Skechers said that its new performance and fitness ranges, GOrun and GOwalk, had enjoyed robust sales, and additional GO products were scheduled to be launched in the third quarter. The group is currently testing the products in its own stores and in some wholesale accounts such as Shoe Carnival, Famous Footwear, Finish Line and Zappos.
In a conference call this week, the group's chief operating and financial officer, David Weinberg, said that international markets offered significant growth opportunities for Skechers' performance ranges, while their expansion in the U.S. was limited by the presence of strong competitors.
The group is building up its presence in sporting goods stores in markets such as Brazil, Japan and South Korea, and some European countries. Weinberg said that, judging from the feedback from the group's stores and customers, the group did not have enough GOrun and GOwalk products to meet demand. He added that the group's other fitness, active and sport lines were also performing well.
In company-owned concept stores, which are the first to receive all the group's new products, comparable store sales were positive in value and rose by a double-digit rate in volumes.
Weinberg declined to forecast sales for the GO product line, but he said that it might be possible to sell up to 1 million pairs this year, which would represent about $40 million in wholesale revenues. The broker Auriga estimates that Skechers could even sell 2.5-3.0 million pairs in 2013, generating revenues of about $100 million.
In the first quarter, Skechers booked a 26.2 percent decline in sales to $351.3 million, due to a 40 percent drop in the total pairs sold. Sales in the first quarter of 2011 were bloated by the clearing of excess inventory of toning shoes sold at reduced prices. The average selling price of shoes rose by 5.8 percent year-on-year in the first three months of 2012.
The gross margin widened to 44.3 percent from 40.4 percent, owing to higher selling prices, but they booked a loss from operations of $4.4 million against a $15.3 million profit a year earlier. The bottom line produced a net loss of $3.7 million compared with a profit of $11.8 million for the same quarter last year.
Skechers believes it could return to a profit in the fourth quarter. Financial analysts see the group finishing the year slightly above breakeven with sales approaching $1.5 billion. Skechers' inventory stood at $214.6 million at the end of March, $11.8 million less than at the end of 2012 and more than $161 million less than a year earlier.
