Skechers USA, Inc. reported earnings rose nearly five-fold in its first quarter ended Mar. 31, to $31.0 million, or 61 cents a share, from $6.7 million, or 9 cents, a year ago. Revenues rose 21.0 percent to $546.5 million from $451.6 million a year ago.
Gross profit for the first quarter of 2014 was $240.4 million, or 44.0 percent of net sales, compared to $192.7 million, or 42.7 percent of net sales, in the first quarter of 2013. Earnings from operations for the first quarter of 2014 were $48.2 million compared to earnings from operations of $15.3 million for the first quarter of 2013. Due to Easter falling later in Spring, the company shifted a portion of its advertising expenses into the second quarter 2014, reducing its media expenses in the first quarter 2014.
"The demand for Skechers footwear from both our customers and consumers has been above and beyond our expectations. The result was net sales of over $546 million, a 21 percent increase over last year's first quarter and a first quarter record as well as the second highest quarterly revenues in the company's 22-year history," began David Weinberg, chief operating officer and chief financial officer. "The improvements were achieved despite Easter falling late in April and the extreme cold weather experienced in most of the United States throughout the quarter. The sales results are attributable to double-digit increases in our domestic and international wholesale business, as well as increases in our worldwide company-owned retail business, which achieved a 5.6 percent comparable quarter net sales increase. With multiple product success stories in our lifestyle, performance and kids' footwear, the positive reaction to our current products resulted in a gross margin of 44.0 percent and an operating margin of 8.8 percent."
Net earnings in the first quarter of 2014 were $31.0 million compared to net earnings of $6.7 million for the first quarter of 2013. Net earnings per diluted share in the first quarter 2014 were $0.61 based on 50.8 million weighted average shares outstanding compared to a diluted net earnings per share of $0.13 based on 50.5 million weighted average shares outstanding for the same period in the prior year. The Company's effective tax rate for the first quarter of 2014 was 25.7 percent as a result of certain discrete items recorded in the first quarter. The Company currently estimates its effective tax rate for 2014 to be 25 percent to 28 percent.
Robert Greenberg, Skechers chief executive officer, commented: "The combination of the simultaneous success of multiple product categories in the United States and the broad global acceptance of these same initiatives allowed us to expand our assortment of styles and create a unified product message around the world. We believe this is because we're on target for current trends with the most relevant and exciting footwear offering in the company's history, including our Spring 2014 collection which we began to deliver in February. The record first quarter sales are evidence that our product initiatives are working and our on-going efforts to elevate our product offering with fresh innovative footwear styles is resonating with consumers. The innovation has also lead to remarkable accomplishments in our Skechers Performance Division with two editorial awards in the first quarter for our Skechers GO running footwear, and yesterday's incredible Boston Marathon win for elite runner and Olympian Meb, who achieved a personal best in Skechers GOmeb Speed 3 at the event. Meb continues to appear in Skechers Performance Division marketing campaigns, while The Voice winner Danielle Bradbery, television celebrity Brooke Burke-Charvet, and sport icons Joe Montana, Mark Cuban and Tommy Lasorda appear in our campaigns for our lifestyle division. In addition, print ads are running in magazines and on billboards and kiosks, and we have a strong online and in-store marketing presence. We are also running many of our product and lifestyle focused campaigns around the world, further creating global synergy between product and marketing. We have seen the benefits of leveraging the strength of our brand, product and marketing across international markets as first quarter sales achieved double-digits growth in Europe, Canada, Asia, including China, and many other regions. We believe this positive trend will continue as the demand for our brand remains strong globally. We are looking forward to delivering the remainder of our Spring footwear collection, and introducing new innovative product for Back-to-School 2014."
Weinberg continued: "April has started off very strong in terms of order rates, revenues and backlogs, all which have accelerated since year end. This was achieved without impacting our at-once business which remains at the same levels as last year. We believe this positive trend will continue through the second quarter and back half of the year as the demand for our key product initiatives in the United States, Asia, Europe, the Middle East and South America remains very high. We believe we are well positioned to maintain this growth with the combination of $329.4 million in cash, an additional 50 to 60 company-owned Skechers stores opening later this year in addition to the 10 opened in the first quarter, and more in-line product deliveries in the second quarter and throughout 2014. Though we believe there may be some upside with the second quarter sales numbers, we remain comfortable with the analysts' consensus earnings estimates currently reported for the quarter even with the shift of media expenses previously discussed."
