Skechers Warns Profit in 3rd Quarter Will Fall

Skechers USA Inc. said Wednesday that its third-quarter earnings will fall and fourth-quarter profit may be less than forecast as costs rose and shipments to retailers slowed.

The Manhattan Beach-based maker of sneakers, boots and sandals said third-quarter per-share earnings will be in line with or slightly less than the 40 cents the company earned a year earlier. Fourth-quarter profit may miss the 31-cent average estimate of five analysts polled by Thomson Financial/First Call. Skechers earned 26 cents in that period last year.

Sales in the third quarter are forecast to be at or above the top end of the range of $265 million to $275 million, compared with $205.7 million a year earlier.

July and August sales were higher than expected, leading the company to spend more on advertising, personnel and distribution in anticipation of sales that didn’t materialize later in the quarter, analysts said.

Sluggish consumer spending and the Sept. 11 terrorist attacks resulted in fewer shipments to customers, analysts said.

“Department stores and chains are canceling orders at the very end of the quarter,” said John Zolidis, an analyst at Sidoti & Co. who has a “buy” rating on the stock. “The crucial thing is to demonstrate they can effectively manage the costs in the fourth quarter.”

Skechers shares fell $1.58 to $13.20 on the New York Stock Exchange.

Zolidis, who doesn’t own Skechers shares, cut his third-quarter per-share profit forecast Monday to 47 cents from 50 cents. He’s considering a further reduction to 37 cents.

Zolidis reduced his fourth-quarter estimate to 21 cents from 31 cents. For the year, the forecast has been lowered to $1.58 from $1.70 and may be cut to $1.48, he said.

The company will release full results for the third quarter during the week of Oct. 22.