Sales for Skechers ( SKX 4.99% ) came roaring back to life in the third quarter of 2020, according to the company's newly released earnings report. But it wasn't enough to keep the stock from falling. Perhaps the broader market decline helped pull it down, but it was down 9% on Friday nonetheless.
Skechers reported sales of $1.3 billion in Q3, which was only down 4% from the year ago. That's a stark improvement from the previous quarter, in which it reported a sales decline of 42% year over year. Like many successful retail companies, Skechers' results were assisted by strong e-commerce sales. Management noted that its direct-to-consumer business fell 17% during the quarter, but e-commerce sales in U.S. soared 172% higher.
In the third quarter, Skechers remained solidly profitable with $64.3 million in net income. But this was down 38% year over year. Management gave a couple of reasons for the sharp decline. First, relatively higher e-commerce sales placed a strain on warehouses, resulting in higher costs. Second, the company incurred over $18 million in a one-time noncash charge for a legal settlement.
Chief operating officer David Weinberg tried to keep things in perspective in the conference call by saying, "We are very pleased with our third-quarter performance at only a 3.9% decrease from the same period last year, which was also our highest quarterly sales in our history." In other words, the quarter's sales were impacted by a global pandemic, and results were nearly as good as they've ever been.
Skechers is well capitalized, with $1.5 billion in cash, cash equivalents, and short-term investments. That said, the company refrained from giving guidance.