Shape-up toning shoes were all the rage in 2010.
They gave Skechers a big sales lift and, then, thump. They fell flat.
Skechers would just as soon forget about the product's spectacular fall, which caused a profit loss of 60 cents a share in 2011 on a 20% drop in sales as retailers cleared out excess inventory at discounts.
As they were clearing out Shape-up inventory, wholesale customers
were reluctant to place big orders with Skechers on other products.
Skechers' wholesale customers include department stores, such as Macy's and Dillard's and footwear specialty stores, such as Famous Footwear.
"Skechers was put in the penalty box for quite a while. Retailers
didn't want to take the risk of getting slammed again," said Sterne Agee
analyst Sam Poser.
Skechers went back to the drawing board.
"They redeveloped a lot of their product lines, and they came up with
new product in a lot of different segments," said analyst Jeff Van
Sinderen of B. Riley & Co. "That product has been gaining strong
traction for the last couple of quarters."
Performance Division
Running shoes were among the new lineup, part of a new performance division that also includes lightweight, active and sports shoes for men, women and kids.
Without one mention of Shape-ups in its last earnings report or conference call, Skechers reported a 39% jump in fourth-quarter sales vs. the prior year, to $395.6 million.
From dress and casual footwear to running shoes, its products have lately been selling well in wholesale channels and in the company's 350-plus company-owned stores.
Same-store sales at company-owned stores rose in the low-double-digits in the fourth quarter while international business leapt 30%.
In the year-end report Feb. 13, CEO Robert Greenberg called 2012 "a remarkable year for Skechers" as the Manhattan Beach, Calif.-based company broadened product lines and grew earnings 132% over 2011's 60-cent loss.
Sales, however, were down 3% for the year as excess inventory continued to be liquidated, especially in the first half of the year.
Earnings in the fourth quarter grew 121% to 8 cents a share. In the same quarter of 2011, earnings had plummeted 657% for a 39-cent per-share loss. For all of 2011, profit fell 122% to a loss of 60 cents a share.
'Strong Start'
Greenberg said the first quarter of this year got off to "a strong start." Shares are up almost 25% since the first of the year.
source: news.investors.com
