Skechers USA Inc. shares dropped more than 10% in late trading Tuesday after the maker of sneakers missed profit expectations for its latest quarter and delivered an outlook that came in below the consensus view.
The company reported third-quarter net earnings of $85.9 million, or 55 cents a share, down from $103.1 million, or 66 cents a share, in the year-earlier quarter. On an adjusted basis, Skechers
SKX,
earned 64 cents a share, down from 68 cents a share a year before, while analysts tracked by FactSet had been anticipating 70 cents a share.
Skechers noted in its earnings release that gross margins fell to 47.1% from 49.9% a year before amid higher freight and logistics costs as well as a greater portion of sales from distributors. Operating expenses rose given “higher global digital and brand-demand creation expenditures” and increased labor, warehouse and distribution costs.
Revenue climbed to $1.88 billion from $1.56 billion and it exceeded the FactSet consensus, which was for $1.79 billion.
Chief Executive David Weinberg called out the company’s 16% growth in the Americas and 9% growth in Asia-Pacific. “While this broad-based consumer demand for Skechers is not unique to this quarter, we believe our ongoing momentum and strong product offering is a testament to the strength of our brand and resilience as an organization,” he said in the company’s earnings release.
Chief Financial Officer John Vandemore added in the release that the company faces “multiple macroeconomic headwinds, from foreign exchange rates to supply chain challenges and ongoing COVID-related lockdowns.” At the same time, he’s “encouraged that demand remains strong,” and as those challenges ease, Skechers executives anticipate “continued revenue growth and improved operating leverage.”
Skechers inventory in the quarter was $1.78 billion, up $308.4 million from Dec. 31, 2021 levels.
For the fourth quarter, Skechers executives expect $1.725 billion to $1.775 billion in sales as well as 30 cents to 40 cents in diluted earnings per share. The FactSet consensus was for $1.788 billion in sales and 50 cents in earnings per share on the basis of Generally Accepted Accounting Principles.
Shares of Skechers have lost 17% so far this year as the S&P 500
SPX,
has dropped 19%.
