At the current pace, Skechers USA seems to be poised to reach an annual turnover of €4 billion in two to three years' time, with sales outside the U.S. growing from 37.5 percent of the total to 50 percent or more. Clearly, the brand has found its place in the value-priced segment of the market, with an appealing offer in countries where the economy is not so strong at the moment and where the purchasing power is relatively low.
In the fourth quarter of 2014, Skechers' revenues jumped by 26 percent to $569.7 million, building up to a turnover of $2,378 million for the full year. Its foreign subsidiaries and joint ventures raised their sales last year by 41 percent in terms of dollars, in spite adverse currencies, while sales to distributors jumped by 51 percent. Sales increased by 88 percent in China.
Comparatively, U.S. sales went up by 24 percent in the fourth quarter and for the full financial year. Women's and men's styles showed double-digit gains. Sales of children's shoes declined, but stabilized later in the year, leading to a double-digit increase in 2015 orders.
After collecting many industry awards in the U.S., Skechers was named Footwear Brand of the Year and Fashion Footwear Brand of the Year at Moda, the British fashion and footwear fair in Birmingham. The brand's U.K. subsidiary experienced a jump of more than 50 percent in its sales to over $100 million last year, delivering more than 2.7 million pairs in the U.K. and Ireland at wholesale and through its own stores. The U.K. thus became Skechers' biggest foreign market, slightly above China.
A similar turnover is expected for Skechers' newly established subsidiary for Central Europe, whose potential at wholesale and retail is very strong. Total orders from abroad were up by 60 percent at the end of 2014, due in part to the availability of more inventory at the company's recently expanded European distribution center.
Foreign orders were higher than orders from the U.S., and the management is predicting that the foreign share of Skechers' total turnover will reach 50 percent over the next three years.
In the fourth quarter, the gross margin improved to 45.2 percent, aided by a 7.4 percent increase in average wholesale prices charged in the U.S. Net earnings increased to $21.9 million from $14.2 million in the year-ago period, despite a negative impact of $7.0 million from currencies and of $2.3 million from foreign and domestic bad debt writeoffs. Net income was up strongly for the full year to $138.8 million from $54.9 million.
David Weinberg, chief operating officer and chief financial officer of Skechers, indicated that the best has yet to come, especially in Europe where the brand stands to experience two- or three-digit growth.
As previously reported, Skechers opened its 1,000th single-brand store last year. The total store network includes 87 company-owned stores and 670 doors outside the U.S. The company expects 250 more store openings in the course of 2015. Acting through its Scandinavian distributor, Sport Connection, it opened the first Skechers store in Sweden a few days ago as a franchise, located in Halmstad, to be followed by franchises in Malmö and Stockholm in the next two months. Sport Connection already has three franchised Skechers stores in Denmark.
