We appreciate the resiliency of the Skechers organization over the past 18 months and hope that those facing the ongoing COVID-related challenges are staying safe.
Skechers second quarter financial results exceeded expectations as we achieved record quarterly sales of $1.66 billion, a 127% increase over 2020 and a 32% increase over 2019.
This marks the first time our quarterly sales have exceeded $1.6 billion and together with our first quarter yields a new six-month record of over $3 billion.
We also achieved a record gross margin of 51.2%, record quarterly diluted earnings per share of $0.88, an exceptionally strong operating margins of 12.1%.
Our record revenues were the result of increases of 147% in our domestic business and 114% in our international business and both businesses increased over 30% compared to 2019.
International sales comprised 56% of our total sales in the quarter.
Our international wholesale business grew 95% from the second quarter last year and 37% from 2019.
The quarterly sales growth was primarily driven by China with an increase of 51% over the same period in 2020 and a 68% increase from 2019, as well as Europe, which had an increase of 150% over 2020 and 85% over 2019.
Our joint venture businesses increased 56% for the quarter compared to 2020 and 46% as compared to 2019.
Subsidiary sales increased 163% from 2020 and 48% from 2019 despite temporary closures and reduced operating hours in many regions, including India, Canada, Japan and parts of Europe and South America.
Our distributor business improved 122% over last year, though it was down 7% from 2019.
Skechers direct-to-consumer business increased 138% over 2020 and 26% over 2019 despite temporary store closures, primarily in India, Canada, Japan and Chile and reduced hours in many of our international company-owned stores due to local health guidelines.
Worldwide comp store sales were up 109% compared to 2020, including 96% domestically and 165% internationally.
As compared to 2019, worldwide comp store sales increased 13%, including an increase of 22% domestically and a 9% decrease internationally, reflecting the ongoing store closures.
Our direct-to-consumer average selling price per unit rose 17% compared to 2020, indicative of our less promotional stance and the success of our comfort technology products.
Our domestic direct-to-consumer sales increased 101% compared to the second quarter of 2020 and nearly 30% compared to 2019.
Driving this growth was a 232% increase in our retail store sales or 11% over 2019.
The domestic retail store improvement was partially offset by a decrease in our domestic e-commerce channel of 25%, which faced difficult comparisons to the prior year.
However, it is important to note that domestic e-commerce sales were up 337% over 2019.
Our international direct-to-consumer business increased 259% over the second quarter of 2020 and 20% over 2019.
In the second quarter, we opened 13 company-owned Skechers stores, including key locations in Antwerp, Barcelona Berlin and Lima.
We have opened three stores to-date in the third quarter and have another three planned through the end of the month, with another 20 to 25 expected to open by year's end.
An additional net 63 third-party Skechers stores opened in the second quarter across 26 countries, including our first in the Dominican Republic.
In total, at quarter end, there were 4,057 Skechers stores around the world.
Another 145 to 155 third-party stores are expected to open by year-end.
206% in the second quarter compared to the same period in 2020 and 31% compared to the same period in 2019.
We have completed our new 1.5 million square foot China distribution center, which as of this month is fully operational.
We are continuing to work on the expansion of our LEED Gold-certified North American distribution center, which will bring our facility in Southern California to 2.6 million square feet in 2022.
Sales in the quarter achieved a new record totaling $1.66 billion, an increase of $928.3 million or 127% from the prior year and a 32% increase over the second quarter of 2019 with both our domestic and international businesses growing over 30%.
On a constant currency basis, sales increased $857 million or 118% from the prior year.
International wholesale sales increased 95% year-over-year and grew 37% compared to the second quarter of 2019.
Our joint ventures grew 56% year-over-year, led by China which grew 51% on the strength of robust e-commerce demand, partially offset by weakness in several adjacent markets, which are still being impacted by the pandemic.
As compared to the second quarter of 2019, China grew by 68%.
Subsidiary sales increased an impressive 163% year-over-year and as compared to the second quarter of 2019 grew 48%.
Our distributor business grew 122% year-over-year, declined by 7% as compared with the second quarter of 2019.
Direct-to-consumer sales increased 138% year-over-year, supported by growth in both domestic and in international markets, albeit at a lower rate due to store closures in the period.
As compared with the second quarter of 2019, direct-to-consumer sales increased 26%, the result of a 30% increase domestically and a nearly 20% increase internationally.
Domestic wholesale sales grew 206% year-over-year and as compared to the second quarter of 2019 increased 31%.
Gross profit was $849.5 million, up 130% or $480.9 million compared to the prior year.
Gross margin for the quarter was 51.2%, an increase of over 70 basis points versus the prior year and 270 basis points as compared to 2019.
Total operating expenses increased by $220.3 million or 51% to $652.44 million in the quarter versus the prior year period.
Selling expenses in the quarter increased year-over-year by $72.2 million or 120% to $132.4 million.
However, as a percentage of sales, this represented a year-over-year decrease of 30 basis points and as compared to 2019, a 100 basis point reduction.
General and administrative expenses in the quarter increased year-over-year by $148 million or 40% to $519.9 million but decreased as a percentage of sales by almost 20 percentage points.
Earnings from operations were $201.2 million versus a prior year loss of $61 million, an increase of $262.2 million.
Compared to the second quarter of 2019, earnings from operations increased 81%, operating margin was 12.1% as compared with 8.8% in the second quarter of 2019, an increase of 330 basis points.
Net earnings were $137.4 million or $0.88 per diluted share on 156.7 million diluted shares outstanding.
This compares to prior-year net loss of $68.1 million or $0.44 per diluted share on 154.1 million diluted shares outstanding.
As compared to the second quarter of 2019, net earnings improved 83% from $75.2 million or $0.49 per diluted share.
Our effective income tax rate for the quarter was 20.4% versus an income tax benefit of $4.3 million in the prior year and an 18.4% effective tax rate in the second quarter of 2019.
During the second quarter, we fully repaid our revolving credit facility, of which $452.5 million was outstanding and still ended the quarter with $13.2 billion in cash, cash equivalents and investments.
This reflects a decrease of 234.5 million or 15.1% from June 30, 2020.
Trade accounts receivable at quarter-end were $778.2 million, an increase of $300.2 million from June 30, 2020, predominantly a result of higher wholesale sales.
Total inventory was $1.06 billion, an increase of 2.9% or $29.5 million from June 30, 2020.
Total debt, including both current and long-term portions, was $312 million at June 30, 2021 compared to $763.3 million at June 30, 2020, reflecting the repayment of our revolving credit facility during the quarter.
Capital expenditures for the second quarter were $62 million, of which $23.1 million related to the expansion of our joint venture on domestic distribution center in the United States, $14.7 million related to investments in our direct-to-consumer technologies and retail stores, $8 million related to our new now fully operational distribution center in China and $7.8 million related to investments in our new corporate offices in Southern California.
For the remainder of 2021, we expect total capital expenditures to be between $150 million and $200 million.
We expect third quarter 2021 sales to be in the range of $1.6 billion and $1.65 billion and net earnings per diluted share to be in the range of $0.70 and $0.75.
For fiscal 2021, we now expect sales to be in the range of $6.15 billion and $6.25 billion.
And net earnings per diluted share to be in the range of $2.55 and $2.65.
And then, our effective tax rate for the year will be approximately 20% as compared to a rate of 5.5% in 2020 and 70% in 2019.
Our second quarter performance exceeded expectations with three new records, quarterly revenues of more than $1.6 billion, gross margins of 51.2% and diluted earnings per share of $0.08.

Summary:
Skechers second quarter financial results exceeded expectations as we achieved record quarterly sales of $1.66 billion, a 127% increase over 2020 and a 32% increase over 2019.
We also achieved a record gross margin of 51.2%, record quarterly diluted earnings per share of $0.88, an exceptionally strong operating margins of 12.1%.
Net earnings were $137.4 million or $0.88 per diluted share on 156.7 million diluted shares outstanding.
We expect third quarter 2021 sales to be in the range of $1.6 billion and $1.65 billion and net earnings per diluted share to be in the range of $0.70 and $0.75.
For fiscal 2021, we now expect sales to be in the range of $6.15 billion and $6.25 billion.
And net earnings per diluted share to be in the range of $2.55 and $2.65.