Despite a staggering 42% sales slowdown in the second quarter, Skechers (NYSE:SKX) beat analyst estimates and posted a 428% increase in company-owned e-commerce sales.
Strength in digital and China
Net sales in the shoe company's second quarter, which ended June 30, were $730 million, and the net loss was $68 million. Diluted loss per share was $0.44. The Chinese market, were stores reopened earlier, grew 11.5%. The company ended the quarter with $1.56 billion in cash, cash equivalents, and investments. Selling, general, and administrative expense decreased $73 million as management effectively curtailed capital expenditures during the quarter.
While Skechers saw strength in digital direct-to-consumer (DTC), overall DTC decreased 47% and domestic wholesale decreased 53% as retail stores were shut down during the pandemic. The company did not have to discount many products, potentially aided by its already lower prices, with many people aiming to spend less.
With a 20% increase in inventory, Skechers feels it's in a very good position to allocate merchandise where demand is growing.
As of June 30, Skechers had 510 company-owned U.S. stores; 308 company-owned international stores; 390 joint-venture stores; and 2,407 distributor, licensee, and franchise stores for a total of 3,615. About 90% of stores have reopened. The company opened seven new stores during the second quarter and added 102 third-party resellers.
Skechers released a new website this week and is planning to launch a new mobile app and loyalty program as it builds its DTC business.