Skechers USA again posted record revenues for the full financial year ended last Dec. 31, surpassing the threshold of $4 billion, due in part to strong double-digit growth in its business outside the U.S.
The management attributed the performance to its continued focus on efficiencies and infrastructure, as well as innovation. The company grew its Skechers store base to 2,570 locations by year-end, and saw significant growth across the globe.
In the fourth quarter, the company benefited from a robust holiday selling season, with increased demand for its lighted children's shoes and its comfortable adult styles, and double-digit growth in each of its three distribution channels. Revenues grew by 27.0 percent in the quarter to $970.6 million, driven by a 40.2 percent increase in the company's international wholesale business, an 11.6 percent increase in its domestic wholesale business, and a 25.8 percent increase in its own retail operations around the world.
The number of pairs shipped rose by 14 percent in the quarter, but average selling prices were off by 2 percent due to the strength of less expensive collections in the product mix. Comparable store sales at company-owned stores improved by 12.0 percent. At quarter-end, the company had 645 company-owned Skechers retail stores, of which 196 were outside the U.S.
Adding to the growth was the domestic e-commerce business, which rose by 28.2 percent. Skechers also has company-owned and operated e-commerce sites in Chile, Germany, the U.K., Spain and Canada.
The growth in international wholesale revenues resulted from increases of 53.6 percent in Skechers' subsidiaries and joint ventures and 3.1 percent in its distributor business. During the quarter, double-digit increases were recorded in nearly every subsidiary and joint venture market and in sales to several of the group's key distributors, including Australia, New Zealand, the Philippines, Russia and Turkey. They recorded a triple-digit gain in the Ukraine. Additionally, more than $20 million in sales were pulled forward into the fourth quarter from the first quarter of this year to ensure timely spring deliveries.
The company's wholly-owned international subsidiary business grew by 41.8 percent, while joint venture sales were up by 58.9 percent. The markets with the highest dollar gains were China, South Korea and the U.K., and those with the highest percentage gains were Italy and Spain. Skechers is gearing up to open a dedicated distribution center for the Chinese market later this year.
In the quarter, 146 new third-party Skechers stores were opened, including 74 in China, 22 in India, 7 in Indonesia, and 5 each in Australia, Singapore, Thailand and Turkey. There were also three new units in Spain, two each in France, Malaysia and Portugal and one each in Brazil, Denmark, Estonia, Hong Kong, Lebanon, New Zealand, Paraguay, the Philippines, St. Lucia, Switzerland, the Ukraine and the United Arab Emirates. The total number of third-party stores reached 1,937.
The company's gross margin inched up by 0.2 percentage points to 46.8 percent, due to strength in the international retail business and increased sales through foreign subsidiaries.
However, the company posted a net loss of $66.7 million, compared with earnings of $6.7 million for the fourth quarter of 2016, due to the enactment of the Tax Cuts and Jobs Act in December 2017, which resulted in a provisional additional income tax expense of $99.9 million in the fourth quarter. Excluding the impact of the new legislation, adjusted net earnings were $33.3 million.
For the full year, revenues jumped by 24.3 percent to $4,164 million, also driven by the company's international wholesale business, a 21.9 percent increase in the global retail business, and a 4.1 percent increase in the domestic wholesale business. Comparable store sales at company-owned stores advanced by 7.2 percent overall, with an increase of 10.1 percent outside the U.S.
Still, the wholesale operations outside the U.S. remained the biggest distribution channel for Skechers, representing 41.5 percent of total revenues for the year. International wholesale and retail combined represented 50.6 percent of the turnover.
The annual gross margin rose by 0.7 percentage points to 46.6 percent, due to the sale of more on-line products and a stronger company-owned retail and international business. However, the Tax Cuts & Jobs Act caused net earnings to go down by 26.4 percent to $179.2 million. Adjusted net earnings reached $279.1 million.
For the first quarter of 2018, the company believes it will achieve sales in the range of $1,175 million to $1,200 million. It expects to open an additional 75 to 85 company-owned stores during 2018 and to remodel or relocate 15 to 25 existing stores. It also expects another 500 to 525 third-party owned Skechers branded stores to open in the course of the year. The international business remains the biggest growth opportunity for Skechers, and the management is forecasting that it will continue to grow at a faster pace than its U.S. business.