores and its e-commerce website, and over 100
countries and territories through the Company`s global network of distributors
and subsidiaries in Canada, Brazil, Chile, Japan and across Europe, as well as
through joint ventures in Asia. For more information, please visit
www.skechers.com, and follow us on Facebook (www.facebook.com/SKECHERS) and
Twitter (twitter.com/SKECHERSUSA). 

This announcement may contain forward-looking statements that are made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Forward-looking statements include, without limitation, any statement that
may predict, forecast, indicate or simply state future results, performance or
achievements, and 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, national and local general
economic, political and market conditions including the ongoing global economic
slowdown and market instability; entry into the highly competitive performance
footwear market; 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; 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 SKECHERS` Form 10-K for the
year ended December 31, 2011 and its Form 10-Q for the quarter ended September
30, 2012. The risks included here are not exhaustive. SKECHERS 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.

                                                                                                                             
 SKECHERS U.S.A., INC.                                                                                                       
 CONDENSED CONSOLIDATED BALANCE SHEETS                                                                                       
 (Unaudited)                                                                                                                 
 (In thousands)                                                                                                              
                                                                                                                             
                                                                                   December 31,          December 31,        
                                                                                   2012                  2011                
 ASSETS                                                                                                                      
 Current Assets:                                                                                                             
 Cash and cash equivalents                                                         $        325,826      $        351,144    
 Trade accounts receivable, net                                                             213,697               176,018    
 Other receivables                                                                          7,491                 6,636      
 Total receivables                                                                          221,188               182,654    
 Inventories                                                                                339,012               226,407    
 Prepaid expenses and other current assets                                                  27,755                88,005     
 Deferred tax assets                                                                        26,531                39,141     
 Total current assets                                                                       940,312               887,351    
 Property and equipment, at cost less accumulated depreciation and amortization             362,446               376,446    
 Intangible assets, less applicable amortization                                            3,242                 4,148      
 Deferred tax assets                                                                        16,387                530        
 Other assets, at cost                                                                      17,833                13,413     
 Total non-current assets                                                                   399,908               394,537    
 TOTAL ASSETS                                                                      $        1,340,220    $        1,281,888  
 LIABILITIES AND EQUITY                                                                                                      
 Current Liabilities:                                                                                                        
 Current installments of long-term borrowings                                      $        11,668       $        10,059     
 Short-term borrowings                                                                      2,425                 50,413     
 Accounts payable                                                                           241,525               231,000    
 Accrued expenses                                                                           36,923                16,994     
 Total current liabilities                                                                  292,541               308,466    
 Long-term borrowings, excluding current installments                                       128,517               76,531     
 Deferred tax liabilities                                                                   73                    4,364      
 Total non-current liabilities                                                              128,590               80,895     
 Total liabilities                                                                          421,131               389,361    
 Equity:                                                                                                                     
 Skechers U.S.A., Inc. equity                                                               875,969               852,561    
 Noncontrolling interests                                                                   43,120                39,966     
 Total equity                                                                               919,089               892,527    
 TOTAL LIABILITIES AND EQUITY                                                      $        1,340,220    $        1,281,888  
                                                                                                                             


                                                                                                                                                                                                                                  
 SKECHERS U.S.A., INC.                                                                                                                                                                                                            
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                                                                                                                                                                                  
 (Unaudited)                                                                                                                                                                                                                      
 (In thousands, except per share data)                                                                                                                                                                                            
                                                                                                                                                                                                                                  
                                                                                                                 Three Months Ended December 31,                         Twelve Months Ended December 31,                         
                                                                                                                        2012                          2011                      2012                            2011              
 Net sales                                                                                                       $      395,617                $      283,248            $      1,560,321                $      1,606,016         
 Cost of sales                                                                                                          227,153                       170,635                   876,995                         982,268           
 Gross profit                                                                                                           168,464                       112,613                   683,326                         623,748           
 Royalty income                                                                                                         2,601                         3,128                     7,104                           7,558             
                                                                                                                        171,065                       115,741                   690,430                         631,306           
 Operating expenses:                                                                                                                                                                                                              
 Selling                                                                                                                31,086                        23,398                    134,920                         152,000           
 General and administrative                                                                                             132,142                       150,851                   532,373                         569,164           
 Legal settlements (recoveries)                                                                                         (123     )                    44,581                    818                             43,935            
                                                                                                                        163,105                       218,830                   668,111                         765,099           
 Income (loss) from operations                                                                                          7,960                         (103,089  )               22,319                          (133,793   )      
 Other income (expense):                                                                                                                                                                                                          
 Interest, net                                                                                                          (3,450   )                    (2,042    )               (12,765    )                    (6,002     )      
 Gain (loss) on disposal of assets                                                                                      (14      )                    9,893                     (216       )                    9,632             
 Other, net                                                                                                             2,138                         (299      )               1,135                           (884       )      
                                                                                                                        (1,326   )                    7,552                     (11,846    )                    2,746             
 Earnings (loss) before income taxes                                                                                    6,634                         (95,537   )               10,473                          (131,047   )      
 Income tax expense (benefit)                                                                                           2,968                         (37,500   )               (39        )                    (63,467    )      
 Net income (loss)                                                                                                      3,666                         (58,037   )               10,512                          (67,580    )      
 Less: Net income (loss) attributable to noncontrolling interest                                                        (290     )                    (376      )               1,000                           (96        )      
 Net earnings (loss) attributable to Skechers U.S.A., Inc.                                                       $      3,956                  $      (57,661   )        $      9,512                    $      (67,484    )      
                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                  
 Net earnings (loss) per share attributable to Skechers U.S.A., Inc.:                                                                                                                                                             
 Basic                                                                                                           $      0.08                   $      (1.18     )        $      0.19                     $      (1.39      )      
 Diluted                                                                                                         $      0.08                   $      (1.18     )        $      0.19                     $      (1.39      )      
                                                                                                                                                                                                                                  
 Weighted average shares used in calculating earnings (loss) per share attributable to Skechers U.S.A., Inc.:                                                                                                                     
 Basic                                                                                                                  49,980                        48,931                    49,495                          48,491            
 Diluted                                                                                                                50,271                        48,931                    49,942                          48,491            
                                                                                                                                                                                                                                  


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



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