SKX Reports 2016 Q4 Earnings

In case anyone here is still interested. Revenue was a beat but earnings fell off a cliff, but shares are up in AH trading. I’m trying to go through everything. Guidance seems okay.

Shares of Skechers USA (SKX) rose 5.67% to $24.60 in after-hours trading on Thursday after the athletic footwear maker reported fourth-quarter revenue and comparable-store sales that topped analysts’ expectations.

Revenue rose 5.8% to $764.3 million year-over-year and surpassed analysts’ forecasts of $723.7 million. Comparable-store sales increased 3.6%, while analysts had expected flat results.

The strong quarterly growth was primarily due to a 17.1% increase in the company’s international wholesale business, led by China with a jump of 48.5%, Skechers said.

Read more at…

Here’s a look at the numbers:

Net Sales (millions)		Q1		Q2		Q3		Q4			
2013								515.8		450.7		
2014				546.5		587.1		674.3		569.7	
2015				768.0		800.5		856.2		722.7	
2016				978.8		877.8		942.4		764.3

EPS (diluted)			Q1		Q2		Q3		Q4			
2013								0.18		0.09	
2014				0.20		0.23		0.33		0.14		
2015				0.37		0.52		0.43*		0.19	
2016				0.63		0.48		0.42		0.04

*SKX 3-for-1 stock split 10/15/15, but all EPS figures are split-adjusted

2016 Q4 Earnings (Current):

Revenue Growth (millions)
2015 Q4 TTM Revenue = 3147.4
2016 Q4 TTM Revenue = 3563.3
Year Over Year TTM Revenue Growth = 13.2%, previous quarter 17.6%

EPS Growth (diluted)
2015 Q4 TTM Earnings = 1.51
2016 Q4 TTM Earnings = 1.57
Year Over Year TTM EPS Growth = 4%, previous quarter 17.8%

P/E (Check Current Price) = 23.28/1.57 = 14.82

Here’s more from the press release:

“Skechers achieved new fourth quarter and full-year net sales records, exceeding our fourth quarter guidance range of $710 million to $735 million,” began David Weinberg, chief operating officer and chief financial officer. “The strong quarterly growth was primarily the result of a 17.1 percent increase in our international wholesale business, led by China with an increase of 48.5 percent. In addition, our global Company-owned retail business grew 13.9 percent on a store base of 571 at year-end. Combined with our third-party owned stores, we had 2,012 Skechers stores worldwide at year-end, creating a global network that includes more than 500 locations in China, more than 60 in each of India, Mexico and Saudi Arabia, and over 50 in each of Australia, Malaysia, South Korea and Taiwan.”

You can read the release at

I’m trying to make sense of these numbers. Sales were up. Gross profit was up. EPS was destroyed. Their G&A expenses increased by more than $50 million. Why did those expenses go up so much?

The year-over-year quarterly increase was primarily due to Skechers’ focus on long-term global growth, including $15.3 million associated with the Company’s 53 additional domestic and international retail stores, and $27.0 million to support its international growth, of which $19.0 million was due to increased costs in China, $2.8 million for the transition of its South Korean distributor to a joint venture, $2.3 million in support of its new Latin America subsidiary, and $3.2 million in Japan. Domestic wholesale general and administrative expenses increased $10.0 million during the fourth quarter primarily due to increased headcount in the United States to support its brand worldwide.

I have thinking to do. Lots of thoughts and questions but I’ll save them for after the conference call.

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SKX shares are up more than 20% right now. This has been a much-needed quarter. Skyworks, Skechers, Paycom - all up significantly. I’ll take it!

I’ll try to go through SKX conference call and take notes in the next week or so.

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I ditched my SKX a while back, no regrets as I thought the decision was sound. Happy for those of you that stuck it out, maybe there will be some good days ahead now.

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Today I sold my SKX for a nice profit. They may have turned the corner but there’s a double top on the daily and i think I will be able to buyback lower going forward. The market feels somewhat stretched and the $VIX is very low. If I’m wrong and she continues up it won’t be the 1st time. Heartened by the international sales bump.


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