Coronavirus knocks Skechers sales back 42%

By

Robin Driver

Published
Jul 24, 2020

Manhattan Beach, California-based footwear company Skechers USA, Inc. announced a notable decline in its second-quarter revenues on Thursday, as disruption caused by the Covid-19 pandemic took its toll on sales.
 

For the second quarter ended June 30, 2020, the company reported total sales of $729.5 million, a 42.0% decrease compared to $1.26 billion in the prior-year period. This decline reflected a 47.3% decrease in its domestic sales and a 37.8% decrease in its international business, where declines were partially offset by an 11.5% increase in China.
 
Wholesale revenues fell 29.9% internationally and 57.2% domestically, while direct-to-consumer sales decreased 47.1%, despite a mammoth 428.2% increase in quarterly e-commerce revenues. Overall, comparable store sales in Skechers’ direct-to-consumer business fell 45.6%.

The company’s total net loss for the quarter came to $68.1 million, or $0.44 per diluted share, compared to earnings of $75.2 million, or $0.49 per diluted share.
 
“The impact of Covid-19 to Skechers’ business was significant in the second quarter as we saw much of the world outside Asia shutter nearly all businesses,” commented Skechers COO David Weinberg in a release. “However, we remain optimistic about the early signs of recovery we witnessed during the quarter, including a return to growth in China, consistent improvement each month in some markets outside of China, and record shattering growth of over 400 percent in our Company-owned e-commerce business.”
 
As well as China, Weinberg highlighted recovering sales in Australia, Germany, South Korea and Taiwan, concluding that “when the global health crisis stabilizes, Skechers will remain a global footwear leader.”
 
Taking into account the first quarter, Skechers’ first-half sales totaled $1.97 billion, down 22.2% from $2.54 billion in the same six-month period in the previous year. The company’s net loss for the period was $19.0 million, or $0.12 per diluted share, falling from earnings of $183.9 million, or $1.19 per diluted share.
 
Faced with the financial challenges of the Covid-19 pandemic, the company has implemented a range of measures aiming to preserve its liquidity. These have included drawing down on its credit facility, cutting costs and postponing non-critical capital expenditures.
 
Having implemented temporary closures in reaction to the pandemic, Skechers, which boasts 3,615 stores around the world, including 818 company-owned locations, 390 joint-venture stores and 2,407 distributor, licensee and franchise locations, has now reopened 90% of its store network.
 
Due to ongoing uncertainty surrounding the evolution of the coronavirus crisis, the company has not provided financial guidance for the third quarter or full fiscal year 2020.