Home Consumer Goods CG Stocks Momentum= Skechers USA Inc (NYSE:SKX), Johnson Controls Inc (NYSE:JCI)

CG Stocks Momentum= Skechers USA Inc (NYSE:SKX), Johnson Controls Inc (NYSE:JCI)


Skechers USA Inc (SKX) recently declared financial results for the fourth quarter and year ended December 31, 2016.

Quarterly and Fiscal Year Highlights

Record fourth quarter net sales of $764.3 million, a boost of 5.8 percent, and record annual net sales of $3.56 billion, a boost of 13.2 percent

Earnings from operations of $28.3 million for the fourth quarter and $370.5 million for the year

Net earnings of $6.7 million for the fourth quarter and $243.5 million for the year

Diluted earnings per share of $0.04 for the fourth quarter and $1.57 for the year

“Skechers achieved new fourth quarter and full-year net sales records, surpassing our fourth quarter guidance range of $710 million to $735 million,” began David Weinberg, chief operating officer and chief financial officer. “The strong quarterly growth was mainly the result of a 17.1 percent increase in our international wholesale business, led by China with a boost of 48.5 percent. In addition, our global Company-owned retail business grew 13.9 percent on a store base of 571 at year-end. Combined with our third-party owned stores, we had 2,012 Skechers stores worldwide at year-end, creating a global network that includes more than 500 locations in China, more than 60 in each of India, Mexico and Saudi Arabia, and over 50 in each of Australia, Malaysia, South Korea and Taiwan.”

Fourth Quarter Financial Results

Quarterly net sales raised 5.8 percent to $764.3 million contrast to fourth quarter 2015. The growth was the result of a 17.1 percent increase in the Company’s international wholesale business and a 13.9 percent increase in its Company-owned global retail business which included comparable same store sales increases of 3.6 percent. In Addition To, the negative currency translation impact on its gross margins in its international wholesale and international Company-owned retail businesses for the fourth quarter was $18.4 million. The net sales increases were offset by a decrease of 11.8 percent in the Company’s domestic wholesale business, which included a 4.6 percent decrease because of the launch of the Star Wars footwear collection in the fourth quarter of 2015.

Gross profit for the fourth quarter was $356.2 million, or 46.6 percent of net sales, contrast to $329.9 million, or 45.6 percent of net sales, for the fourth quarter of last year. Historically, gross margins for its retail segment are the highest, followed by gross margins for international partner sales and then domestic wholesale sales, with gross margins for its international distributor sales being the lowest. The slightly higher gross margin during the quarter was because of a combination of raised international partner revenues and margins, reduced domestic wholesale and international distributor sales and margins, which were offset by lower retail margins.

Fourth quarter selling expenses raised $1.6 million to $59.5 million, or 7.8 percent of sales, contrast to $57.9 million, or 8.0 percent of sales, in the fourth quarter of the prior year. The increase was mainly because of raised international advertising expenses.

General and administrative expenses for the fourth quarter raised $52.3 million to $273.4 million, or 35.8 percent of sales, contrast to $221.1 million, or 30.6 percent of sales, in the prior year. The year-over-year quarterly increase was mainly because of Skechers’ focus on long-term global growth, counting $15.3 million associated with the Company’s 53 additional domestic and international retail stores, and $27.0 million to support its international growth, of which $19.0 million was because of raised costs in China, $2.8 million for the transition of its South Korean distributor to a joint venture, $2.3 million in support of its new Latin America partner, and $3.2 million in Japan. Domestic wholesale general and administrative expenses raised $10.0 million during the fourth quarter mainly because of raised headcount in the United States to support its brand worldwide.

“We are in our 25th year of business, have a well-established brand and prominent position in the United States, and have grown our international business to 46.1 percent of our 2016 sales,” added Mr. Weinberg. “As we plan for our international business to grow to 50 percent of our total sales in the near future, we transitioned several of our international distributors to joint ventures or auxiliaries in key regions in 2016 and the few years prior, and have been investing in the infrastructure and marketing to support the current and planned growth. In the fourth quarter, these investments were mainly in China, Korea Japan and Latin America, which are regions that we believe will represent great growth opportunities.”

Johnson Controls Inc (JCI) finalized a contract covering North America, China and Europe for a cutting-edge electrochemical battery recycling technology. Under terms of a multi-faceted deal, the company is investing in Aqua Metals (AQMS).

“Our partnership with Johnson Controls is a tremendous step forward and is an opportunity for us to work with the global leader in automotive battery manufacturing and responsible recycling,” said Dr. Stephen Clarke, chairman and CEO of Aqua Metals. “We will build on this exciting relationship in order to facilitate clean and efficient battery recycling around the world.”

Under the agreement Johnson Controls will also:

  • Become the first licensee for AquaRefining™ technology
  • Supply Aqua Metals with batteries to recycle as a service, as part of the Johnson Controls closed-loop network
  • Purchase AquaRefined™ metals produced from Aqua Metals’ facilities
  • Acquire just under 5 percent of Aqua Metals outstanding shares

“Agreements like this are a part of our continuing strategy to invest in clean technologies, building on our commitment to create a more sustainable and environmentally responsible industry,” said Joe Walicki, president of Johnson Controls Power Solutions.

Aqua Metals, which recently opened its first plant in McCarran, Nevada, uses an advanced electrochemical process for recycling batteries. As it scales up capacity, Aqua Metals plans to hire hundreds of employees for existing and future operations across the United States.