Skechers (NYSE:SKX) announced fiscal first-quarter results Thursday evening that showed a dramatic impact from the temporary closures that have swept its global store footprint since mid-March.
Sales had been rising by nearly 10% for most of the quarter, management said, but that momentum was quickly halted as COVID-19 forced widespread social distancing efforts. That two-week period led to an overall revenue decline of 1% for the full quarter.
The footwear specialist's earnings were hit harder mainly because of inventory writedowns on seasonal merchandise. Gross profit margin fell to 44% of sales from 46% a year ago and selling expenses jumped, which pushed operating margin down to 3.6% of sales from 13%. Adjusted earnings fell 45% to $0.39 per share.
Management sounded an optimistic tone about Skechers' financial strength, which is currently backed by $1.37 billion of cash on the balance sheet. Executives are also hopeful that a quick rebound may be in store once the COVID-19 threat passes.
"We believe that our performance prior to the disruption is a testament to the strength of our product and brand," COO David Weinberg said in a press release, "which leads us to believe that when markets reopen, people return to work and customers get back to shopping, Skechers will continue in its position as a leading footwear brand."