On October 26, 2023, Skechers USA Inc (SKX, Financial) announced its financial results for the third quarter ended September 30, 2023. The company achieved a new quarterly sales record of $2.02 billion, reflecting robust demand for its brand. All regions experienced growth, including the Americas, with a 7% increase in the United States, and Asia Pacific, with an 18% increase in China. The company's gross margin was strong at 52.9%, reflecting favorable pricing, a higher mix of Direct-to-Consumer sales, and lower unit costs.
Financial Highlights
Third quarter sales increased by 7.8% due to an 8.6% increase internationally and a 6.5% increase domestically. Direct-to-Consumer sales grew by 23.8%, while Wholesale sales decreased by 1.4%. Gross margin was 52.9%, an increase of 590 basis points, primarily due to higher average selling prices, a higher proportion of Direct-to-Consumer sales, and lower freight costs. Operating expenses increased by 13.9%, and as a percentage of sales, it increased by 230 basis points to 42.4%. Net earnings were $145.4 million, and diluted earnings per share were $0.93, compared with prior year net earnings of $85.9 million and diluted earnings per share of $0.55.
Year-to-Date Performance
Year-to-date sales increased by 8.5%, reflecting a 15.6% increase in international sales and a 1.1% decrease domestically. Direct-to-Consumer sales grew by 26.0%, while Wholesale sales decreased by 1.1%. Gross margin was 51.5%, an increase of 470 basis points, primarily driven by higher average selling prices and a higher proportion of Direct-to-Consumer sales. Net earnings were $458.6 million, and diluted earnings per share were $2.93, an increase of 54.2% over the prior year.
Balance Sheet and Share Repurchase
As of September 30, 2023, the company's cash, cash equivalents, and investments totaled $1.27 billion, an increase of 61.5% from December 31, 2022. Inventory was $1.38 billion, a decrease of 24.0% from December 31, 2022. During the third quarter, the company repurchased approximately 805,486 shares of its Class A common stock at a cost of $40.0 million.
Outlook
For the fourth quarter of 2023, the company expects to achieve sales between $1.91 billion and $2.01 billion and diluted earnings per share of between $0.40 and $0.50. For the full year 2023, it expects to achieve sales between $7.95 billion and $8.05 billion and diluted earnings per share of between $3.33 and $3.43.
Explore the complete 8-K earnings release (here) from Skechers USA Inc for further details.
