Andrew Greenebaum - Integrated Corporation Relations David Weinberg - Chief Operating Officer, Executive Vice President & Director Frederick Schneider - Chief Financial Officer

Chris Svezia - Susquehanna Financial Group Scott Krasik - CL King Sam Poser - Sterne, Agee Jeff Mintz - Wedbush Morgan

Welcome to the Skechers USA, Inc. second quarter 2008 earnings conference call. (Operator Instructions) I would now like to turn the conference over to Andrew Greenebaum, with ICR.

Thank you everyone for attending Skechers second quarter 2008 results conference call. I’ll 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 statements involve known and unknown risks including, but they are not limited to the general economic and business condition and conditions in the retail industry. 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 latest annual report on Form 10-K, its filings on Form 10-Q, management’s discussion and analysis and the company’s latest annual report to stockholders, the company’s filings on Form 8-K and other federal securities law filings for a description of the other important factors that may affect the company’s businesses, results of operations and financial conditions. On the call today our David Weinberg ,Skechers Chief Operating Officer and Fred Schneider, Chief Financial Officer, and with that I would like to the turn call over to David Weinberg.

As always we will open the call to questions following our prepared comments. Second quarter 2008 net sales were $354.6 million, a new second quarter record. Net income for the quarter was $14.6 million and diluted net earnings per share were $0.31 for the second quarter of 2008. Record second quarter and six month revenues are primarily the result of very strong growth across our international businesses, which were approximately 24% of our total net sales for the quarter and 26% of our net sales for the year. Our sales within our domestic wholesale channel were better than anticipated, and we remain confident in our position in the U.S. market even with the soft retail environment. The key highlights for the second quarter were record quarterly sales with our eighth consecutive quarter of sales over $300 million, high double-digit sales growth in our international subsidiary business, double digit sales growth in our international Skechers retail division, backlog of double-digits from the prior year at quarter end. Improvement in our gross margins by a 110 basis points year-over-year to 44.3% for the second quarter of 2008 versus 43.2% for the same period last year, and a strong balance sheet with nearly $240 million in cash and investments representing over $5 of share. We are continuing to focus on developing stylish in-demand product and aggressively market our brands to further grow our position in the global marketplace. This strategy in the second quarter allowed us to maintain our position in the U.S. market, to continue to grow our international subsidiaries including our newest in Brazil and joint ventures in China and Hong Kong to deliver the right product to our distributors and experience growth in our retail business. Now I would like to expand on our second quarter 2008 achievements in our three operating segments, the Mexico sale, international and retail. For the second quarter domestic wholesale, net sales decreased by approximately 8% from the same period of last and for the first six months by 2.5%. Our domestic wholesale sales, while down for the quarter were slightly stronger than anticipated which we feel is meaningful given the current soft retail environment. We believe our brand, consumer awareness and products acceptance remained very strong in the domestic market based on several indicators. First, our incoming orders received in Q2 increased double-digits over the last year, leading to improved mid-single digit domestic backlog. Secondly, the positive response from key accounts during our preline meetings earlier this month and finally retailer feedback as reported by NPD which placed Skechers as the number one brand in three categories; Juniors’ Men, Juniors’ Women and Low Performance Footwear and placed Skechers in the top 10 for outdoor, high performance and skate. We are pleased with the continued growth of our key Skechers Women’s sport, Men’s USA and Skechers Work Line and the strong performance of Skechers kids’. We are continuing to build on our proven style as well as offer fresh looks in each of our Skechers lines, and I’m encouraged to report that our backlogs are up for our major lines. We are taking the same approach with our fashion division, building on our key styles and developing new looks within each line. While the fashion division did not grow in total, due in parts of the closing are several underperforming brands since last year, the kids’ fashion line performed extremely well and the 310 line experienced growth. Additionally, the majority of these lines have strong backlogs going into the remainder of the year. Also we are encouraged by the initial sales of BEBE Sports Footwear, which had its first shipment in the quarter and I believe the new styles showed at FFANY and our prelines will do well in the market based on our initial reactions from our key accounts. We are also encouraged with the account reaction and strong initial sales for the recently acquired brands Punkrose for women and Public Royalty for men. With an existing small account base, and a fresh approach to junior sneakers we believe these brands will benefit from our logistics and marketing expertise. Our approach to marketing remains highly visible, consistent, focused and aggressive. We recently signed the new American Idol winner David Cook to an 18-months marketing agreement for Skechers footwear print ads, billboard, Kiosks and in-store visuals. We are excited about the photo shoot later this week and look forward to the new ads. We are also excited about the extension of the singer/actress Vanessa Hudgens agreement for Red by Marc Ecko footwear and a debut of her first single Sneaker Night in her recently released new album. The official music video for this singe features several shors of Red by Marc Ecko sneakers and has received more than $3.5 million hits on You Tube. This song is also featured in the new Reb by Marc Ecko commercial. : We believe that continuous marketing support we provide and the diversity of our trend right product offering remains a critical part of our business. As our wholesale business indicates, we are not immune to the current economic environment but we also believe we are extremely well positioned giving our multiple unique lines comprised of more than 25,000 trend right and reasonably price styles. We are able to successfully meet the needs of a diverse consumer base of the United States by marketing our products through multiple mediums and to a variety of department, family footwear, specialty, independent and athletic stores. We believe our fashionable product, broad diversification and willingness to support our business in both marketing and execution makes us the right brand for our retail customers and consumers. : The strong growth in our international wholesale business is primarily from our subsidiaries, which improved by 54% for the quarter and marks the 9th quarter of double-digit increases from our subsidiaries. Spain, the Benelux region, Italy and Switzerland had triple digit growth, while our three largest operations Canada, the United Kingdom and Germany continue to grow at double-digit rates. In addition our backlog at the end of the quarter, were up double-digit for virtually every subsidiary. Brazil our newer subsidiary turns a year old this quarter and is on plan for its sales of both Skechers and Marc Ecko footwear. We are encouraged by Brazil’s strong performance this quarter and believe it has potential to become one of our bigger subsidiaries. We believe our product and talent marketing efforts are on target and we look forward to continued growth. From our product standpoint, the improved sales across our subsidiaries were the result of the continued growth of our Skechers men’s, women’s and kid’s lines as well as the significant growth in the Mark Ecko footwear lines. We believe that our brands are in great positions in our subsidiary markets in terms of shelf space, reputation and image. Our distributor sales were up just over 6% for the quarter an improvement over our past two quarters. We are pleased to see renewed growth from our distributors. We see the growth coming from several areas, but are particularly satisfied with the improved sales and backlogs from our biggest distributor who cover Central and South America. With our two Russian distributors, who combined represent one of our largest distribution countries and in Greece with double digit growth supported by great marketing. We are also pleased with our two newest distributors that cover Turkey and South Korea. Our team Turkey has a lot of enthusiasm for the brand and it shows with solid first shipments and good incoming orders and South Korea is really one to watch. They have already opened five stores, three of which were in the second quarter and one this quarter, established Skechers apparel and had there realty show mostly tied in with Skechers. To support their Skechers businesses, many of our key distribution partners have Skechers retails stores in regions where they sell our footwear. At quarters end, 78 Skechers retail stores were opened in 25 countries from 14 of our distribution partners. This includes two new stores, one in the Philippine and one in Russia. Our distributor in the Czech Republic opened their first store earlier this month and eight additional stores are planned for this year. : The strong growth in our international wholesale business is primarily from our subsidiaries, which improved by 54% for the quarter and marks the 9th quarter of double-digit increases from our subsidiaries. Spain, the Benelux region, Italy and Switzerland had triple digit growth, while our three largest operations Canada, the United Kingdom and Germany continue to grow at double-digit rates. In addition our backlog at the end of the quarter, were up double-digit for virtually every subsidiary. Brazil our newer subsidiary turns a year old this quarter and is on plan for its sales of both Skechers and Marc Ecko footwear. We are encouraged by Brazil’s strong performance this quarter and believe it has potential to become one of our bigger subsidiaries. We believe our product and talent marketing efforts are on target and we look forward to continued growth. From our product standpoint, the improved sales across our subsidiaries were the result of the continued growth of our Skechers men’s, women’s and kid’s lines as well as the significant growth in the Mark Ecko footwear lines. We believe that our brands are in great positions in our subsidiary markets in terms of shelf space, reputation and image. Our distributor sales were up just over 6% for the quarter an improvement over our past two quarters. We are pleased to see renewed growth from our distributors. We see the growth coming from several areas, but are particularly satisfied with the improved sales and backlogs from our biggest distributor who cover Central and South America. With our two Russian distributors, who combined represent one of our largest distribution countries and in Greece with double digit growth supported by great marketing. We are also pleased with our two newest distributors that cover Turkey and South Korea. Our team Turkey has a lot of enthusiasm for the brand and it shows with solid first shipments and good incoming orders and South Korea is really one to watch. They have already opened five stores, three of which were in the second quarter and one this quarter, established Skechers apparel and had there realty show mostly tied in with Skechers. To support their Skechers businesses, many of our key distribution partners have Skechers retails stores in regions where they sell our footwear. At quarters end, 78 Skechers retail stores were opened in 25 countries from 14 of our distribution partners. This includes two new stores, one in the Philippine and one in Russia. Our distributor in the Czech Republic opened their first store earlier this month and eight additional stores are planned for this year. : The strong growth in our international wholesale business is primarily from our subsidiaries, which improved by 54% for the quarter and marks the 9th quarter of double-digit increases from our subsidiaries. Spain, the Benelux region, Italy and Switzerland had triple digit growth, while our three largest operations Canada, the United Kingdom and Germany continue to grow at double-digit rates. In addition our backlog at the end of the quarter, were up double-digit for virtually every subsidiary. Brazil our newer subsidiary turns a year old this quarter and is on plan for its sales of both Skechers and Marc Ecko footwear. We are encouraged by Brazil’s strong performance this quarter and believe it has potential to become one of our bigger subsidiaries. We believe our product and talent marketing efforts are on target and we look forward to continued growth. From our product standpoint, the improved sales across our subsidiaries were the result of the continued growth of our Skechers men’s, women’s and kid’s lines as well as the significant growth in the Mark Ecko footwear lines. We believe that our brands are in great positions in our subsidiary markets in terms of shelf space, reputation and image. Our distributor sales were up just over 6% for the quarter an improvement over our past two quarters. We are pleased to see renewed growth from our distributors. We see the growth coming from several areas, but are particularly satisfied with the improved sales and backlogs from our biggest distributor who cover Central and South America. With our two Russian distributors, who combined represent one of our largest distribution countries and in Greece with double digit growth supported by great marketing. We are also pleased with our two newest distributors that cover Turkey and South Korea. Our team Turkey has a lot of enthusiasm for the brand and it shows with solid first shipments and good incoming orders and South Korea is really one to watch. They have already opened five stores, three of which were in the second quarter and one this quarter, established Skechers apparel and had there realty show mostly tied in with Skechers. To support their Skechers businesses, many of our key distribution partners have Skechers retails stores in regions where they sell our footwear. At quarters end, 78 Skechers retail stores were opened in 25 countries from 14 of our distribution partners. This includes two new stores, one in the Philippine and one in Russia. Our distributor in the Czech Republic opened their first store earlier this month and eight additional stores are planned for this year. : In conjunction with Skechers China, we are establishing Skechers Hong Kong a new joint venture that will focus on maximizing our potential in Hong Kong, Macau and the territories through, wholesale and retail. At the quarter end international was 24% of our total sales. We continue to believe international can be at least 30% to 35% of our total sales in the near future and there are many opportunities to grow our Skechers in fashion lines around the world. Turning to retail, in the second quarter we opened our 200th store on Chicago Shopping avenue State Street. We see that as a significant milestone for a wholesale driven company. At quarter end there were total of 208 domestic and international company owned retail stores. Our combined domestic and international retail sales increased nearly 4% for the second quarter. The improved quarterly sales are due to a net 40 store increase in the prior year ended approximately 8% domestic comp store decrease. Consistent with other domestic retailers, we are seeing reduced foot traffic on our company owned stores. We have made significant infrastructure investments to grow our retail division recently. To put things in perspective, our store base at the end of 2004 stood at 125. While we expect the year end 2008 to have approximately 224 to 229 stores representing an increase of approximately 80% of the number of stores from just four years ago. We continue to believe in our retail concept and have opened 13 stores in the quarter including our first at Indiana and our first store in Scotland. We plan to continue to strategically grow our retail business in the second half of 2008, with the addition of 15 to 20 Skechers domestic stores, including three premier locations. The new Southcenter on the South side of Seattle and New York’s Union Square, neighboring Abercrombie & Fitch and on San Francisco’s Powell Street. We will also continue to look for desirable, international location. Now turning to our second quarter financial performance, as previously mentioned second quarter net sales were $354.6 million compared to $352.2 million last year. Second quarter gross profit was a $157.2 million or 44.3% of sales compared to last years gross profit of a $152 million or 43.2% of sales. Operating expenses as the percentage of sales increased to 38.8% in the second quarter of 2008, compared to 37.3% in the prior year. Second quarter selling expenses decreased to $38.6 million in the period from $41 million in the prior year even within an increased media spend. General and administrative expenses were $98.9 million compared to $90.5 million last year. Our general and administrative cost increased to 27.9% of sales compared to 25.7% over last years second quarter. The higher expenses were primarily due to the increased number of company-owned retail stores and growth in our international subsidiary business. Net income for the second quarter was $14.6 million compared to net income of $14.9 million in the prior year. Diluted earnings per share were $0.31 on approximately $46.8 million average shares outstanding, compared to diluted earnings per share of $0.32 on approximately $46.8 million shares outstanding during the second quarter of last year. Our balance sheet continues to be very strong. At June 30, 2008 cash plus both short and long-term investments fitted nearly $240 million or approximately $5.13 a share. Trade accounts receivable at quarter end were $232.9 million and our DSOs improved to 49 days from 53 days last year. Inventory at quarter end was $234.2 million, representing a year-over-year increase of $29.4 million to accommodate our increased backlog. Capital expenditures for this quarter ended June 30, 2008 were approximately $24.8 million as compared to approximately $8.2 million in the prior year. We expect those capital expenditures for the remainder of 2008 to be approximately $20 million, which includes the opening of 15 to 20 new stores, store remodel and tenant improvements in our corporate headquarter. Now turning to guidance; we’re pleased with our continued growth and new record second quarter revenues, particularly given the soft U.S. retail environment. We believe this is due to the reputation of our brand and increasing awareness in the United States and around the world, our varied product offering and our global business model. While we are cautious in our domestic plans given the U.S. economy, we expect that our momentum will continue through the remainder of 2008. We believe the third quarter will be stronger than the second, as discussed when we gave second quarter guidance a few months ago. This expectation is based on orders received during the second quarter, resulting in double-digit backlogs internationally and mid-single-digits domestically. In addition, we just completed several weeks of free line and received very positive feedback from our key domestic and Canadian accounts. Furthermore our international business is showing strong growth in nearly every market in which we operate across the globe. We now expect third quarter 2008 net sales to be in the range of $425 million to $440 million and diluted earnings per share in a range of $0.57 to $0.65 on approximately $47 million diluted shares outstanding using a tax rate equivalent to the first six months. We continued to further lay the foundations for our planned worldwide growth by enhancing our distribution capabilities, building our international business and looking for new opportunities to grow domestically. We will continue to support all of our brands with aggressive marketing efforts to ensure, we are top in line with consumers and that our footwear achieves strong sell throughs. We are also continuing to support the company with necessary investments and improvements to grow to the next level in the coming year. We remain very focused on profitably growing our business in the future and now I would like to turn the call over to the operator to begin the question-and-answer portion of the conference call.

(Operator Instructions) Our first question comes from the line of Chris Svezia with Susquehanna Financial Group. Chris Svezia - Susquehanna Financial Group: Can you add any color with regard to given the 14% increase in inventory at the end of the quarter? Is that a reflection of the improvement in backlog and can you maybe clarify if there was any shift in product maybe retailers holding back a little bit at the end of the second quarter and that falling into the third quarter domestically?

Shift is very difficult to define. I will tell you the increase in inventory is primarily due to a bigger backlog going into second quarter, which obviously the orders were in hand at the end of the second quarter, so if you say that could have shift, that’s probably true. It also has 40 more stores and significantly higher backlog in Europe where there is inventory as well and remember that includes work in process, so that’s everything coming for the quarter as well. So we think it’s inline with the backlogs, the stores Europe, Brazil, China and obviously we believe we’re going to have a stronger third quarter than there was in the second quarter. Chris Svezia - Susquehanna Financial Group: Okay and so can you maybe clarify in terms of the improvement that you saw in the backlog. You mentioned that you saw during the second quarter, it accelerated at a double digit rate during the second quarter, was that domestically?

It was both domestic and international. On an overall basis we were up double-digit on our incoming order rate. We had these conversations when we had the first quarter conference call as well and that Easter was earlier and people were trying to order later, so the fact that Easter had cleared in March and now people were ordering for back-to-school and trying to hold onto the last minute, that we didn’t see those order in February, March, couldn’t plan for it but certainly did see them in April, May and June and now coming into the third quarter on a stronger basis. Chris Svezia - Susquehanna Financial Group: Okay. The so your trying to say that your third quarter is stronger than your fourth quarter in terms of how the order book looks right now.

Yes, always stronger. I mean if you talk about it on a relative basis, but it’s certainly the bigger percentage is always for the third quarter. Chris Svezia - Susquehanna Financial Group: And can you maybe just comment; you walked through some of the product lines in U.S. that we’re working well for you. You mentioned sport work and kids product. Can you maybe comment on what’s going on with your active product line, low-profile and is the status series which I think is the sort of the next revision to the low-profile and the sport particularly the Delights, is that really starting to gain traction for you guys that enough to offset maybe some of the maturity in the low-profile?

: Chris Svezia - Susquehanna Financial Group: Okay and then just lastly can you just clarify just on the Europe obviously it seems just the overall macro economic sort of headlines coming through about softness and some other brands that talked about just generally a slowdown retail seems to be little tougher in U.K.; just maybe talk about what you’re seeing out there relative to your business specifically. Maybe just talk about some of the additional opportunities both in U.K., Germany and I know you talked about Brazil; just kind of what’s going on there, what do you see in the pipeline as it relates to the backlog?

As I said in the prepared comments we’ve had great results from our European business. Now, we’ve heard obviously that there are macro economic issues beginning in Europe, certainly in U.K. and Germany and the most of where it is, but we still continue to have significant growth. We’ve had double-digit increases in shipments for Q2, which is not a very strong quarter for them, but it’s turned out to do very well; as a matter of fact Q2 this year was not significantly smaller than Q3 last year in Europe. So, that’s a very positive effect and backlogs are still significantly double-digits up both on a local currency and a dollar basis. So, we do hear it and we do hear we’re performing well. I think it’s a case of the same as when we started here in the United States -- started early with such a small piece of the market share and our product is right that you take little pieces from some of these big items as they slowdown, it becomes big growth for us although it’s not as meaningful as we’d like it to be in the year. Chris Svezia - Susquehanna Financial Group: Is it more of a shift to your product or is it more just the fact that you guys are just gaining additional shelf space and also just getting more of your product into channels of distribution or a combination of all that?

I think they’re all tied together. It’s obviously -- we have the right product with the product shift moving towards us. We have better sell-throughs, we have better inventory turns and people are beginning to depend on us and realized that we’re certainly viable for them to grow their businesses or keep their businesses up there in tough times.

Your next question comes from the line of Scott Krasik with CL King. Please go ahead. Scott Krasik - CL King: David when you walked into some of your big customers this spring whether it’s Famous or Penny’s or even Kohl’s to a lesser extent, you guys just seem to own the shoe floor, in your category. As these guys start to look to some of the other athletic players as resources, how do you comp against that?

I’m not really sure how to take that. In our free lines we’ve just met with the guys for Penny’s and Kohl’s and Famous, I don’t know that anybody’s looking to move us around or on general principal of those things that we’re performing less. As of a week ago, we still continue to take our share and those ones you’re talking about, we continue to grow. We get bigger pieces whether it’s our own sport or our own active, our own kids, our own men’s is doing very well, but we’re in a lot of categories and they’ve been dependent on us and we haven’t yet heard from them unless you’ve heard something different that there is a shift away from our brand as far as continuing to hold that mark-to-market space or shelf space and continue to grow with them. I haven’t heard any of them tell me or indicate to our sales guys in a conversation or picking product or when they’re open to buys that they’re slowing down with all that’s transitioning away anyway. Scott Krasik - CL King: But just as an example in women’s they were ordering 50,000 pairs of bicycle bottom style, they’re just taking those 50,000 or maybe even more and two or three different styles, it’s not going to Nike or New Balance or someone else?

I think that’s correct. Rumors of our demise are way, way too early. First of all the 50,000 pairs of biker bottoms don’t go away, they don’t all need to be replaced, they’re probably straightened out somewhere and whatever percentage continues, they’re certainly more than made up with our new sport line and our Delights package and maybe some open footwear or whatever happens to be hot in the marketplace and maybe even some of our black and brown shoes that still sells. So A; the first parts not all going away and whatever has slowdown or has become a steady way order business for us is certainly being made up for by our new product that’s coming into the market. Scott Krasik - CL King: Good, okay good and then just lastly, do you still feel comfortable with the marketing portion of your selling expenses being flat year-over-year?

We haven’t had any changes. I mean we’ve been pretty good and as we said we’re not backing away from marketing; I don’t want anybody to get that opinion. We’ve actually increased our media spend in the second quarter to a decreased selling line by watching other expenses and if you remember last year we had a big launch for a couple of new product lines that we said created a lot of PLP and in-store relationships and one-time charges and we sort of stayed by that and we actually controlled those expenses and moved them into media, so we have now a higher media expense and a more modified selling line.

Thank you. The next question comes from the line of Sam Poster, with Sterne, Agee. Please go ahead. Sam Poser - Sterne, Agee: Can you give us what the -- are the change in average selling prices and the change in units?

Say that one more time, sorry. Sam Poser - Sterne, Agee: Average ASPs and units for the quarter for domestics?

Our ASPs have gone -- you talk about wholesale ASPs? Sam Poser - Sterne, Agee: Wholesale ASPs for domestic?

We’re up in our wholesale ASPs this quarter. Sam Poser - Sterne, Agee: Can you give us what the numbers were for units in the sales volume?

We will have $0.28 in our wholesale ASP. On an average prepaid basis we’re up to about $18, $19 at wholesale. Sam Poser - Sterne, Agee: And the units were down?

The units were down slightly from -- we’re talking about last year, comp quarter from last year, yes we’re down a bit in units. Our ASP went up and our units were down. Sam Poser - Sterne, Agee: Okay and then on the new product David, that you have coming in with these good backlogs, is this a situation where there’s just a lot of things that nobody’s seen selling yet, so the initial response is good, but we just don’t know what the sales are yet. You sort of hinted at that when you answered Chris’s question.

No, I think from what we’ve seen is the initial responses, what we’ve heard from the free line is that our new product is checking very well and we are getting a re-order time-table started. It’s probably not as a strong as we’d like to see it, simply because we continue to deliver the first product in light of a very big month for us to deliver; June and July for back-to-school, but we are seeing re-orders and there are constrictions on a lot of retailers and they’re opened to buys in the end of the month inventories, but we have indications with the beginning that as things open up and they really see that the stuff’s got to sell, they still will continue to back-to-school and hopefully as we get into August and September and then we’re in to do re-orders and open to buys. We’ll see the increase at ones order business. Sam Poser - Sterne, Agee: And how much of that is in the guidance number, or are you just seeing…

: : :

Thank you. Your next question comes from the line of Jeff Mintz with Wedbush Morgan. Please go ahead. Jeff Mintz - Wedbush Morgan: Thanks very much. David you guys obviously put up a very strong gross margin again and kind of guided gross margin, but a little more conservatively they’ve been coming in. Is that primarily driven by the international business and kind of what’s the longer-term outlook on gross margins now?

Yes, I think that’s a Fred questions, so he’s close with those numbers.

: Jeff Mintz - Wedbush Morgan: And Fred how much of it is currency driven?

Well, comparing to -- some of it is. I mean but we buy in dollars and we sell in euros, so some of it is embedded in the margin and some of it in one piece of the international business. Obviously, we have international distributor businesses that’s a dollar based sales as well, but I mean I would say that even if we’re having growth in both local currency and in the U.S. dollars, it’s a real growth in that mid and we are also getting to a point where the dollar last year started to weaken at this point in time, so the delta is beginning to narrow. Jeff Mintz - Wedbush Morgan: Okay and looking longer-term you still are kind of looking at a 42% to 43% gross margin on a sustainable basis?

Well, we hope it really will be a mix issue. If domestic rebounds, we would think that that would be appropriate. Right now will obviously our domestic business is challenged as it is for most folks. I think on a longer-term basis that’s been an appropriate margin to use because we are certainly expecting that to come stronger back in the future here. Jeff Mintz - Wedbush Morgan: Okay, great and then David can you talk a little bit about what you’re seeing in terms of distribution channels in the U.S. wholesale business. Is it different between the family footwear channel and the kind of department store channel or are you seeing pretty similar trends across the board?

I think its very customer specific. There’s no one rule for one line, they sort of compete against each other and they have different demographics in different territories, so some of each category do best. Some department stores do better than others and some Family Footwear Channels do better than others. So, I would tell you that I think the places we’re entrenched our larger customer seems to be doing better than the rest in across both of those.

(Operator Instructions) and our next question comes from the line of Sam Poser with Sterne Agee. Please go ahead. Sam Poser - Sterne Agee: I just want to follow-up on the G&A part for the balance of the year and how we should look at that? Fred I guess.

Yes, I mean we’re going to continue to open stores and so the gross dollars will increase. I think that the European business is getting to a point were it’s going to go up as well just because we’re hitting some infrastructure issues there. We feel it’s more of a variable cost than a fixed cost. We have to add labor dollars within the manual system over there, so that’s going to grow the -- I am talking about pure dollars. If domestic comes back we can leverage a little bit on the G&A line, but we expect the G&A cost and the aggregate to continue to grow in Q3 along with our forecasted top-line growth. Sam Poser - Sterne Agee: At about the same rate or about the same dollars would you say?

Same rate and same dollars with what, as to grow or..? Sam Poser - Sterne Agee: In Q2 the G&A was up about $8 million, is $8 million a good number to use or is the rate increase what we should be looking at?

Well I don’t think there’s going to be -- I mean I’m not sure we’re looking at de-leveraging on an operating basis, so I mean in dollars if you look at that $8 million divided by the increase in growth, I think that…

Some of that will depend on where it comes from, we don’t think of all our segments dramatically. If we have a pick up in comp store sales we obviously will leverage significantly more than if we have to pick it up on a reorder business for domestic and even somewhat international. I think it’s safe to say if you can leverage significantly on comp store increases, we leveraged better domestically if there is a significant increase over plan and we would internationally since we have more automation and more and more fixed costs in the gain so for domestically then we do internationally, so it’s a little more people intensive and obviously in real dollar terms it also depends on currency since we pay our labor and everything for our subsidiaries. The benefit you get in the sales for the weak dollars is de-levering seeing effect to some degree on the real dollar spent, so after all that got I would tell you that, yes I think your first one is basically correct all things being equal and things going to the way we see them now, that $8 million to $10 million and having a fairly constant selling line; not getting a dramatic change in volume is probably good number to at least start with.

Yes, at least that’s somewhat consistent with what we use in the guidance. Sam Poser - Sterne Agee: And then on gross margin, I mean you had a nice pick up in this quarter, is that consistent? Are we just expecting to see that as well or do you think that’s going to level out a little more.

I think this quarter you can count on or we would count on still seeing some benefit to the gross margin line since this is a much stronger quarter for our subsidiary business certainly in Europe. It’s our first big shipping in Brazil, which will continue to help that subsidiary with equivalent margin, so any benefit you get from there is certainly positive and unless there is a big pick up or a big decline, but the only other change in that part or I think you’d have to look at it as retail. If retail comes on real strong, it does show now as the comp store increases within a flat or decreases. That will certainly push the margin up unless there is the corresponding big upside in domestic in which case you probably won’t have to worry about it, because the top line will drive it.

Thanks, your next question is a follow-up from the line of Scott Krasik with CL King. Please go ahead. Scott Krasik - CL King: Do you have an idea how many additional doors in Q3 of the Fashion brands will be in versus the year ago of the same time?

The domestic and international or worldwide Scott Krasik - CL King: Well domestically, but if you have it internationally -- why international I guess it wasn’t there right in the third quarter.

Yes, as far as the third quarter it’s actually grown very, very well and if you take the Ecko line on a international basis we’ll probably be as big as we’d hope the whole fashion group would be this year. It is significant in well over $100 million, as we speak and it certainly would be significantly larger than that. So, it’s hard to say how many do a significant number of doors, I mean it’s certainly over 1000. If you take the kids, some of it’s in the test area and it’s going into new account and it’s broadening out some of its distribution primarily in kids and should be followed by adults, so it is becoming significant and is pushing the growth. I mean that’s becoming a very good business for us and it’s going to be quite larger this year given by our standards. Scott Krasik - CL King: Well that’s good. So then domestically do you have a sense that mid-single digit backlog -- do you have sense how that breaks ups between Skechers and the Fashion brands?

Not significantly -- and you know Skechers is so perfect, so you have some that are bigger than others and it certainly gives its self out. I think it’s fair to say, if you look at the big expansion being in Kids, Kids is certainly higher than the norm, domestically. The adults is probably on average saying that Skechers maybe slightly less because that is still waiting to get its store expansion. Scott Krasik - CL King: :

No, we’ve just in the past -- by the way the non-personality ad reviews in the past had worked quite, quite well, it’s a very strong category and it’s probably as instrumental to our growth internationally, as any category we have. I think we’re just opportunistic by nature and we did well with the American Idol and the female version. The men became available, we were opportunistic and took it. It’s not any different kind of roll of thought process. We’ve created characters for the kids; it doesn’t mean we’re looking to goose the kids anymore than we think we can. So we’re just opportunistic, we look at each division and what's available and we just go on if it’s available to us. Scott Krasik - CL King: Okay, and then Fred, the other income this quarter was about $800,000, $844,000, what was that?

: Scott Krasik - CL King: And, did you pay your cash and CD’s; is that’s what’s going on with interest income? Should we expect that to trend down?

We certainly put whatever I put into treasury and I wouldn’t expect the same run rate of interest on the future. We still are getting some decent yield on the stuff that we have no liquidity for, but that doesn’t compensate for the lack of liquidity in our view.

Yes, absolutely.

Thank you. At this time I would like to turn the conference back over to Andrew with ICR. Please go ahead.

Thanks again for joining us today on the call. Again, I would like to note that today’s call may have contained forward-looking statements and as a result of various risk factors actual results could differ materially from those projected. These risks factors are detailed in Skecher’s filings with the SEC. Again, thank you and have a great day.