Skechers U.S.A., Inc.
Q3 2015 Earnings Call Transcript

Published: 23 Oct 2015

[Operator:]

Greetings and welcome to the Skechers USA Incorporated Third Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. At this point, I would like to turn the conference call over to Skechers. Thank you. Please, go ahead.

[Unidentified Company Representative:]

Thank you everyone for joining us on Skechers' conference call today. I will now read the Safe Harbor statement. Certain statements contained herein, including, without limitation, statements addressing the beliefs, plans, objectives, estimates or expectations of the Company or future results or events, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statement involve known and unknown risks, including, but not limited to, global, national and local, economic, business and market conditions, in general and specifically as they apply to the retail industry and the Company. There can be no assurance that the actual future results, performance or achievements expressed or implied by such forward-looking statements will occur. Users of forward-looking statements are encouraged to review the Company's filings with the U.S. Securities and Exchange Commission, including the most recent annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all other reports filed with the SEC as required by federal securities laws for a description of other significant risk factors that may affect the Company's business, results of operations and financial conditions. With that I would like to turn the call over to Skechers' Chief Operating Officer and Chief Financial Officer, David Weinberg. David?

[David Weinberg:]

Good afternoon and thank you for joining us today to review SKECHERS third quarter 2015 financial results. Please note that all share and per share information mentioned on today’s call has been retroactively adjusted for the 3-for-1 stock split, which was effective October 15, 2015. Our sales for the third quarter were $856.2 million, a 27.0 percent increase over last year, and the highest quarterly sales in the Company’s 23-year history. This also resulted in record nine-month sales of $2.4 billion. Third quarter financial highlights include

[Operator:]

Thank you, ladies and gentlemen. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes line of Corinna Van Der Ghinst, Citi. Please go ahead with your question.

[Corinna Van Der Ghinst:]

So, U.S. wholesale was up 12% this quarter with more than half of that coming from pricing gains, it looks pretty different from the industry data out there, can you help us to understand maybe what channels did better or worse than -- was there anything in particular that surprised versus your plan for the quarter?

[David Weinberg:]

Yes, I think it's a number of things, I think part of it was obviously the 20 million that moves from July to June and we weren’t anticipating the next return in September, for whatever reason although we were selling very well. I think most of the channels of distribution that were big and had not so good end of September and because we don't necessarily participate in a lot of the close out there no with no filling business and stuff to come, actually we were holding up very well, through August and September seems to be a low, from our meetings it doesn't seem to had significant amount to do with the way we're selling or the perception of our brand or what's moving through, it’s just that we lost that big piece in July to June and it didn't get replicated in September because there was a lot of promotional activity and there was no need to bring in a lot of new full priced inventory at that time for a lot of the people. At least that's my perception anecdotally and from some of the conversations I've had with them currently. You see the same information I do when we get the same channel checks and everything seems to be very positive, so it was a macro piece in September specifically that seems to be the biggest piece.

[Corinna Van Der Ghinst:]

Okay and then I know September isn't typically a big selling month but did you see the trends improved sequentially or are you seeing anything in the kind of quarter to date environment now that would give you any reason to see a change in that pattern?

[David Weinberg:]

I don't think we would see it right now. We’d normally see it at the very end of October going into early November, for the most part the end of October and a quarterly reporting for many of the retailers and they're trying to get their inventories in lines for taking new staff in the beginning or middle of the October beyond certainties and we certainly are shipping, but I wouldn't expect the pickup until probably the end of next week going into November before thanksgiving and after they closed that quarter and after they take whatever they need to adjust their overall inventories.

[Corinna Van Der Ghinst:]

Okay great and then just in terms of your inventory being up 38% can you give us a little bit more color on how those are positioned for holiday and maybe what that implies for your top line growth plans for the fourth quarter?

[David Weinberg:]

Well I think it more reflects the fact that we didn't get the extra return, we've always said, we like to have the inventory on hand just in case there is an extra turn, most of that inventory is certainly spoken for and will ship in October, early November for the excess for the stuff we’ve brought in and we will continue to build as we historically do, going to the end of the year because first quarter has turned out to be a significantly larger quarter for us. I think parts of it is the new stores, it's our new operations around the world, we have to put inventory into South America more so than we were in the past and we put inventory for Central Eastern Europe. So we own more inventory, most stores that's part of it and part as we didn’t get the extra return in September, so although the inventory is spoken for, it was here early just case it was necessary and it really is spoken for.

[Corinna Van Der Ghinst:]

And should we be expecting that inventory number to increase from here into the end of the fourth quarter, when you report Q4?

[David Weinberg:]

I would anticipate that it will increase because first quarter is very seasonal both here and in Europe, we’d like to ship at the early end and remember even those things that are in transit counts, so everything we have to ship through mid-January or February which is by far now our bit which is a biggest growth quarter and will be our biggest quarter internationally, we’ll be building for through the end of the year. So as we have in times past we anticipate we will go into the end of the year with higher inventories off course unless there is a significant shift, these things get better through holiday and we start picking up some shipments at the end of December and get the X-return in that way and that's way too early to determine right now.

[Corinna Van Der Ghinst:]

Okay, thanks. And then just my last question is on the international wholesale in the fourth quarter. How should we be thinking about the cadence of that business from Q3 into Q4 can you just kind of walk us through your thinking there?

[David Weinberg:]

I think it will hold up the biggest the piece is obviously [indiscernible] smaller quarter for most of us internationally. I think it will continue to grow in the fourth quarter as it has in the third quarter, I don’t know if it will grow 50%, but I think it will be very close. All around I think China will continue to grow so we anticipate that that international will continue with its cadence well into the mid-double digits going through the end of the year and then continue even though its gets tougher comps in the first quarter next year.

[Operator:]

Thank you. Our next question comes from the line of Jay Seo with Morgan Stanley. Please go ahead with your question.

[Jay Seo:]

So just wanted to follow up on your comment that, I see significant potential in the first quarter of 2016 and the entire year. Now is it possible to kind of quantify -- are you sort of saying that street estimates you think, are too low, without maybe putting some numbers on it. Could you tells a little bit more about what you mean about -- what you think the business can generate in terms of earnings of sales for ’16, when do you think [indiscernible]?

[David Weinberg:]

I think what we're saying is that the numbers that are on the street for 2016 start to seem certainly achievable and if certain things break positively and international continues and we continue our full price and get back to significant growth in the U.S. that there is significant upside to that. I think China continues to grow very-very well. The backlogs we've seen and the growth we saw in Europe even though it was magnificent this year, still seems to be high, there seems to be a lot of room on our backlogs in Europe are significantly higher than the company as a whole. So that shows a lot more room, we think we’ll get some benefit out of Central-Eastern Europe, we think we actually will get some benefit out of South America. On top of which we think we have some upside as far as gross margins are concerned and those countries where we've had significant pain for the lack of a better word, because of the strength of the dollar we've instituted some price increases that will help get some of the big significant piece of those margins back and to date we haven’t seen any significant headwinds to those, so we think we can increase the pairs and the gross margins in some of those countries like continent like Europe, some of South America, certainly Canada and barring any big changes in currency or big changes in China that will continue at a relatively good margin. So we see up side to certainly in the international market price and numbers of payers and margins as we go into next year although we are not currency wise [ph], so if there is another hit for whatever happens to currencies is of significance and some of that may. The terminal will certainly be better than the alternatives as we go in. And certainly from what we hear from our prelaunch now we are still very much in favor, there are no major customers of ours that are planning anything but up for the first half of next year and it’s possibly for the whole of next year they are very happy with the product assortments they see from the sell-throughs from this year, the margin favorite cheap so we anticipate that that will show itself also as we go into first quarter which is very significant for us.

[Jay Seo:]

Okay got it. So you mentioned FX couple of times. Can you say how much FX impacted the top line in the quarter?

[David Weinberg:]

For Europe, I'd be telling [indiscernible] I just saw probably for this quarter compared to last year because it's very difficult unless you have a comparison period but till last year I believe there was 8 million or 10 million.

[Jay Seo:]

Okay. And then is it fair to say that, that's the 11 million in legal cost that are being booked into this quarter, that next year essentially that won't repeat the double cost and it will just come out of the SG&A?

[David Weinberg:]

That certainly is the hope, but that's always our hope. Certainly the 5 million will not be replicated as it is that was a settlement and it goes away. The 5.9 million that was litigation cost that's now awaiting a verdict, so we acted out one way or another, I'm not sure if they will appeal after that and how we have to wait for the verdict, but our hope is that that dives down as we go through the back half of the year, should new items arise and we will [indiscernible] for litigation should hopefully dissipate as well. So yes it's my distinct hope, although we are not always in control of the litigation that that just disappears and will not be repeated next year.

[Jay Seo:]

Okay and then the last one from me is just gross margin in the quarter was better than you signaled at the end of this 2Q. We talked about it going down perhaps in 3Q, but ended up going up. What was the big difference in this quarter that ended up -- gross margin being ended up being better than your expectation?

[David Weinberg:]

It was a little bit of everything, first of all we had better margins in Europe, we picked up a little bit of -- pricing retail came in with slightly higher margins. Those pricing increases you saw were a benefit everywhere, we thought we might lose some of them on the domestic and/or order shipped and but our retail was up there, we just got a little bit gross margin back in each piece. So even though our international margin for the most part are lower than they were last year which was the anticipation. Our domestic margins came in somewhat higher with the price increase and no close out inventory.

[Operator:]

Thank you. Our next question comes from the line of Scott Krasik from Buckingham. Please go ahead with your question.

[Scott Krasik:]

So I just wanted to touch on a couple of those things. So you just alluded to a lack of I guess or a mix being a benefit domestically, that you weren’t selling to the close out channel. So is that -- how would you sort of describe the volumes that you are selling into the traditional closeout channels and do you expect that to rise over the next couple of quarters to deal with the inventory or do you expect to sell the inventory in inline channels?

[David Weinberg:]

Right now we expect to sell the inventory in inline channels. Even though it's off, it's just a timing issue, our [indiscernible] position to where we stand within our whole production field has not increased, certainly not domestically over the last six months. So it's a timing issue of getting it in early. I think we pushed some of our suppliers to get inventory in early because of our growth anticipated for 2016 and don’t want to push out our production cycles, so it’s stuff that’s spoken for, we're trying to get in on a much quicker basis so. I don't anticipate any real downturn in that.

[Scott Krasik:]

Okay and to the extent that you either hear it directly from your customers or maybe you subscribe to that, but how would -- what are the current sell through rates of your products on average with various retail distribution?

[David Weinberg:]

It changes with all and they all have different metrics and they all have their way to count. I will tell you of all the people that have been through which will certainly be significantly higher one. There is no one upset with how their selling or they sell throughs or using it as a reason to change the showcasing of the brand in their stores, people are still very-very positive about the brand and about it’s potential for 2016. So we take them at their word and we still see it selling and I think if you look at our stores, the fact that we didn’t get an extra turn and there was a lot of some off price activity in September and within the whole channels, but our store is still comp’d up over 10% even domestically for the quarter and I could tell you they were up over 10% for the month of September, shows you the strength of the brand and that will manifest itself even at the wholesale level as they clean out some other things as we go forward.

[Scott Krasik:]

And then in terms of pricing, how much incremental pricing will you be taking on the spring product that we haven't seen as all yet?

[David Weinberg:]

It’s hard to tell, we have some out there, we haven’t booked really fully spring yet. I think that there is some to be had, but we are waiting to see what the mix looks like. I think overall in a worldwide basis we’ll get an increase, just like I said we had some pricing power internationally where there was currency issues that could change the outlooks in some of those countries significantly.

[Operator:]

Thank you. Our next question comes from the line of Jeff Van Sinderen with B. Riley. Please go ahead with your question.

[Jeff Van Sinderen:]

Hi, David. I wonder if you can give us a little better sense of the breakdown between the international backlog and the domestic backlog and then also any substantial changes in the concentration of types of product in the backlog. And then maybe if you can just touch on what we should look for in gross margin in Q4?

[David Weinberg:]

I think, look going in reversal, what our gross margin I think should be fairly equivalent to what it was in Q3, there may be some slight upside because retail still has a bigger percentage there, it has a very strong quarter coming up certainly at on a worldwide basis. As far as backlogs are concerned it’s obviously higher in international that it is domestically and it's higher in Europe than certainly places like South America and Canada, so far the increases because they’re coming into some price increases and it’s early in the season, but where our strength is significantly higher. I would also tell you that we don't really go through a backlog scenario in China since it's predominantly retail and now that's moving into franchising model. We may move into some of that as we go forward, but that doesn’t appear in any way in here and obviously that would be a big driver of significant upside on the international portion of the backlogs.

[Jeff Van Sinderen:]

Okay and as far as inventory goes, there is really nothing in there that would have an aging issue, you said it's all spoken for.

[David Weinberg:]

Yes, the amount of unsold, we have and then [incremental] make into inventory hasn't change over the last six months, some of these to present in the United States, there is some increases inventory obviously in the additional store count and our additional store count around the world, and obviously places like China they've gone as 175% and opening significant amount of store have some more standing inventory that they have to get ready for and domestically which is obviously our bigger user has the same and it's just come in somewhat early and we’ve gotten a next return, well it certainly looked the same as their top line. So I think it's a timing issue and we don't see anything their right this minute that is of concern.

[Jeff Van Sinderen:]

Okay, any sense you can give us on your -- on sort of what the progression was through the quarter for the retail comps in your own stores, I was just wondering if there was a big difference between the months there and then maybe what you're seeing in October?

[David Weinberg:]

From what I remember, it was pretty consistent across the quarter. The comps were better although -- in July and September on a relative basis although August is still the biggest month for us and so came in at I think very low or very high singles or very low double-digits for the month. So, it was fairly consistent so far this month we're seeing mid to high single digit but remember this is now the fourth year, this quarter starts to [indiscernible] comp at a double-digit basis and it's early in the month and the forecast right now is still for high singles for the quarter.

[Operator:]

Thank you. Our next question comes from the line of Sam Poser with Sterne Agee. Please go ahead with your question.

[Sam Poser:]

Hi, David. I just want to clarify something. So basically some large retailers in the U.S. because they had goods of yours or from other brand to clear in September, did not step up on the filling orders in the manner you would have expected based on the selling that you're seeing? Am I thinking about that right?

[David Weinberg:]

Yes, I mean it's anecdotal at this point but yes my understanding is that there was no issues with our sell troughs or our margins from all the reports I've seen and people I’ve spoken to. September wasn’t a great month, there was no step up as we’ve seen in the last two or three quarters, to that extent certainly not anything of the extent that move from July to June. So if you take the two quarters together you can sort of even out some of that flow, and we're in free lines now, we have a lot of customers rotating still, we haven't seen that, it just started at the end of last week, but those we've seen through here still make the same comments.

[Sam Poser:]

So now that you have the inventory that you currently have and some of that is inventory -- I mean some of those styles are styles that will be line for a while, have you now pushed back orders with the factory, so you don't get all built up on top of each other, like basically since that turn didn’t come, are you making the adjustments in the orders on a forward basis [multiple speakers]?

[David Weinberg:]

It's a timing thing and we don't think that that holds true till the first quarter. So, I don't think we've made any significant adjustments. I mean, you have to understand the under order of magnitude what we had here, as we close September as we get into the beginning of October we had somewhere between the 1.5 million and 2 million pairs on the dock that were ready for shipment, on some years we’ll ship 500,000 and some ship will 1.5 million and you're sending the United States, that 1.5 million is every bit of $30 million to $32 million which we get a portion of, we get a relatively small portion this time. We will ship all of those through October and early November, as a matter of fact, we’ve already shipped in excess on the few million pairs in first -- we're going to have that we're here and we saw 2 million pairs on the dock, it looks like our shipping will start to pick up and hold up as we get to the end of October and early November. At least that's would look like now. So we really haven't changed any production cycle for the time being, like I've said, we don't have any more uncommitted inventory in production than we had six months ago.

[Sam Poser:]

Maybe you can answer this, what is the difference this year versus last year in in transit inventory?

[David Weinberg:]

It’s higher this year than last year. That's a big -- that's a part of the growth, but we also have somewhat more in-house because we didn't get the extra turn this year.

[Sam Poser:]

Okay and then just going back to the backlog question. The backlog of 28%, and could you just give us what international is and what domestic is, I mean just can you give us the numbers?

[David Weinberg:]

No, we’re getting down into real nitty-gritty now, but I'll give them to you this one time, so we don't have to worry about it, domestic is about 24%, the balance is international.

[Sam Poser:]

About [multiple speakers]?

[David Weinberg:]

And remember that, domestic has a much bigger base, so international is up -- all that I would think international is up probably somewhere between 35% and 40% of backlog.

[Sam Poser:]

And that does not include China?

[David Weinberg:]

That does not include China.

[Sam Poser:]

And you said earlier, that you expect China to hit around 200 million this year, is that still moving in that direction?

[David Weinberg:]

Absolutely.

[Sam Poser:]

Okay and then last and then I guess lastly, just some clarification again on Q1. You commented that there is a lot's of opportunity there. Can you give us some idea of exactly what that means? I'm going to repeat one of the previous questions?

[David Weinberg:]

Yes, it means there is significant upside, I don’t have --.

[Sam Poser:]

But upside to what?

[David Weinberg:]

Upside to what. Well If you look at the year, the year has somewhere on the street of 15% or some 12% growth, I think we could grow that rate and on top of that rate. So I think it can grow significantly in the first quarter, certainly over the 15% rate. But a lot of things still have to break, we’re too early to commit to any of that stuff but it certainly is possible from where we stand.

[Sam Poser:]

Thank you. And then are you finding that the big retailers when they -- if they are having problems, like if they are backed with inventory from other people they are just basically cutting off [indiscernible] just to be able to clear mark downs, clear the stuff that's underperforming, so they make sure they get rid of that rather than selling, just to continuing to sell the good stuff, is that basically what happened and what going on right now?

[David Weinberg:]

Well it's difficult to paint with such a broad brush, but I have seen some -- I don’t think they care. It depends on the time of the years as well, you wouldn’t anticipate anybody going through that velocity as you go into back to school and certainly wouldn’t anticipate that going into holiday season at the end, but in months like October and like May you can't see that because you have to clear certainly fourth quarter end and because we have to clear up and get ready for holiday and it's not a big selling season anyway so you would switch those things around and not bring in full price and sell off, but you certainly wouldn’t continue that strategy going at the holiday.

[Sam Poser:]

So basically they’re going to get clean, you’re anticipating they get clean by the end of the month and then open up the gates again?

[David Weinberg:]

Yes but remember fourth quarter is not historically our strongest, but they will open it up and we should perform well through that and set a very good stage for going into spring.

[Operator:]

Thank you. Our next question comes from the line of Corinna Freedman with BB&T. Please go ahead with your question.

[Corinna Freedman:]

Quick question on the backlog, I know we’re beating a dead horse here but does that number include reorders and replenishment or is that just initial orders?

[David Weinberg:]

It includes flows as we and our customers anticipate them, you have to define for me what initial and fillings are, I mean obviously no one’s tested it yet, there is some repeat business, there is some styles that they’re trying to comp year-on-year, there is some new stuff they’re testing moving in there, flows to the best they can see. But it's just the beginning and we’re not out too far, we haven’t finished booking spring yet.

[Corinna Freedman:]

And then the 24% domestic backlog does that include [indiscernible] and some of the new distribution that you are testing this year?

[David Weinberg:]

Yes. It includes everything that we have out six months, which is historically our norm, for [indiscernible] it’s not an outrages piece and remember they’re only testing, they are getting started and while it’s nice and we anticipate and they anticipate some great results and movements, it's not enough to significantly moves the needle.

[Corinna Freedman:]

Okay. And then for this quarter and for first quarter do you anticipate any unusual marketing expenses? I know the marathon is in first quarter, but do you start accruing for that or expensing that in the fourth quarter and will you be on TV for the Superbowl in the first quarter?

[David Weinberg:]

To my knowledge no final decision has been made on the Superbowl, the marathon is in, we amortize it over the life of the contracts. I'm not sure what date is begins, to might begin in spring, but that's all calculated into our marketing spend. So I don’t anticipate any wild fluctuations in that.

[Corinna Freedman:]

Okay. And then just a big picture question on the license -- the Star Wars license, understanding that only it started selling in the middle of September. Are there any other opportunities for other licensed properties that you are going after or is this just Star Wars just to be the only one?

[David Weinberg:]

Well right now it’s the only one we have and the only one we’re talking about. There is always some conversations going on, but we’re set at the early stages of Star Wars, remember they haven’t even released the new characters yet. So it’s hard to tell even what it would be as we get through the end of the year into the first quarter when new characters become available. So it seems they have a very positive vibe now, but it's very-very early in a game. It’s hard to tell exactly how successful it’s going to be.

[Corinna Freedman:]

And my last question is on ASPs and what you’re seeing internationally, are the ASPs down domestic versus international or are they a little bit higher domestic versus internationally?

[David Weinberg:]

They’re a little bit higher in domestic, simply because we haven’t changed pricing there and it's the currency differential. I think you’ll see imbalance and actually maybe be the higher in international, certainly in our subsidiary with -- sorry not the distributers but the subsidiaries as this pricing goes through first quarter.

[Operator:]

Thank you. Our next question comes from the line of Chris Svezia with Susquehanna Financial Group. Please go ahead with your question.

[Chris Svezia:]

So a question just on the backlog, when you think about, August and September are big booking months. Can you just maybe add a little color if there is any difference continued two months, one was stronger than the other or what the trend line was, I think is curtailed off a little bit in September or was it equally as robust as August was?

[David Weinberg:]

The dollar amounts were pretty equal through August and September. Historically, September is a bigger booking month for us than August, but August came in as strong, so obviously a higher percentage increase in August. I think it meant that people were coming in earlier and getting their orders done earlier, both internationally and domestic. It turned out to be our biggest booking quarter ever and that goes back even to some pretty wild swings we had in the shapeup days. So this without a doubt it's been our biggest booking quarter to-date.

[Chris Svezia:]

But September didn't really enough -- any meaningful directional change or follow off as you said in September and you didn’t get that additional turn on inventory, you didn't see anything follow off in the backlog? Just what I’m asking.

[David Weinberg:]

That's correct.

[Chris Svezia:]

Did you see at all any -- given the fact that you didn’t get that extra turn, that products you had available on inventory, were there any cancelations of existing orders or no, or there was no change from that?

[David Weinberg:]

Nothing significant.

[Chris Svezia:]

Nothing significant, okay. When you think about expenses as you go into the fourth quarter is there anything we should be mindful of? Legal expenses or anything like that that you're aware of now, that’s not in the number at this point or anything else we should just be mindful of, thinking about that fourth quarter from an expenses perspective?

[David Weinberg:]

Not, it is always -- with somebody our size and what happens it’s always something that could be, but there's nothing that comes to mind right this minute certainly.

[Chris Svezia:]

So, basically when you think about the consensus, growth rate, 24% growth rate in revenues and roughly call $0.23 in earnings, at this point there's nothing unusual within that or something that whether it’s legal expense or whatever that, you haven't thought off that's not in that number at that point?

[David Weinberg:]

Not that I know of.

[Chris Svezia:]

Just about the Europe, can you just touch on what's going on in the distribution center and the efficiencies there? I know first quarter last year could have been better and better margins there, if you had the efficiency, just kind of where are we? What does that mean for the first quarter or first half?

[David Weinberg:]

We said we got more returns, we are certainly running better, we anticipate having 50% of our additional space done and operational buys and so I would anticipate that we would have significant growth in Europe and a bigger portion will flow through to the operating line.

[Chris Svezia:]

And last question, just on the wholesale growth for U.S. wholesale for the fourth quarter, is it fair to say that we continue to kind of low teens trend line into the fourth quarter with international being in a 40-50 range and direct consumer, your retail business being close to 20 is that, how we should we think about it?

[David Weinberg:]

Yes, that's the way we're thinking about it, although there's certainly can be switches and changes for domestic as we get through November-December depending on the holiday period is, but that's the way we have it modeled right now.

[Operator:]

Thank you. Our final question is a follow-up from the line of Scott Krasik with Buckingham. Please go ahead with your follow-up.

[Scott Krasik:]

Thanks David, I may have missed it, but when it was asked before about your comfort and your comments around 1Q, I think consensuses revenue growth is 15%-16% something like that, is that what you're comfortable with, you think you can do above that, what was the comment exactly?

[David Weinberg:]

I think that would be a benchmark and I would tell you that I think there is certainly possibilities of upside from there.

[Operator:]

Thank you ladies and gentlemen, at this time I'd like to turn the conference back over to Skechers for any closing remarks.

[Unidentified Company Representative:]

Thank you again for joining us on today's call. We would just like to note that today's call may have contained forward-looking statements. As a result of various risk factors, actual results could differ materially from those projected in such statements. These risk factors are detailed in Skechers' filings with the SEC. Again, thank you and have a great day.

[Operator:]

Thank you, ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. And thank you for your participation.