Despite drop in second quarter sales, Sketchers shows early signs of recovery

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The footwear brand announced its second quarter results, with a sales decline of 42% overall due to the impact of the Covid-19 pandemic. However, the company said it is optimistic about its ability to recover, mainly driven by growth in China, improvements in other key markets and a jump in e-commerce.

Skechers’ overall sales decreased by 42% as a result of a 37.8% decrease in its international business and a 47.3% decrease in the company’s domestic business. The company’s international sales declines were partially offset by an 11.5% increase in China sales, while the company’s international wholesale business decreased by 29.9% and its domestic wholesale business shrunk by 57.2%. With nearly all Skechers stores closed at some point in the quarter, its direct-to-consumer business decreased by 47.1%. Comparable same store sales in its direct-to-consumer business dropped by 45.6%, including a decline of 35.9% in the United States and 66.9% internationally. Net loss for the quarter reached US$68.1 million. However, the brand’s e-commerce business spiked by 428.2%.

David Weinberg, Chief Operating Officer, said that despite the significant impact by Covid-19 on the Sketchers business, the company was optimistic in light of early signs of recovery witnessed during the quarter, including a return to growth in China, consistent improvements each month in some markets outside of China, and the record growth in the company-owned e-commerce business. “While every country’s recovery has been unique, we began to see a similar recovery trend, first reflected in China and now extending into other markets globally, including Australia, Germany, South Korea and Taiwan. We believe the positive sales trends in markets that have re-opened, as well as the efficiency with which we addressed the pandemic challenges, are strong indicators that when the global health crisis stabilises, Skechers will remain a global footwear leader”, he said.

For the first six months of the current fiscal year, sales decreased by 22.2%, reflecting the impact of the global pandemic on the businesses worldwide. Net loss totalled US$19 million.

Reference:

Sketchers shows early signs of recovery despite drop in second quarter sales – International Leather Maker. (n.d.). Retrieved July 31, 2020, from https://internationalleathermaker.com/news/fullstory.php/aid/8740/Sketchers_shows_early_signs_of_recovery_despite_drop_in_second_quarter_sales_.html