Covid-19 blunts tremendous growth of footwear brand Skechers
US footwear brand Skechers has reported a modest 2.7-per-cent drop in first-quarter sales brought on by the coronavirus outbreak – and painted a rosy picture of life beyond the coronavirus crisis.
“We are in unprecedented times, facing difficult decisions daily as we navigate this global pandemic that has negatively impacted every business throughout our industry and most others,” said Skechers CEO Robert Greenberg.
“We know from the triple-digit growth we are experiencing so far this month in our e-commerce business and the positive sales trajectory of our recovering business in China, that Skechers’ product continues to resonate with consumers. As our business begins to return to normal, we firmly believe that our retail partners and customers will look to a brand they trust that delivers comfort, innovation, style, and quality at a value.”
The firm’s net earnings during the period were US$49.1 million, with adjusted net earnings $59.9 million, reflecting the impact of negative foreign currency rates and certain purchase price adjustments related to the company’s Mexico joint venture.
“We experienced strong momentum throughout 2019, which continued into the first two months of 2020,” said Skechers COO David Weinberg. “However, due to significantly reduced economic activity in China after January, and the spread of the Covid-19 pandemic around the rest of the world in March, sales decreased 2.7 per cent in the first quarter. Until then, Skechers’ business was on track for a new first-quarter sales record.”
CFO John Vandemore said that despite “an extremely strong end” to last year and an equally strong beginning to this one, the company saw notable slowdown in markets impacted by the Covid-19 pandemic.
“We have taken decisive action to fortify our business for the duration of this crisis, including drawing down on our senior unsecured credit facility, actively managing operating expenses, inventory levels and production orders, and deferring non-critical capital expenditures. We are confident that the actions we have taken and will continue to take, combined with the global strength of our brand and balance sheet, will position Skechers to successfully navigate this situation, and poise us to return to growth in the future.”