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Skechers USA (SKX) on Q1 2016 Results - Earnings Call Transcript

Q1 2016 Earnings Conference Call

April 21, 2016 4:30 PM ET

Executives

Andrew Greenebaum - IR, Addo Communications

David Weinberg - COO & CFO

Analysts

Sam Poser - Sterne, Agee & Leach

Jay Sole - Morgan Stanley

Corinna Van Der Ghinst - CitiGroup

Jeff Van Sinderen - B. Riley & Co

Corinna Freedman - BB&T

Scott Krasik - Buckingham Research

Laurent Vasilescu - Macquarie Capital

John Kernan - Cowen & Co

Jim Chartier - Monness, Crespi, Hardt

Chris Svezia - Susquehanna Financial Group

Operator

Greetings and welcome to the Skechers USA Incorporated First Quarter 2016 Earnings Conference Call. [Operator Instructions] At this point, I'd like to turn the conference call over to Skechers. Please go ahead.

Andrew Greenebaum

Thank you, everyone for joining us on Skechers conference call today. I will now read the Safe Harbor statement. Certain statements contained herein, including without limitation, statements addressing the beliefs, plans, objectives, estimates or expectations of the Company or future results or events may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended. Such forward-looking statements involve known and unknown risks including, but not limited to, global, national and local, economic, business and market conditions in general and specifically as they apply to the retail industry and the Company. There can be no assurance that the actual results performance or achievements expressed or implied by such forward-looking statements will occur.

Users of forward-looking statements are encouraged to review the Company's filings with the U.S. Securities and Exchange Commission, including the most recent annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all other reports filed with the SEC as required by federal securities laws for description of other significant risk factors that may affect the Company's business, results of operations and financial conditions.

With that, I would like to turn the call over to Skechers’ Chief Operating Officer and Chief Financial Officer, David Weinberg. David?

David Weinberg

Good afternoon and thank you for joining us today to review Skechers’ first quarter 2016 financial results. We achieved new quarterly records for sales, earnings from operations and earnings per share. The first quarter net sales increased 27.4% or $210.8 million to $978.8 million, a new quarterly record.

Additional quarterly records include net earnings of $97.6 million and earnings from operations of $138.6 million. Our growth was broad based and the results of net sales increases across our domestic wholesale, worldwide company owned retail stores and our international business.

Our international wholesale business had a record first quarter surpassing domestic wholesale revenues for the first time with a gain of 47.1%. First quarter highlights include, record first quarter revenues, earnings from operations and earnings per share, diluted earnings per share of $0.63, gross margin of 44.2%, a strong balance sheet with $443.8 million in cash or approximately $2.87 per diluted share. A 12.1% in our domestic wholesale business including an increase of 12.1% in pairs shipped, a 47.1% sales increase in our international wholesale business which brought our international wholesale business to 42.9% of sales and our international wholesale and retail business to 47.7% of sales.

A 23.2% sales increase in our company owned retail stores which also included an additional 72 net stores opened compared to the prior year period of which 9 were opened in the first quarter including three international stores. Worldwide comps of 9.8% in our company owned Skechers retail stores and reaching the milestone of a 1,000 company and third-party owned Skechers retail stores outside the United States.