Given the effect of COVID-19, Skechers still managed to beat sales forecasts from analysts. During the first two months of 2020 the company had solid momentum, until the outbreak of coronavirus in China -- and the rest of the world -- that caused the footwear company's first-quarter revenue to decrease to $1.24 billion.
Skechers disclosed that its top and bottom line fell year-over-year. Reduced investment in China has affected the quarterly success of the company. For the quarter, margins decreased, as well. Owing to doubts linked to the current scenario, management has given no guidance on sales or earnings.
Net earnings in the first quarter dropped from $108.8 million or $0.71 per share in the same quarter a year earlier to $49.1 million, or $0.32 per share. Earnings of $0.39 per share, excluding products, matched an average estimate of 9 analysts polled by Thomson Reuters.
The company had the highest shipments ever from its North American and European distribution centers in January and February, and in the group-owned direct-to-consumer market, comparable same store sales grew by 9.8 percent worldwide.
Skechers listed several optimistic indicators during the first-quarter conference call. The positive indicators included its strong e-commerce sector, a positive sales trend in China as stores reopened, and shops reopening in several markets such as Germany, Scandinavia and Austria.
Meanwhile, a 9 percent rise in the company's domestic wholesale revenues to approximately $378 million has guided overall revenue growth for the domestic sector. Increased sales in the women's and men's Go Line, men's and women's USA segment, and the working and street categories benefitted the domestic wholesale sector.
Nevertheless, in the midst of the crisis, the company has seen strength in its e-commerce market. Impressively, its company-owned e-commerce revenues rose in the first quarter by more than 70 percent and so far reached 250 percent in the month of April.
Management will continue to invest in the e-commerce sector, with a POS scheme, new websites and loyalty program being rolled out. The company has seen a strong sales trend recently in its sector in China.
According to Skechers chief operating officer David Weinberg, the footwear company believes that its quarterly performance before the disruption is proof to their strength in product and brand, all of which leads Skechers to believe that when the markets resume their operations, people go back to work and buyers get back to shopping, the company will continue in its position as a leading footwear brand.
