Skechers halved its inventory of toning shoes by selling 2 million pairs of original Shape-up models at a $21 million loss. The shoes were predominantly sold to one big account. The company booked an additional charge of $4.4 million on the rest of the stock, comprising less than 2 million pairs of more basic models, which it expects to sell through its stores or outside the U.S., where it continues to receive orders for such items. The aggressive move hit the group's profitability in the second quarter, which ended with a $29.9 million loss compared with a $40.2 million gain a year earlier. The company aims to book a profit in the third quarter, partially thanks to spending cuts in marketing, but remains cautious about the outlook. Quarterly sales slipped by 14 percent to $434.5 million. A year earlier, Skechers booked a record turnover of $504.9 million fueled by strong demand for toning shoes. The top line was hit by a 32 percent collapse in American wholesale revenues and the company expects another drop in the third quarter. The group's gross margin narrowed to 33.0 percent in the second quarter due to the inventory cleanup, from 47.1 percent a year earlier.

Topics