Retail earnings were hit hard more or less across the board this winter, as extreme weather put a drag on store traffic. Brick-and-mortar retailers in various industries were affected, from electronics stores to apparel chains. However, some companies managed to buck this trend, delivering better-than-expected earnings despite soft consumer spending and the snowstorms that pounded much of the US. Skechers (SKX 0.60%) is one of the companies that managed to deliver excellent earnings, and it seems to be outpacing major rivals Nike (NKE 0.95%) and Deckers Outdoor (DECK -0.72%). How did the company do it?

Source: Wikimedia Commons

Bucking the trend
Whereas many apparel companies floundered during this past winter period, Skechers managed to deliver a massive earnings beat for its fiscal first quarter. Earnings of $0.61 per share more than quadrupled year over year and smashed the $0.33 consensus. Sales of $546.5 million also easily beat the $508.7 million consensus estimate, up from around $451 million a year ago. These are some impressive figures by any measure, let alone compared to the dip most retailers experienced during the winter.

In terms of market share, Skechers seems to be pinching some of Nike's business. In the walking-sneaker category, Skechers increased its market share from 34% to 50.5% between 2012 and 2013, while Nike saw its market share halved from 8% to 4%. While Nike is still growing earnings, the figures aren't nearly as impressive as Skechers'. For its most recent report, diluted earnings per share were up about 4% on a 3% increase in net income.

Wholesale strength
According to management, strength in the company's wholesale division was the driver behind these formidable growth figures. The company's international and domestic wholesale businesses both saw double-digit increases, with demand from customers as well as consumers outpacing the company's expectations.

Product innovation, especially in terms of comfort, seems to be propelling consumer demand. Good publicity is also working for the company, products from the Skechers performance division having been used by Boston marathon winner Meb Keflezighi.

The international distributor business is on fire, with triple-digit growth in Indonesia, Turkey, and Taiwan; at home, sales for the domestic wholesale business were up 20.7%. Meanwhile, the international company-owned retail business was no slouch either, posting a 5.6% increase in comp-store sales. Moreover, Skechers' management expects this positive sales momentum to continue into the second quarter and for the rest of the year, with April incoming order rates looking strong and backlogs on the increase.

Another competitor worth watching is Deckers Outdoor, which reported earnings on April 24. The company delivered a loss of $0.08 per share, which came in better than the previously given guidance for a loss of $0.16 per share. The company's UGG brand did well, with sales up nearly 16%.

Guidance for first-quarter 2015 isn't particularly inspiring, the company expecting a loss of around $1.33 per diluted share. Generally, the company is projecting a tough first half of calendar 2014, with most of the positive earnings to be generated in Q2 and Q3 of fiscal 2015, or the three-month periods ending Sept. 30 and Dec. 31.

The bottom line
Skechers is on fire. The shoemaker smashed first-quarter expectations, posting a huge earnings increase driven largely by strength in its international wholesale business. Encouragingly, the company expects this strong performance to continue in the next quarter and throughout the rest of the year, making it an enticing choice in the footwear industry.