SKECHERS Announces Third Quarter 2012 Financial Results

  SKECHERS Announces Third Quarter 2012 Financial Results

  *Net Sales of $429.4 Million
  *Net Earnings of $11.0 Million
  *Diluted Earnings Per Share of $0.22

Business Wire

MANHATTAN BEACH, Calif. -- October 24, 2012

SKECHERS USA, Inc. (NYSE:SKX), a global footwear leader, today announced
financial results for the quarter ended September 30, 2012.

Net sales for the third quarter of 2012 were $429.4 million, compared to
$412.2 million in the third quarter of 2011, and income from operations was
$20.3 million, compared to $2.2 million in the third quarter of 2011. Net
earnings for the quarter were $11.0 million compared to net earnings of $8.3
million in the third quarter of 2011. Net earnings per diluted share for the
third quarter were $0.22 on 49.9 million diluted shares outstanding, compared
to net earnings per diluted share of $0.17 on 49.4 million diluted shares
outstanding for the third quarter of 2011.

"During the third quarter, sales improved in our domestic wholesale division,
company-owned retail stores and international distributor businesses as a
result of growth in many of our men's, women's and kids’ lines, including
strong sales in our expanding Performance division. Also, our company-owned
SKECHERS domestic concept stores achieved low double-digit positive comp store
sales for the entire quarter, a positive market indicator for the acceptance
of our new product offerings," began David Weinberg, chief operating officer
and chief financial officer. "The only revenue channel which did not increase
during the third quarter was our international subsidiary division, which was
adversely affected by a combination of the very challenging economic retail
environment in Europe and the Euro exchange rate, as well as declining toning
sales in comparison to the prior year period. However, we are now seeing an
overall positive trend within our largest international subsidiaries."

Mr. Weinberg continued: “It is also important to note that currency
translations reduced our net income by $1.4 million during the quarter, which
reduced our after-tax diluted earnings per share by approximately $0.02. Also
of note, we increased our total sales between the second and third quarters by
12 percent while general and administrative expenses remained relatively flat.
We believe we will continue to further leverage our infrastructure positively
in 2013.”

Gross profit for the third quarter of 2012 was $187.8 million, compared to
$175.2 million in the third quarter of 2011. Gross margin was 43.7 percent for
the third quarter of 2012, compared to 42.5 percent in the third quarter of
2011. Gross profit for the first nine months of 2012 was $514.9 million, or
44.2 percent of net sales, compared to $511.1 million, or 38.6 percent of net
sales, in the first nine months of 2011.

For the nine months ended September 30, 2012, net sales were $1.165 billion
compared to net sales of $1.323 billion in the first nine months of 2011. Net
earnings for the first nine months of 2012 were $5.6 million, compared to net
loss of $9.8 million in the first nine months of 2011. Net income per diluted
share in the first nine months of 2012 was $0.11 per share on 49.8 million
diluted shares outstanding, compared to a net loss of $0.20 per share on 48.3
million diluted shares outstanding for the same period last year.

Robert Greenberg, SKECHERS chief executive officer, commented: "The third
quarter marked yet another first for Skechers with elite marathon runner, Meb,
competing successfully in Skechers GOrun footwear during the 2012 London
Olympics. Running with the best athletes in the world, Meb was the first
American to finish and came in fourth place. We are extremely proud of his
Olympic achievement and our recent awards from respected publications,
including 'Editor’s Choice' from Runner’s World (UK) for Skechers GObionic.
Our success in the quarter was in part the result of the continued growing
acceptance of our expanding Performance footwear by the running community and
consumers alike, as well as many new product developments and fresh styles
within our lifestyle collections, including the successful introduction of
Relaxed Fit Footwear for men and the growth of BOBS from Skechers. Through
BOBS we have now donated more than two million pairs of shoes to children in
need thanks to the ‘buy a pair, give a pair’ charitable program. In the
quarter, we supported our performance, kids’ and lifestyle brands with
advertising, including a new Mr. Quiggly commercial for Skechers GOrun Ride.
We also released Twinkle Toes: The Movie on DVD in our SKECHERS stores and at
key retailers. We are continuing to support our brands through the Fall and
Holiday seasons, including the launch of a new men’s campaign starring Dallas
Mavericks owner Mark Cuban earlier this month, baseball icon Tommy Lasorda
next week, and football legend Joe Montana next month. We also extended our
agreement with Dancing with the Stars host Brooke Burke, who will be appearing
in several new print and television campaigns starting in Spring 2013. We are
energized by the enthusiasm for our product in our SKECHERS retail stores,
with our domestic retail partners and in many countries around the world. We
are building on this momentum with a continued focus on delivering fresh
innovative styles and are looking forward to a strong holiday season and
growth in 2013."

Mr. Weinberg added: “We are pleased with our continued improvements in
financial performance and the positive response to our new products. Based on
our key indicators and early sell through rates, we have confidence that all
operating divisions – domestic wholesale, international and retail – will be
up low to mid double digits in the fourth quarter. The combination of our
recent growth, the coming Holiday season, and the reaction to our new product
divisions, gives us confidence that SKECHERS is experiencing a resurgence on a
global basis and we are on target to continue to grow profitably in 2013.”

ABOUT SKECHERS USA, INC.

SKECHERS USA, Inc., based in Manhattan Beach, California, designs, develops
and markets a diverse range of footwear for men, women and children under the
SKECHERS name. SKECHERS footwear is available in the United States via
department and specialty stores, Company-owned SKECHERS retail stores and its
e-commerce website, and over 100 countries and territories through the
Company’s global network of distributors and subsidiaries in Brazil, Canada,
Chile, Japan, and across Europe, as well as through joint ventures in Asia.
For more information, please visit www.skechers.com, and follow us on Facebook
(www.facebook.com/SKECHERS) and Twitter (twitter.com/#!/SKECHERSUSA).

This announcement may contain forward-looking statements that are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include, without limitation,
any statement that may predict, forecast, indicate or simply state future
results, performance or achievements, and can be identified by the use of
forward looking language such as "believe," "anticipate," "expect,"
"estimate," "intend," "plan," "project," "will be," "will continue," "will
result," "could," "may," "might," or any variations of such words with similar
meanings. Any such statements are subject to risks and uncertainties that
could cause actual results to differ materially from those projected in
forward-looking statements. Factors that might cause or contribute to such
differences include international, national and local general economic,
political and market conditions including the ongoing global economic slowdown
and market instability; entry into the highly competitive performance footwear
market; sustaining, managing and forecasting costs and proper inventory
levels; losing any significant customers, decreased demand by industry
retailers and cancellation of order commitments due to the lack of popularity
of particular designs and/or categories of products; maintaining brand image
and intense competition among sellers of footwear for consumers; anticipating,
identifying, interpreting or forecasting changes in fashion trends, consumer
demand for the products and the various market factors described above; sales
levels during the spring, back-to-school and holiday selling seasons; and
other factors referenced or incorporated by reference in the Company’s annual
report on Form 10-K for the year ended December 31, 2011 and its quarterly
report on Form 10-Q for the three months ended June 30, 2012. The risks
included here are not exhaustive. The Company operates in a very competitive
and rapidly changing environment. New risks emerge from time to time and the
companies cannot predict all such risk factors, nor can the companies assess
the impact of all such risk factors on their respective businesses or the
extent to which any factor, or combination of factors, may cause actual
results to differ materially from those contained in any forward-looking
statements. Given these risks and uncertainties, you should not place undue
reliance on forward-looking statements as a prediction of actual results.
Moreover, reported results should not be considered an indication of future
performance.

SKECHERS U.S.A., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
                                                               
                                                  September 30,   December 31,
                                                               
                                                  2012            2011
ASSETS
Current Assets:
Cash and cash equivalents                         $  307,946      $  351,144
Trade accounts receivable, net                       241,199         176,018
Other receivables                                   6,902         6,636
Total receivables                                    248,101         182,654
Inventories                                          302,140         226,407
Prepaid expenses and other current assets            34,091          88,005
Deferred tax assets                                 39,141        39,141
Total current assets                                 931,419         887,351
Property and equipment, at cost less                 366,939         376,446
accumulated depreciation and amortization
Intangible assets, less applicable amortization      3,469           4,148
Deferred tax assets                                  2,258           530
Other assets, at cost                               12,056        13,413
TOTAL ASSETS                                      $  1,316,141   $  1,281,888
                                                                     
LIABILITIES AND EQUITY
Current Liabilities:
Current installments of long-term borrowings      $  10,311       $  10,059
Short-term borrowings                                57,654          50,413
Accounts payable                                     237,152         231,000
Accrued expenses                                    24,461        16,994
Total current liabilities                            329,578         308,466
Long-term borrowings, excluding current              70,233          76,531
installments
Deferred tax liabilities                            33            4,364
Total liabilities                                    399,844         389,361
Equity:
Skechers U.S.A., Inc. equity                         872,763         852,561
Noncontrolling interests                            43,534        39,966
Total equity                                        916,297       892,527
TOTAL LIABILITIES AND EQUITY                      $  1,316,141   $  1,281,888


SKECHERS U.S.A., INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
                                               
                Three Months Ended September     Nine Months Ended September
                30,                              30,
                2012             2011           2012           2011
Net sales       $  429,429        $  412,183     $ 1,164,704     $ 1,322,768
Cost of sales     241,605        236,988    649,842      811,633   
Gross profit       187,824           175,195       514,862         511,135
Royalty income    1,758          1,406      4,503        4,430     
                  189,582        176,601    519,365      515,565   
Operating
expenses:
Selling            34,385            37,943        103,834         128,602
General and       134,913        136,459    401,172      417,666   
administrative
                  169,298        174,402    505,006      546,268   
Income (loss)      20,284            2,199         14,359          (30,703   )
from operations
Other income
(expense):
Interest, net      (3,338   )        (986    )     (9,315    )     (3,960    )
Other, net        (1,621   )      490        (1,205    )   (846      )
                  (4,959   )      (496    )   (10,520   )   (4,806    )
Income (loss)
before income      15,325            1,703         3,839           (35,509   )
taxes
Income tax
expense           3,725          (6,653  )   (3,007    )   (25,966   )
(benefit)
Net earnings       11,600            8,356         6,846           (9,543    )
(loss)
Less: Net
earnings
attributable to   596            71         1,290        280       
noncontrolling
interest
Net earnings
(loss)
attributable to $  11,004       $  8,285     $ 5,556       $ (9,823    )
Skechers
U.S.A., Inc.
                                                                 
                                                                 
Net earnings
(loss) per
share
attributable to
Skechers
U.S.A., Inc.:
Basic           $  0.22         $  0.17      $ 0.11        $ (0.20     )
Diluted         $  0.22         $  0.17      $ 0.11        $ (0.20     )
                                                                 
Weighted
average shares
used in
calculating
earnings (loss)
per share
attributable to
Skechers
U.S.A., Inc.:
Basic             49,443         48,445     49,335       48,344    
Diluted           49,923         49,399     49,834       48,344    

Contact:

Company Contact:
SKECHERS USA, Inc.
David Weinberg
Chief Operating Officer
Chief Financial Officer
(310) 318-3100
or
Investor Relations:
Andrew Greenebaum
(310) 829-5400
 
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