SKX - Skechers rallies after earnings topper

2023-07-28 06:52:14 ET

Skechers U.S.A ( NYSE: SKX ) rallied in premarket action on Friday after soft guidance overshadowed a Q2 earnings report .

The retailer saw mixed growth during the quarter with a 4.6% decrease in domestic sales and a 17.9% increase in international sales, leading to a total revenue tally of $2.01B vs. $1.92B consensus.

Wholesale sales fell 5.9% during the quarter, including a decrease in the Americas region of 18.7%, partially offset by increases in APAC of 14.3% and EMEA of 7.4%. Wholesale volume decreased 13.1% and average selling price increased 8.0%.

Gross margin improved by 460 basis points, primarily due to a higher proportion of Direct-to-Consumer sales and higher average selling prices. Operating marginb rose to 10.8% of sales vs. 8.3% a year ago. Net earnings were $12.8M vs. $90.4M a year ago.

Skechers ( SKX ) ended the quarter with an inventory position of $1.49B, down 18.3% from the position a year ago. SKX's cash position at the end of the quarter totaled $1.07B, up 36.2% from a year ago, primarily due to an increase in earnings and favorable changes in working capital, offset by capital expenditures of $147.4M, payments of $70.4M, net of cash acquired, related to the acquisition of the Scandinavian distributor and the completion of $60.0M of share repurchases year-to-date.

CFO update: "Despite anticipated headwinds in the domestic wholesale market, we successfully navigated the challenges and achieved record quarterly sales in addition to a new second quarter earnings record... With sustained momentum in our Direct-to-Consumer business globally and broad-based strength in our international wholesale business, aided by healthy inventory levels and an innovative pipeline of comfort technology products, we continued to show the strength of the Skechers brand and to execute our long-term growth strategy."

Looking ahead, Skechers ( SKX ) sees full-year sales landing in a range of $7.95B to $8.1B vs $8.09B consensus and EPS of between $3.25 and $3.40 vs. $3.19 consensus.

Shares of SKX rose 4.34% in premarket trading on Friday.

More on Skechers:

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• Seeking Alpha's Quant Rating for Skechers

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