Fueled by its uninterrupted international growth, Skechers has reported a sales increase of 11.4 percent to $1,080.8 million for the fourth quarter ended on Dec. 31, including a gain of 13.7 percent in local currencies. While the company's total wholesale and retail sales outside the U.S. went up by 17.9 percent, accounting for 55.6 percent of the total turnover, sales in the U.S. increased by only 4.1 percent.
Skechers' profitability improved. The gross margin increased by 0.9 percentage points to 47.7 percent as better margins achieved in the U.S. offset the negative impact of foreign exchange rates. In spite of increased spending on the brand's expansion in China and the addition of 47 stores, operating earnings shot up by 50.4 percent to $83.7 million, and the company reported a higher-than-expected net profit of $47.5 million for the quarter, sending its share price up by 18 percent. In the year-ago period, Skechers had posted a loss of $66.7 million after a tax charge of $100 million.
International wholesale revenues jumped by 18.4 percent in the quarter, with the subsidiaries in Germany, Spain, Japan and Peru driving a 14 percent increase at company-owned operations. Sales grew by about 20 percent in the company's joint ventures and the distributor business. The highest gains at the distributor level took place in Indonesia, Russia, Turkey and the Middle East.
Among the foreign joint ventures, China was the star with an increase of 22 percent, followed by India, Malaysia and Singapore. India will become a subsidiary this year, and Skechers is working on a joint venture in Mexico.
The company's directly operated stores around the world, which totalled 692 at the end of the quarter, delivered a 7.5 percent sales increase, with comparable store sales rising by 0.4 percent in the U.S. and 3.0 percent elsewhere. E-commerce went up by nearly 9 percent worldwide. Including third-party stores, there were 2,306 Skechers stores around the world at the end of the year.
For the full financial year, Skechers reported a 7.9 percent increase in adjusted net earnings to $301.0 million. The gross margin expanded by 1.3 percentage points to 47.9 percent and the operating margin gained 0.2 percentage points, reaching 9.4 percent.
Total revenues for the year were up by 11.5 percent to $4,642.1 million, with increases of 3.5 percent in the U.S. and 19.2 percent internationally. Revenues went up by 18.8 percent in the company's international wholesale business, by 12.0 percent in its global retail business and by 0.8 percent in the domestic wholesale business.
Including e-commerce, same-store sales rose by 9.2 percent, with increases of 6.7 percent in the U.S. and 16.7 percent in the rest of the world.
With an increase of about 29 percent, China was the strongest market for the brand, whose affordable products designed in the U.S. are creating demand locally. Similarly, the brand is still growing at a double-digit rate in Russia, where its local distributor, Sportmaster, is opening its first Skechers stores in two premium shopping malls.
