Skechers USA announced financial results for the fourth quarter ended December 31, 2017.
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Sales grew 27 percent as a result of a 40.2 percent increase in the company’s international wholesale business, an 11.6 percent increase in the company’s domestic wholesale business, and a 25.8 percent increase in its company-owned global retail business.
Comparable same store sales in company-owned stores increased 12 percent, including a domestic increase of 10.5 percent and an international increase of 16.5 percent.
Gross margins increased due to strength in the company’s international retail business and increased sales in the company’s international subsidiary business.
SG&A expenses increased 21.6 percent. This increase was driven by $67.4 million in general and administrative expenses, including $37.8 million to support international growth in the company’s joint venture and subsidiary businesses, and $20.1 million associated with operating 75 additional company-owned Skechers stores, of which 22 were opened in the fourth quarter.
Selling expenses increased by $4.4 million primarily due to higher international advertising expenses as well as $1.5 million in increased sales commissions in its South Korea joint-venture business.
Earnings from operations increased 96.9 percent primarily due to sales growth.
Net loss was $66.7 million and diluted loss per share was $0.43 per share. However, after adjusting for the impact of Tax Cuts & Jobs Act (“TCJAâ€), adjusted net earnings were $33.3 million and adjusted diluted earnings per share were $0.21.
Full-year sales growth was the result of a 24.3 percent increase in the company’s international wholesale business, a 21.9 percent increase in the company’s global retail business, and a 4.1 percent increase in the company’s domestic wholesale business.
Comparable same store sales in company-owned stores increased 7.2 percent, including a domestic increase of 6.4 percent and an international increase of 10.1 percent.
Gross margins improved due to the sale of more in-line product in 2017 and a stronger company-owned retail and international business.
SG&A expenses increased 23.1 percent including an increase in selling expenses of $70.1 million primarily to support growth in its international markets.
It also included an increase of 22.0 percent in general and administrative expenses principally due to $73.7 million in new store operating costs associated with 75 additional company-owned stores opened in the year and $109.5 million to support growth in the company’s international joint venture and subsidiary businesses.
Earnings from operations increased 3.3 percent primarily from increased sales growth.
Net earnings were $179.2 million and diluted earnings per share were $1.14 per share. However, after adjusting for the impact of TCJA, adjusted net earnings were $279.1 million and adjusted diluted earnings per share were $1.78. ■