Skechers Profit Falls on Ad Expenses
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Shoemaker Skechers USA Inc. said Thursday that quarterly earnings fell on higher advertising expenses and forecasted a disappointing current quarter, sending shares down more than 10%.
Skechers, which makes and sells colorful sneakers targeting young consumers, reported a first-quarter profit of $7 million, or 18 cents a share, compared with $8.5 million, or 22 cents, a year earlier, as advertising costs increased. Sales rose 6% to $221.5 million.
Four analysts on average had expected a profit of 15 cents a share on sales of $210 million, according to Reuters Research.
Wedbush Morgan Securities analyst Michael Pachter said Skechers had indicated that expenses were under control, and investors had expected earnings would improve.
“They are going the wrong direction,” said Pachter, referring to Skechers’ smaller profit despite higher sales. Pachter rates the company’s shares “hold” and doesn’t own them.
Skechers shares fell $1.41, or 10%, to $12.54 on the New York Stock Exchange.
The Manhattan Beach-based company also said gross margin fell to 40.5% from 43.3% in the year-earlier quarter.
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