Skechers achieved a new fourth quarter sales record of $1.65 billion, the second highest quarterly sales in the company's history, and gross margins of 48.6%.
For the full year, Skechers achieved record sales of $6.29 billion with strong gross margins of 49.3%.
These exceptional results bring us closer to our goal of $10 billion in five, or $10 billion by 2026.
The fourth quarter sales gain of 24% was the result of a 10% increase in our domestic sales and a 34% increase in our international sales.
International represented 65% of our total sales for the fourth quarter.
Our international wholesale business grew 30% year over year in the fourth quarter, with increases coming from all our channels, reflecting the global strength of our brand.
Our distributor business was the largest growth driver with a 124% increase, led by the Middle East and followed by Russia, Scandinavia, Indonesia, and Turkey.
Subsidiary sales increased 47% with double-digit growth coming from nearly every country.
Our joint venture business increased 10% for the quarter on strong sales in China and Mexico, as well as the addition of the Philippines, which transitioned from a distributor model to being directly managed by Skechers.
China's high single-digit growth in the quarter is particularly notable, given temporary store closures in select provinces due to COVID-19 and the supply chain restrictions, which resulted in a delay of some 11.11 inventory.
An additional net 128 third-party Skechers stores opened in the fourth quarter across 30 countries, including our first in Bhutan, a notable number of franchise locations in China and India, as well as through our distributors in Australia, New Zealand, Turkey, among others.
In total, at quarter-end, there were 2,946 third-party Skechers stores around the world.
Skechers' direct-to-consumer business achieved quarterly sales gains of 30%, driven by a 52% increase in international and a 17% increase domestically.
Worldwide comparable same-store sales increased 21%, including 15% domestically and 36% internationally.
Further, our direct-to-consumer average selling price per unit increased 25%.
The increase of 17% in our domestic direct-to-consumer business was the result of a 24% gain in our brick-and-mortar stores, partially offset by a decrease of 12% in domestic e-commerce, which was challenged by low inventory availability during periods in the quarter.
As compared to the same period in 2019, our domestic e-commerce business increased 115%.
In the fourth quarter, we opened 16 company owned Skechers stores, including eight in India, two in Colombia and one each in France, Italy, Peru, and Chile.
This brings the global company owned and third-party Skechers store count to 4,306 at year-end.
To date, in the first quarter, we've opened six stores in the United States and one in Italy, and we plan to open an additional 120 to 150 company-owned locations by year-end.
We closed 11 stores in the United States at the end of January, and by the end of the year, expect to close another five to 10 locations, the majority of which are mall-based concept stores.
Sales in our domestic wholesale business improved 5% in the fourth quarter.
And we also recently relocated to a slightly larger distribution space in Panama with the intent to build an additional center, allowing us to grow from 270,000 square feet to approximately 800,000 square feet in 2023.
The expansion continues on our LEED certified Gold North American distribution center, which will bring our facility in Southern California to 2.6 million square feet later this year.
The effect of these challenges was most evident in our inventory balances, which include an incremental $325.1 million in in-transit inventory, a year-over-year increase of over 130%.
Nonetheless, we remain confident in the strength of our brand and trajectory of our business and have fully embraced the goal of achieving $10 billion in sales by 2026.
This confidence in the long-term health of the business encouraged our board to authorize a new three-year share repurchase program of up to $500 million, which we expect to fund through free cash flow.
Sales in the quarter achieved a new fourth quarter record totaling $1.65 billion, an increase of $323.2 million or 24% from the prior year and a 24% increase over the fourth quarter of 2019.
Direct-to-consumer sales increased 30% year over year, supported by growth in domestic and international markets of 17% and 52%, respectively.
As compared with the fourth quarter of 2019, direct-to-consumer sales increased 22%, the result of an 8% increase domestically and a 45% increase internationally.
International wholesale sales increased 30% year over year and grew 33% compared to the fourth quarter of 2019.
Our distributor business grew 124% year over year but remains slightly below pre-pandemic levels.
Subsidiary sales increased 47% year over year, and as compared to the fourth quarter of 2019, grew 66%.
Our joint ventures grew 10% year over year, led by a 9% growth in China.
As compared to the fourth quarter of 2019, this reflects a 32% increase.
Domestic wholesale sales grew 5% year over year, and we continue to see very positive underlying trends among our domestic wholesale partners, including strong sell-through rates and higher average selling prices.
Gross margin for the quarter was 48.6%, a decrease of 30 basis points year over year due to higher freight expense and the mix impact of higher sales in our distributor business, which is an inherently lower gross margin business with very attractive operating margins.
Total operating expenses increased by $119.4 million or 20% to $715.1 million in the quarter versus the prior year but improved 160 basis points as a percentage of sales from 45% to 43.4%.
Selling expenses in the quarter increased year over year by $24.2 million or 25% to $122.1 million, reflecting additional demand creation spending globally.
General and administrative expenses in the quarter increased year over year by $95.2 million or 19% to $593 million.
However, as a percentage of sales, this represented an improvement of 160 basis points.
Earnings from operations were $93.1 million versus prior year earnings of $57.7 million, an increase of $35.4 million or 61%.
Operating margin improved 120 basis points to 5.6% as compared with 4.4% in the prior year.
Net earnings were $402.4 million or $2.56 per diluted share on 157.3 million diluted shares outstanding.
We recorded an income tax benefit of $346.8 million in the quarter, resulting from an intra-entity transfer of certain intellectual property, which will be amortized in the future.
Excluding the effects of this nonrecurring tax benefit and the settlement of multiple legal matters, adjusted diluted earnings per share were $0.43.
This compares to prior year net earnings of $53.3 million or $0.34 per diluted share on 155.4 million diluted shares outstanding.
Our effective tax rate for the fourth quarter was a negative 399%, which reflects the benefit of the intellectual property transfer.
The company's effective income tax rate was a negative 43.2% for the full year, which includes a 60.9% impact from the intellectual property transfer in the fourth quarter.
Excluding this benefit, our effective tax rate would have been 17.7% for the full year.
We ended the quarter with $1.04 billion in cash, cash equivalents and investments.
This reflects a decrease of $539.6 million or 34% from December 31, 2020.
As a reminder, we fully repaid our revolving credit facility in the second quarter of 2021, of which $452.5 million was outstanding last year.
Also, in December, we expanded our senior unsecured credit facility to $750 million, which retains a $250 million accordion feature that provides for total liquidity of up to $1 billion.
Trade accounts receivable at quarter-end were $732.8 million, an increase of $113 million from December 31, 2020, predominantly the result of higher wholesale sales.
Total inventory was $1.47 billion, an increase of 45% or $454.2 million from December 31, 2020.
However, as previously noted, this balance reflects an increase of $325.1 million in in-transit inventory, attributable mainly to supply chain disruptions.
Total debt, including both current and long-term portions, was $341.6 million at December 31, 2021, compared to $735 million at December 31, 2020.
Capital expenditures for the fourth quarter were $74 million, of which $28.7 million related to the expansion of our joint venture-owned domestic distribution center, $16 related to investments in our new corporate offices, $14.2 million related to investments in our direct-to-consumer technologies and retail stores and $5.9 million related to our distribution centers in China, the United Kingdom, and Japan.
For 2022, we expect total capital expenditures to be between $250 million and $300 million, reflecting continuing investments, both in the U.S. and internationally in our distribution infrastructure, omnichannel retail capabilities and corporate offices.
We expect sales to be in the range of $7 billion to $7.2 billion and net earnings per diluted share to be in the range of $2.70 to $2.90.
For the first quarter, we expect sales to be in the range of $1.675 billion to $1.725 billion and net earnings per diluted share in the range of $0.70 to $0.75.
Our effective tax rate for the year is expected to be between 19% and 20%.
Achieving record sales for the fourth quarter of $1.65 billion and for the year at $6.29 billion is a tremendous accomplishment, especially given the supply chain constraints and ongoing COVID-related challenges.
The comfort, innovation, style and quality of Skechers resonating with consumers around the world and drove an increase in sales of 24% for the fourth quarter and 37% for the full year, with gross margins of 48.6% and 49.3%, respectively.
And together, as determined and driven organization, we will make 2022 another record year and continue on the road to $10 billion in sales.

Summary:
Sales in the quarter achieved a new fourth quarter record totaling $1.65 billion, an increase of $323.2 million or 24% from the prior year and a 24% increase over the fourth quarter of 2019.
Net earnings were $402.4 million or $2.56 per diluted share on 157.3 million diluted shares outstanding.
Excluding the effects of this nonrecurring tax benefit and the settlement of multiple legal matters, adjusted diluted earnings per share were $0.43.
We expect sales to be in the range of $7 billion to $7.2 billion and net earnings per diluted share to be in the range of $2.70 to $2.90.
For the first quarter, we expect sales to be in the range of $1.675 billion to $1.725 billion and net earnings per diluted share in the range of $0.70 to $0.75.