David Weinberg - Chief Operating Officer and CFO

Jeff Van Sinderen - B. Riley & Company Scott Krasik - BB&T Capital Markets Sam Poser - Sterne, Agee Chris Svezia - Susquehanna Financial Group Corinna Freedman - Wedbush Securities

Greetings. And welcome to the Skechers USA, Inc. Fourth Quarter 2012 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. (Operator Instructions) As a reminder, this conference is being recorded. At this point, I would like to turn the conference over to Skechers. Please go ahead.

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 statements 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?

Thank you for joining us today to review Skechers’ fourth quarter and year end 2012 results. Net sales for the fourth quarter were $395.6 million and earnings from operations were $8 million. Net income for the fourth quarter was $4 million and diluted earnings per share were $0.08. For the year, net sales were $1.560 billion, earnings from operations were $22.3 million, net income was $9.5 million and diluted earnings per share were $0.19. Our fourth quarter 2012 sales increased by 39.7% over the same period last year. This was the result of growth in all our revenue channels domestic wholesale, international and our company-owned retail business. We are particularly pleased with the 72% gain in our domestic wholesale business. Along with a strong gains in our domestic wholesale business, additional fourth quarter highlights include, a 30% increase in our international business, including 17% growth in our international distributor business and a 40.5% increase in international subsidiary and joint venture sale, a 16.2% increase in domestic and international retail sales, a 39.4% increase in e-commerce sales, a 9.8% increase in price per pair and 56.8% increase in pairs shipped within our domestic wholesale business, with triple-digit growth in our women’s and double-digit growth in our men’s and kids divisions, improved gross margins of 42.6%, domestic and international wholesale backlog improved by over 20%, excluding legal settlements reduce G&A expenses by $18.7 million. Financial highlights for the year include strong balance sheet with $325.8 million in cash or approximately $6.48 per share and a return to profitability with net earnings of $9.5 million. Also in the year, we grew our existing product divisions with new lines for men, women, juniors and kid, and firmly established our Skechers Performance division with several new product introductions and earned eight awards from top [lending] publications in the United States and several countries around the world. With Meb wear and GOrun we had our first elite athlete competing Skechers Performance footwear at the Olympic this past summer. He has achieved several personal best in Skechers GOrun and his performance at the London Games landed him in the prestigious position of being the fastest American marathon runner. We believe our product is on target. Our marketing is effective and our operations are more efficient. Our improved focus and execution in 2012 translated into a strong fourth quarter and as we continue to grow our businesses around the world, we believe the positive momentum will continue and we will experience a strong first half of 2013. In our domestic wholesale business, fourth quarter sales increased 72% or $69.9 million over the prior year. This was due to strong sales in our men’s, women’s and kids line, and a 56.8% increase in pairs shipped. This growth also came despite off-price sales in our fashion brands in the fourth quarter of 2011. Excluding our fashion lines, Skechers brands were up $73.4 million or 81.6%. Along with double-digit improvements in our women’s active, women’s and men’s USA, men’s sport, kids and work lines, we experienced triple-digit growth in our women’s sport in our charitable line BOBS from Skechers. The continued sales growth with BOBS has resulted in more than 3 million pairs of shoes donate to children in need around the world. We launched our performance division in the fourth quarter of 2011 with one-style Skechers GOrun, a year later with numerous lines under our performance division including Skechers GOwalk and Skechers GOrun Ride and Skechers GOrun 2, the goal platform has become a key growth category with triple-digit gains in the fourth quarter. Also in the fourth quarter, we delivered two new lines, Daddy’s Money for juniors and Mark Nason by Skechers from men, both of which were very well received and we believe will be very successful. We have continued to develop significant marketing campaigns in support of our growing sale and have done so efficiently maintain selling expense at 7.9% of our fourth quarter sales. During the holiday season, these marketing campaigns included three new commercials for men’s Relaxed Fit, starring sports icons, Tommy Lasorda, Mark Cuban and Joe Montana, Daddy’s Money commercial that ad on MTV, a SKCH+3 spot and new commercials for Twinkle Toes, Bella Ballerina, Air-Mazing and Mega Flex. This quarter we have already added two new commercials. First, the new Joe Montana commercial for Relaxed Fit and then humorous Skechers GOrun 2 commercial, which debuted during the Super Bowl. The spot which pitted man against cheetah and highlighted the speed of this new running shoe has received a lot of attention in the media and placed in the top 10 in several Super Bowl advertising polls. The demand for our performance in lifestyle product has continued this quarter. The reaction to our new offering during our buy meetings at our corporate offices last month was very positive. And we’re pleased with the initial sell-throughs and ad launch business. We’re looking forward to delivering new product across our diverse product platform through the quarter and further expanding our performance division with new lines in the second quarter. In the fourth quarter, our total international subsidiary joint venture and distributor sales increased by 30% with our subsidiary and joint ventures sales improving by 40.5% and our distributor sales by 17%. The significant subsidiary growth is attributable to eight of our 11 regions improving in the quarter, including the triple digit growth from two countries. Our business in Spain and Italy did not grow in the quarter, which we attribute to the challenging economic environments in the regions. We are remaining cautious about these markets but are seeing positive trend emerging in Italy. For both our distributors and subsidiaries, Europe is showing growth, including markets in Eastern Europe that previously had slowed due to the economic environment. With the new Japan subsidiary contributing in the fourth quarter, the Pan-Asia region continue to be a key driver in our sales growth. Our distributors in the Philippines, South Korea, Taiwan and Australia, New Zealand all had positive improvements that combined resulted in total growth of approximately 27% in the quarter. Additionally, our Asian joint ventures primarily consisting of China and Hong Kong, increased by 33%. The Middle East and Africa regions also showed significant improvement with approximately 115% growth. While each of our distribution partners trended positive, we are particularly pleased with the growth in one of our biggest distributors, the UAE, who continues to open Skechers retail stores across the Middle East with six in the fourth quarter alone. At quarter end, there were 257 distributor owned or licensed Skechers retail stores around the world. 106 Skechers stores in our joint venture countries in Asia, including those run by licensees in the region and an additional 21 company license stores in Canada, Spain, Portugal, Ireland and the Netherlands. 32 Skechers stores were opened in the fourth quarter by our joint ventures, franchisees and distributors. These include one each in Australia, UAE, Oman, Aruba, Estonia, South Africa, Ukraine, Serbia, Malaysia, Singapore, Thailand and Canada, two each in Mexico Taiwan, Colombia and South Korea, three in Hong Kong, and four in Saudi Arabia. Five stores closed in the quarter, one each in the UAE, Estonia and Venezuela, and two in Spain. As in the U.S., we are seeing an increased demand for our product in many countries around the world reflected by the growth we experienced in the fourth quarter. We believe this positive trend will continue based on our backlog, recent international trade shows and response to our new product, which many of our international partners are now showing in their buy meetings. We are looking forward to more ad launch business and presenting the autumn winter collections at the upcoming tradeshows in Japan, China and Europe. We believe our fresh looks and marketing are on trend for consumers around the world. For the quarter, total sales on our company-owned retail business increased by 16.2% with domestic sales improving by 16.6% and international sales by 14%. This was in part due to an increase of five domestic and three international stores. For the quarter, we had positive domestic comp store sales of 9.9% and international comp store sales were up 12.6% for combined increase of 10.3% with gross margins up 400 basis points. At quarter end, we had 354 company-owned Skechers retail stores. In the fourth quarter, we opened one store each in Puerto Rico, Texas, Utah and Arizona and two stores in California. We also opened three stores in Chile, bringing our total company-owned stores in Chile to 21. We closed one store in Arizona in the quarter. In the first quarter of 2013, we closed six stores. We anticipate closing additional two and opening another fourth stores. In 2013, we expect to open another 30 to 35 stores. Before we move onto our financial review, I’d like to mention two additional revenue channels. We presently have three e-commerce website, Skechers.com in the U.S., U.K. and Germany. While our e-commerce sites are primarily branding tools that allow us to highlight our marketing, showcase the breadth of Skechers footwear and direct consumers to the nearest brick-and-mortar location. They’re also a profitable revenue channel. Total e-commerce sales increased by 39.4% in the quarter. Our licensing division is also expanding. We generated $2.6 million in licensing revenue in the fourth quarter from our many licensing partners, which include eyewear, apparel, backpacks and socks, all branded Skechers. Men’s and women’s Skechers performance in sport apparel are expected to launch this quarter in select Skechers retail stores. Now, turning to our fourth quarter 2012 numbers in more detail. As I discussed earlier, fourth quarter sales increased 39.7% to $395.6 million compared to $283.2 million in the fourth quarter of 2011. Fourth quarter gross profit improved to $168.5 million, or 42.6% of sales compared to gross profit of $112.6 million, or 39.8% of sales in the prior year period. The increase in gross profit was due to the combination of increased sales volumes and sell-throughs across all our revenue channel, improved quality of inventory and more in-line product. Fourth quarter selling expenses increased $7.7 million to $31.1 million, or 7.9% of sales compared to $23.4 million, or 8.3% of sales in the prior year. The dollar increase in advertising and marketing expenditures was to support both our new and existing product lines and the growth of our business in the United States as well as overseas, including our new joint venture in India and our new support subsidiary in Japan. For the fourth quarter, general and administrative expenses excluding legal settlements decreased to $132.1 million, or 33.4% of sales compared to $150.9 million or 53.3% of sales in the prior year. The decrease in G&A was largely due to the significantly lower professional fees, including legal, lower research and development costs, reduced bad debt expense as well as increased efficiencies from our domestic distribution center. During the fourth quarter of 2012, earnings from operations were $8 million compared with loss from operation of $103.1 million in the fourth quarter of 2011. Net income during the quarter was $4 million compared to a net loss of $57.7 million last year. Net income per diluted share in the fourth quarter was $0.08 on approximately 50.3 million average shares outstanding compared to a loss per diluted share of a $1.18 on approximately 48.9 million average shares outstanding in the prior year. Income tax expense was $3 million or 44.7% for the fourth quarter of 2012. Now, turning to our full year results. Net sales for the 12-month period ending December 31, 2012 decreased 2.8% to $1.56 billion compared to $1.61 billion in the prior year period. Gross profit increased to $683.3 million, or 43.8% of sales compared to $623.7 million, or 38.8% of sales in the prior year period. Selling expenses decreased 11.2% to $134.9 million or 8.6% of sales, compared to $152 million or 9.5% from last year. General and administrative expenses excluding legal settlements decreased 6.5% to $532.4 million compared to $569.2 million from last year. Net income for the year was $9.5 million compared to a net loss of $67.5 million last year. Diluted earnings per share were $0.19 on approximately $49.9 million average shares outstanding, compared to diluted loss per share of $0.39 on approximately 48.5 million shares last year. And now, turning to our balance sheet which continues to remain very strong. At December 31, 2012, we had $325.8 million in cash or approximately $6.48 per share. Trade accounts receivable at quarter end were $213.7 million and our DSOs at December 31, 2012 were 46 days versus 50 days in the prior year period. Total inventory including merchandise in transit at December 31, 2012 was $339 million, representing an increase of $112.6 million from a year ago. We believe the increase in inventory is appropriate based on our current backlog, sell-throughs, additional store count and the opening of a new joint venture and subsidiary. Long-term debt at December 31, 2012 increased $52 million to $128.5 million compared to $76.5 million in the prior year period. The increase in long-term debt primarily relates to reclassifying our construction loan from short-term to long-term debt, as we extended the term of our loan on our distribution facility for an additional three years. Shareholders’ equity was $919.1 million versus $892.5 million from a year ago. Book value of shareholders’ equity per share stood at approximately $18.28 as of December 31, 2012. Working capital was $647.8 million versus $570.9 million from a year ago. Capital expenditures for the fourth quarter were approximately $24.3 million, of which $3.3 million consisted of six new store openings and several store remodels and $19.9 million for our new domestic distribution center. In summary, 2012 was a remarkable year for Skechers. We returned to profitability and saw sales increase across all our revenue channels in the fourth quarter, including gains of 72% from our domestic wholesale business. The strong domestic wholesale growth plus low double-digit positive comp store sales in our company-owned Skechers stores are evidence of the broad acceptance of our new product offering. Our product and marketing also translated to countries around the world, as we saw growth come from the Americas, Middle East, Africa, across Europe and the Pan-Asian region. During the year, we were highly focused on growing our existing product divisions and broadening our offering to consumers with several new product lines. We established an award-winning performance division and further grew our heritage business, all while adding new features and technologies that consumers desire. Further, with improved backlogs with over 20% for our combined domestic and international wholesale businesses and a strong first quarter to date, we are confident that our growth trend will continue in 2013. And now, I would like to turn the call over to the operator to begin the question-and-answer portion of the conference call.

Thank you. (Operator Instructions) Our first question comes from line of Jeff Van Sinderen with B. Riley & Company. Please proceed with your question. Jeff Van Sinderen - B. Riley & Company: Let me say, great work. Congratulations on a solid return to growth. It seems like you’re invigorated product continued to drive growth for 2013. Maybe you can talk a little bit more about the sales progression you experienced at your own retail stores for holiday? Was it erratic or anything there to speak about? And then how promotional were you versus original plan for holiday and maybe you can talk about how comps have trended in your stores for the first half? Has it been pretty steady there and then also more or less promotional so far in the first half of Q1? And then any color you can give us on what you’re seeing in terms of traffic in a last few weeks and how much of the comps you think is really -- just really being driven by great new product?

That’s a lot. I got to priorate that. I don’t know if I got it all. But I will tell you, the comp store sale in the fourth quarter, we certainly never went beyond any plan for promotional activity. We don’t promote significantly in our stores other than seasonal merchandise and occasionally in our outlet stores. We protect the brand, and we are predominantly a wholesale -- wholesalers by nature. So the stores are at somewhat of a disadvantage by not going on sale. So it’s not promotional. When we sell and we show as well as we do now here and around the world, it’s always based on product and demand from the consumer level. As to traffic patterns for fourth quarter, I don’t think they are any different than what you read about, some weather, certainly in the East Coast and as things change up and down. But we felt pretty consistent. We were up against easier comps to begin with and the products being so light. I don’t think anything dramatic changed then and we found the same progression going into the first quarter, although January is never really the strongest month of the quarter to begin with. So, I don’t know what that all means but so far we’ve continued. We’ve got great demand for our product. We are shipping well. We still feel sell-throughs are going well. As I said in the report, we’ve gotten great feedback from all our larger customers as they come through for their buy meetings. So everything we think, we feel and it seems to remain on plan and on a progression with all this product that we’re developing and bringing in. Jeff Van Sinderen - B. Riley & Company: Okay. So you really haven’t seen any sort of traffic related slowdown in the last few weeks. It sounds like it’s been pretty steady, is that fair to say?

Yeah. We are pretty steady. When you are doing as well as we are doing, I think it’s been fairly steady other than some weather patterns and some districts around the country that obviously change things. Jeff Van Sinderen - B. Riley & Company: Okay. And then maybe you can just give us more color on the running categories since that’s been one that’s been talked about a lot lately. Obviously, you’ve got great innovative products there and I’m sure that’s driving your business but how do you feel about sort of the backdrop of running and do you think that that category is maybe slowing growth and so do you think you can still take market share? Anything you can give us there would be helpful.

Well, obviously, we always think we can take market share or we wouldn’t be here. We are brand new to the category and as much as it’s growing and is successful as it’s been, we’ve always we think scratched the tip of the iceberg. But it all fits into -- all the products that we developed, it’s not only running it’s the whole Skechers Co. family that’s gone beyond running now. And so the rest of the products we’ve brought to the marketplace. We have lightweight in our active and our sport, both men’s and women’s. Our kid’s product is growing. So we continued to innovate and we anticipate taking shelf space and market share across all our categories, not just that one. So that’s just one of that is doing quite well and new for us. So we think it will -- it certainly has the biggest growth potential over the number of years and certainly worldwide. But we are pretty much moving in all categories into significant increases of shelf space. Jeff Van Sinderen - B. Riley & Company: Okay. And then I know you don’t give guidance per se, but maybe you can just talk a little bit about how we should think about Q1? Obviously, I think you think you said your bookings were up more than 20% pretty much opening segment of your business, domestic, international wholesale, retail, it’s all up. So how should we be thinking about revenues for Q1? I mean, does that translate into something in order of magnitude, 15% to 20% growth or any color there then also maybe you can just touch on how we should be thinking about SG&A for Q1 and any color there?

Well, one of always order of magnitude, so I would tell you that and since we don’t usually give guidance. We will grow. We will be significantly large. Numbers like 15%, 20% in first quarter don’t scare at all. I think that that maybe a middle number or lower number. I mean, if the numbers I had seen on the street which are in the 20% range. I mean from low to high, certainly the average is, we wouldn’t significantly change them at this particular point, while there is a long way to go, we’re still feeling very good about them. As far as the expense line is concern, I think, our G&A remain fairly stable from year-to-year, only should be increasing from new stores and maybe expenses some operations and some new subsidiaries and there could be given currencies as a trend, there could be currency issues for slight changes there. From the selling line, I think, obviously, we expect significant growth, so we’ll be going. I think the order of magnitude of the increase will be somewhat less than just short of $8 million we saw in Q4 but certainly higher than last year. Jeff Van Sinderen - B. Riley & Company: Right. But it sound like you should able to get -- you should be able to generate pretty good leverage in the P&L in Q1?

We anticipate significant leverage from the G&A line and somewhat less leverage from the selling line. Jeff Van Sinderen - B. Riley & Company: Got it. Okay. Great. I’ll let somebody else jump in. Thanks so much and good luck for the rest of the quarter.

Thank you.

Our next question comes from the line of Scott Krasik with BB&T Capital Markets. Please proceed with your question. Scott Krasik - BB&T Capital Markets: Hi, David.

Hi, Scott. Scott Krasik - BB&T Capital Markets: Good quarter.

Yes. It was. Scott Krasik - BB&T Capital Markets: So just a couple of questions on sales, you didn’t go into some of the other European countries, the U.K., Germany. How were those in the quarter and how do you expect Europe to do in the first half of ‘13?

Germany, all I interpret, the two countries that were down that I alluded to in the prepared remarks were obviously Spain and Italy that we called out and they were down significantly, all other countries had some growth whether it was low to middle single digits and some into the double digits. I think that continues into first quarter. We are anticipating that we will show volume increases in Western Europe in the aggregate. Although, I don’t believe that Italy and Spain will show any growth and Germany will show some growth, but it will probably be modest and everybody else is continuing on. So we still anticipate significant growth out of Europe and growth out of the international in general. Scott Krasik - BB&T Capital Markets: So, you restocked I would say in North America, right, you had some really low numbers, you’re going up against? Are you still in that restocking mode in Europe? Are you just, are these types of growth rates filling to the sell-through demand, should we see that accelerate the way we saw North America accelerate?

I don’t know that will get to a 70% increase quarter, although, it made possible, there is too many taste levels in Europe. But, yeah, I think we accelerate. So we are delivering the new product, it’s obviously slightly behind, although not that significant any more the deliveries in the United States. So, yeah, I think some of the product we are delivering is just beginning there and we are showing some good sell-ins in the first quarter and if they are successful as we anticipate and they continue to work, obviously, we’ll see acceleration through the back half a year as well. Scott Krasik - BB&T Capital Markets: So if I have to read to what you are saying, so Q1, domestic wholesale still very strong, maybe not as strong as Q4…

Well, we don’t, it’s going up 80… Scott Krasik - BB&T Capital Markets: … but Q1 international should be higher?

Yeah. We don’t think it’s going to be 80%. Scott Krasik - BB&T Capital Markets: Yeah.

Q1 in international… Scott Krasik - BB&T Capital Markets: Okay.

… will be probably on the same order of magnitude maybe within plus or minus a little bit from Q4 as far as order of growth percentage obviously somewhat higher numbers since it’s a much stronger quarter certainly for the subsidiaries. And we still anticipate our retail will be up comp store in that low double-digit range, so. Scott Krasik - BB&T Capital Markets: Okay.

We are still moving along. Scott Krasik - BB&T Capital Markets: Yeah. No. That’s great. Then in terms of the gross margin, what is this 42.5% gross margin really says, does that say, VAT, the ongoing level, was it lower because you rent some [bogos] because may I get your subsidiary business was actually up pretty good, so that should have helped?

Well, our subsidiary business was up good, I think what it show is that, we had growth in United States, and usually in Q4 and when we’ve been very strong as far as margin is concern, retail has been a bigger percentage, obviously, it would 70% growth in domestic wholesale and a big piece of that being kids, we get back to the more normalized margin. And we said, we’d be in that 42% to 43% range as we get more normalize. We did have some inventory, some colors and things that we moved out through the quarter. So I think this is becoming a more normalized margin for the relationship as they exist between our operating division. Scott Krasik - BB&T Capital Markets: Okay. Well, good luck.

Thanks.

Our next question comes from line of Sam Poser with Sterne, Agee. Please proceed with your question. Sam Poser - Sterne, Agee: Good afternoon, David. How are you?

Hey, Sam. I’m very good. Sam Poser - Sterne, Agee: I’m glad to hear. Few questions, just you said in the press release that the inventory increase was basically in line with your expected growth, so?

Yeah. It’s a two-fold thing and the growth is some time filling a pipeline, just we don’t get too far ahead of ourselves, a pieces of it, I would tell you that 20% to 25% of the increase in inventory itself is based on new stores, new subsidiaries, new joint ventures that we pick up that just stocking, getting inventory there to begin with. And part of the U.S. is because we’re so hot and first quarter is growing, and because of Chinese New Year some stuff had to hit the water earlier that hits our number. So it’s in line with our forecasted, but I don’t want to make too close comparisons between percentages here and there. It’s just the timing have some changes. We have Chinese New Year. We have more seasonal product in the first quarter and we are hot. So, we thing we’re very much in line with where we should be and we don’t see any real excesses in inventory right this minute. Sam Poser - Sterne, Agee: Well, actually that was a second question, you talked about inventory on the water and I guess that’s inventory that had to ship early because of Chinese New Year? Could you give us some idea of the magnitude of that inventory that’s in transit right now?

In transit any -- at any time could be somewhere between 10% and 20% of the inventory that exists, so. Sam Poser - Sterne, Agee: I guess, what I’m asking, on year-over-year basis, do you have more goods on the water now because of the shift of the -- because of the early Chinese New Year, are more goods there, as you mentioned that is one of the contributor to higher number. So, my guess, so is that a higher percentage than it was a year ago leading to a higher number that would have been?

I would tell you that the amount being shipped in December and on the water at the close of December 31st in transit and arising in mid-December certainly higher than it was last year. Sam Poser - Sterne, Agee: What -- could you say to what degree, or how much, I mean, what percentage of that combination is of that inventory that you have?

If you want to sit, I’ll talk and break it out for you, but… Sam Poser - Sterne, Agee: So its material, I mean, it was not to call out, so it is material?

It’s not to call out. Well, I will tell you we have a smaller percentage in profit after that stuff move to get out and it’s was higher. I don’t, I have to look at the exact relationship of in transit to physically inventories that here and around the world and pull out what we start to the new countries and I’ll get you numbers, so if you call me, I’ll work it out and give you exactly what we had in transit outside those countries. Sam Poser - Sterne, Agee: All right. Thanks. And the go forward, assuming you’re profitable, and with the mix that you foresee, what tax rate should we be thinking about for 2013?

We still believe our one normalized tax rate is probably in the 33% range. Sam Poser - Sterne, Agee: Okay. And then lastly, the G&A from the DC -- I mean, you came in well under in dollars what I expected. What -- how should we think about that in the dollar rate going forward. It is like -- is the 132 a number or should we use like 135 as a number -- I mean, it doesn’t vary very much. So what’s kind of number should we assume?

Yeah. I was just going to say, it hasn’t varied very much from quarter-to-quarter this year with the increase in volume. So I don’t think it varies significantly going into next year as well. Sam Poser - Sterne, Agee: So it’s like 35 a good number on a quarterly basis?

That’s a whole G&A. Yeah. I will tell you… Sam Poser - Sterne, Agee: The G&A part of it correct.

Yeah. I would think 135, 137, depends on the volume and how much the stores do and obviously comp store sales because we processed them one pair at a time. But in that range, I would say 135, 140 range probably unless there is a concentrations of store buildout in any significant quarter, which could put us pressure. And that’s probably a good place to be. Sam Poser - Sterne, Agee: On year-over-year basis on gross margin, I mean, you had a good gross margin at 44.3% in the first quarter of 2012. Is that -- I mean, should we think of basically gross margin -- basically in line with last year? Are you expecting to get some gross margin growth?

I don’t think it will grow. I think we’re more on 42, 43 range than the 44 range. Sam Poser - Sterne, Agee: Even in the first quarter?

Even in the first quarter. Sam Poser - Sterne, Agee: Okay. All right. Well, thank you very much and good luck.

Thanks.

Our next question comes from the line of Chris Svezia with Susquehanna Financial Group. Please proceed with your question. Chris Svezia - Susquehanna Financial Group: Hey, David. How are you?

I’m very good. Chris Svezia - Susquehanna Financial Group: Nice job. I’m curious, just go back to the gross margin for one second, I know mix plays a factor but as you think about going into Q1 and sort of that’s sequential move from Q4, international becomes a bigger piece. It does have higher margins relative to U.S. wholesale. Why wouldn’t maybe gross margin pick up slightly sequentially in that 42, maybe come close to 43 rate for 43 slightly, just because of the mix?

I said 42, 43 but I think a part of that is while a shoes at international does have a slightly higher margin and it’s stronger in the first quarter. If you look at the growth, while I don’t anticipate certainly 70% growth but if you grow even at 25% for domestic wholesale, I think you get to a point where we’re still slightly higher percentage and does even have the margin. So I’m not that exact. I’m not telling you 43 is not a good number. I’m just saying it’s more in that realm. I would anticipate in 44 but we could still get to 44. I mean, we could have scored internationally as well. So it’s just my -- that case now is little more normalized and I’ll be closer to the 43 or so than the 44. But that doesn’t say I take it all of the table completely. Chris Svezia - Susquehanna Financial Group: Okay. Since you’re not giving guidance, I just -- so if you think that international could grow roughly at similar rate you saw in Q4. And you think company on retail can grow at a similar rate, the plug-in that you opposed on, I’m getting a sense that it got to be close to 30% kind of growth rate. Your push-in sort of 25, little over 25%, 26% for the total company. I mean, is that, am I not guaranteeing that’s going to happen but that seems logical. I mean, it’s just kind of plugging in the number. That’s sort of where it’s coming to.

Well, you got a whole redefined numbers and currencies but I would tell you right now, I’ll be more comfortable with a flat 20% for the company because it’s a tougher comp for next year. And that’s where I would be, not to give true significant guidance, which way the numbers are on the street. Like I said before, I think the consensus number is 427 but the high is 448 which I think is in an outlay which is kind of high and low is 394 which is obviously too low. Take the average of those two, you’re at 421. So we are in that range, 420 to 425, 426, I think pending seeing exactly how the weather turns and sell-throughs and ad launch piece is not a bad place to be right at this minute. Chris Svezia - Susquehanna Financial Group: Okay. Let me, can I -- so on inventory, when do you kind of expect in Q1. I mean, where you see that inventory trending into a quarter at Q1 at this point?

Well, it’s usually higher at December 31st because of the transit and stuff and with the earlier Easter, I wouldn’t expect any significant growth in inventory at March 31st. Chris Svezia - Susquehanna Financial Group: Okay. So is it likely it could still be up 50% or is it coming a little bit…

From last year. Yeah. I always be offering last year because there is more stores and more countries that have more base inventory that didn’t exist last year. So I think China continues to grow. It’s a good season for them. I think Japan will have their inventory that didn’t exist last year. India will have an inventory that didn’t exist last year. And there will be about 20 more stores in inventory in the warehouse to accommodate those 20 stores as you go in through the mid months. So it’s always going to grow from where it was and we have more divisions to support. So there is obviously, we were so lean and mean last year. We were risk aversive to inventory again to more normalized piece now. And we have a bigger infrastructure. So it’s going to grow year-over-year. I don’t think there is any question about that. Chris Svezia - Susquehanna Financial Group: So I know, we’re just starting the year. But if you just think optically about your biggest opportunity whether it’s U.S. wholesale or international and you think about leverage because before handed seem like if most of your growth was U.S. hostel. There is not -- there is not really a lot of cost to put into that. So the leverage opportunity was significant. I mean, if you still think that’s the case even if you get international subsidiary growth in existing market and in existing distributor market, so that leverage ability is pretty significant still.

Yeah. I think while we’re going to grow, I think domestic wholesale has a head start certainly. So when you start growing 70% and even 20% or 25% or more in the first quarter on a base that’s that large, the numbers get significant and we certainly have leverage ability to the G&A line here. So that continues. If international then picks up and starts moving in even big places in Q2 and Q3, we’ll leverage even more because that will be -- there’s not a lot of infrastructure to build. I don’t leverage quite as well to the G&A line that will be leverage on top of the leverage we’ll get in the United States. So it will turn out quite nicely. Chris Svezia - Susquehanna Financial Group: Okay. And just one last thing, just on product real quick, I’m just curious about Daddy’s Money and SKX+3, just where you’re in that, what you’re seeing, what the response in retail, I mean, some retailers have come back to us saying, it’s been little slow to pick up maybe just seasonally if not the time to be selling this stuff in January but maybe I’ll pick up in spring but just what’s the feedback you’re getting on those?

In our own stores and warm weather stores, we see them doing quite well. Like you said, they are out of season and they’re relatively new and the weather has been declining in a lot of places around the country. So it’s tough to say how they start. We see them in our stores and warm weather stores where we shown them, we have Skechers customers that they started off very nicely and SKCH+3, we think does very, very well. So we anticipate that everybody will get that as the weather get nice when we get into real spring. You’re getting out of the close out season in January and into new product in February and March and we anticipate they’ll do quite well. Chris Svezia - Susquehanna Financial Group: Okay. All right. Sounds good. All the best to you.

Thanks. Take care.

(Operator Instructions) Our next question comes from the line of Corinna Freedman with Wedbush Securities. Please proceed with your question. Corinna Freedman - Wedbush Securities: Hi there. Great quarter. Just wondering if you could comment on the retail store opening. I think you said 30 to 35. If you could talk about the cadence of that, is that net of closures, that’s the first question. What comp are you planning to for the retail business?

The store opening numbers is just a store opening number and it depends on availability of leases and things like that. I think the biggest closures we’ll have, we want to be just announced in the first quarter. So I think on a net basis, we should still be up year-over-year as the year ends somewhere in the low 30s unless there is difficulty in finding the correct locations at the correct pricing. Now, more stores become available to us in the back half of the year as we continue to comp well and the stores do well. We certainly reserved the right to open more. So we’re in search of and that’s just a best guess at this point. Corinna Freedman - Wedbush Securities: Okay. And what comp are you planning to for that business?

We’re planning low double digits for the first quarter. Corinna Freedman - Wedbush Securities: Okay. And then just a question about the apparel rollout, I think you said retail only. Is there any plans to grow that out into wholesale and - ?

Yeah. I think we are using Li & Fung for that and obviously they are going to have potential to supply as many people as they want. We are just doing a test to take early deliveries. They are outselling it now to wholesales, so we will see what the reception is. But we want to get our own check early, so we’ve converted a dozens stores ourselves to accept apparel so we can get an idea of how our Skechers customers relate to it. So we are just taking early deliveries. It will roll out wholesale wise for the year. Corinna Freedman - Wedbush Securities: And how big do you think that business will be?

I hope it’s about a $1 billion, but I have no idea. The apparel is pretty big and it could be and obviously Li & Fung have the capacity to pick whatever it is, and have a lot of connections and we will take it out worldwide if it’s successful. So, I really don’t have a number right this minute. It’s outside of my real expertise as the apparel rollouts are certainly worldwide. But we certainly anticipate given the quality of Li & Fung operations that it can be a very big piece of our business. Corinna Freedman - Wedbush Securities: Okay. And lastly on the 650 in cash that you see is on the balance sheet, how much of that is in the U.S. and is there any plans to return that cash?

Right now, I think about 60% or 65% of it is in the U.S. and we haven’t announced any plans on repurchases or anything. It’s not quite our way. We still have some infrastructure though and some international. We think there is nothing we are ready to announce right this minute. Corinna Freedman - Wedbush Securities: Okay. Great. Thanks for taking my question.

Thanks.

We have time for one more question today, and it is a follow-up question from the line of Scott Krasik with BB&T. Please proceed with your question. Scott Krasik - BB&T Capital Markets: Thanks. David, just a couple of follow-ups. What’s been the impact of Penney’s in these domestic wholesale numbers and what’s your expectation for Penney’s in ‘13?

Good question. Penney’s has certainly moved down. Our business is actually down with Penney’s. So what that means, I’m not really sure. I’m not sure if other people are taking share from their business. But Penney’s is the only one in our top 10, certainly one of the few businesses we do with on a regular or sizeable nation in the United States but that’s down year-over-year. Not sure, what to expect on ‘13, I hope they are quite successful and this plan does work out well. We still anticipate some decreases in Q1. Although, but obviously with this decrease stays the order of magnitude decreases are certainly less percentage wise. Scott Krasik - BB&T Capital Markets: All right. Okay. And then two more, what was -- I just missed. What was the store count at the end of the year?

We had 300 domestically and 350 worldwide that are ours. Scott Krasik - BB&T Capital Markets: Okay. 350?

350 or 354 I think some like that. Scott Krasik - BB&T Capital Markets: Okay. And then from a -- you have Penney. You had WSA.

What WSA. We are going to MAGIC next week, if you would like to come see what’s there. Scott Krasik - BB&T Capital Markets: Right. So what is -- I never miss the chance to see it. So what’s the backlog sitting at right now for the back half of the year and what does the pricing look like on the back half for the back half of the year in the backlog?

We are just starting to book for -- this is a big booking season for back-to-school. I don’t know that I have any real insight or anything that would mean anything as far as backlogs for the back half of the year, certainly starting July 1st. Just going back to school shipments starting June and we are just filling that in as we speak. So from a timing perspective, I don’t know what to tell you. Pricing is based on the product we deliver. I don’t know if there is significant pricing pressure on the audience but obviously we’ve got more technologies and we’ve increased some of the pricing as we mentioned in the back half of last year. So we will see the demand for our product is based on, which product sell-through. Obviously, the average pricing for things like BOB and things like GObionic are significantly different. So we have to see how it works out, but I think pricing, from where we sit today we are relatively stable by product categories as we go into the middle of the year. Scott Krasik - BB&T Capital Markets: I’m sorry. But I mean AS -- I mean you have a nice increase in ASPs, will you continue to see that throughout ‘13?

I don’t know if we go up a dollar into the back half for the year where it really start to increase. We will see increases obviously in the first half. Scott Krasik - BB&T Capital Markets: Right. And then I would think last year this time you had probably nothing in the backlog because of the state of the brands. So, I would have thought maybe you will even share something?

I don’t know if that’s true. We didn’t have such a big first and second quarter. We did $730 million, it wasn’t all retail, so in our backlogs. I mean, backlogs are backlog whether they are full priced or close outs or just very basic shoes we did have but we are up 20% and that’s all going to -- for the most part as we stand today full price products. So, I think it bodes well. You have to take into account the quality of the products you have in the backlog just like stores. We said the stores were up just over 10% worldwide that would relate to the 350 stores which is not a big comp increase. But when you compound that also with affect that we were up 400 basis points in gross margins, you see the quality of the product and what you are really selling in there and the average price point. So you got to take both into accounts. So while we have 20% increase in backlog, it’s a stronger backlog. It’s a healthier backlog from a gross profit perspective and with an average price perspective. So the backlog has improved on many levels. Scott Krasik - BB&T Capital Markets: Okay. Well. Thanks again.

Okay.

Thank you. At this time, I would like to turn the conference back over to Skechers for any closing remarks.

I don’t think there is much more to say other than as we lay out, we are very confident and feel very good about going into 2013. We will know more as we go over the next few weeks as we finish platform next week and we do our international shows. So more information to come, we are still very positive and we appreciate everybody’s participation in the call.