Skechers Announces First Quarter 2024 Financial Results and Record Sales of $2.25 Billion

Published

LOS ANGELES--(BUSINESS WIRE)-- Skechers U.S.A., Inc. (“Skechers” or the “Company”) (NYSE:SKX), The Comfort Technology Company™ and a global footwear leader, today announced financial results for the first quarter ended March 31, 2024.

First Quarter Highlights

  • Record sales of $2.25 billion, a 12.5% increase
  • Wholesale sales grew 9.8%
  • Direct-to-Consumer sales grew 17.3%
  • Diluted earnings per share of $1.33, a 30.4% increase
  • Repurchased $60.0 million of Class A common stock

“For the first quarter, Skechers achieved a new sales record of $2.25 billion, EPS of $1.33, gross margins of 52.5% and an operating margin of 13.3%, all notable accomplishments as we mark our 100th earnings call as a public company,” said David Weinberg, Chief Operating Officer of Skechers. “We saw growth of 17% in our Direct-to-Consumer segment and 10% in Wholesale, as well as increases of 15% internationally and 8% domestically. For the quarter, international sales represented 65% of total sales, and we achieved growth in all regions: 17% in Europe, the Middle East and Africa; 16% in Asia Pacific; and 8% in the Americas. Importantly, our domestic wholesale business returned to growth, increasing 8% over last year. With the strong global demand for our brand and a healthy inventory position comprised of proven sellers, innovative technologies and new product categories, we believe that we have significant opportunities for growth across the globe, and we remain confident in our on-going success.”

“We began the new year by setting a new sales record, delivering results above expectations, and further expanding the Skechers brand globally,” said Robert Greenberg, Chief Executive Officer of Skechers. “The broad-based growth is the result of our team’s dedication to delivering exceptional product for consumers of all ages and interests and supporting our initiatives with targeted and effective demand creation. Once again, we created a memorable commercial for the Super Bowl – this year with Mr. T and Tony Romo. In the quarter, we also broadcast our first Skechers Basketball campaigns starring NBA players Julius Randle and Terence Mann, entered the world of cricket by sponsoring one of the leading men’s and women’s teams in India, and grew our roster of Premier League footballers with the addition of Oleksandr Zinchenko. Along with our signature capsules with Martha Stewart and Snoop Dogg, we designed high-performance cleats for three more MLB players – Aaron Nola, Chris Taylor, and Brendan Donovan – and developed an even more robust offering of Skechers Hands Free Slip-ins footwear, which has become the number one Skechers comfort technology product in most markets. With our focus on evolving and innovating our extensive product offering, best-in-class partnerships with our distribution network, and exceptional global demand, we are confident that Skechers will have another record-breaking year.”

First Quarter 2024 Financial Results

 

 

Three Months Ended March 31,

 

 

Change

 

(in millions, except per share data)

 

2024

 

 

2023

 

 

$

 

 

%

 

Sales

 

$

2,251.6

 

 

$

2,001.9

 

 

 

249.7

 

 

 

12.5

 

Gross profit

 

 

1,181.6

 

 

 

978.6

 

 

 

203.0

 

 

 

20.7

 

Gross margin

 

 

52.5

%

 

 

48.9

%

 

 

 

 

360 bps

 

Operating expenses

 

 

882.8

 

 

 

755.0

 

 

 

127.8

 

 

 

16.9

 

As a % of sales

 

 

39.2

%

 

 

37.7

%

 

 

 

 

150 bps

 

Earnings from operations

 

 

298.8

 

 

 

223.6

 

 

 

75.2

 

 

 

33.6

 

Operating margin

 

 

13.3

%

 

 

11.2

%

 

 

 

 

210 bps

 

Net earnings attributable to Skechers U.S.A., Inc.

 

 

206.6

 

 

 

160.4

 

 

 

46.2

 

 

 

28.8

 

Diluted earnings per share

 

$

1.33

 

 

$

1.02

 

 

 

0.31

 

 

 

30.4

 

First quarter sales increased 12.5% as a result of a 15.2% increase internationally and a 7.8% increase domestically. Wholesale increased 9.8% and Direct-to-Consumer increased 17.3%. On a constant currency basis, sales increased 13.4%.

Wholesale sales grew $127.1 million, or 9.8%, including increases in EMEA of 11.5%, APAC of 15.3%, and AMER of 5.9%. Wholesale volume increased 9.9% and average selling price was flat.

Direct-to-Consumer sales grew $122.6 million, or 17.3%, including increases in APAC of 16.5%, AMER of 10.5%, and EMEA of 62.4%. Direct-to-Consumer volume increased 15.5% and average selling price increased 1.6%.

Gross margin was 52.5%, an increase of 360 basis points, primarily due to lower costs per unit, driven by lower freight costs and higher average selling prices.

Operating expenses increased $127.8 million, or 16.9%, and as a percentage of sales increased 150 basis points to 39.2%. Selling expenses increased $27.9 million, or 21.7%, and as a percentage of sales increased 50 basis points to 7.0%. The increase was due to higher demand creation expenditures. General and administrative expenses increased $99.9 million, or 15.9%, and as a percentage of sales increased 100 basis points to 32.3%. Increased expenses were primarily driven by increased labor and facility costs, including rent and depreciation.

Earnings from operations increased $75.2 million, or 33.6%, to $298.8 million, resulting in an operating margin of 13.3%.

Net earnings were $206.6 million and diluted earnings per share were $1.33 compared with prior year net earnings of $160.4 million and diluted earnings per share of $1.02.

In the first quarter, the Company’s effective income tax rate was 19.0%.

“Skechers continues to reach new milestones in expanding our global footprint. Achieving another sales record and exceptional earnings is a testament to the strength of our brand and our ability to meet consumers’ needs,” stated John Vandemore, Chief Financial Officer. “We remain committed to our growth strategy, further expanding our global reach and helping shoppers around the world enjoy the comfort and value of our Skechers products, and we have continued confidence in our goal of achieving $10 billion in sales by 2026.”

Balance Sheet

Cash, cash equivalents and investments totaled $1.25 billion, a decrease of $134.0 million, or 9.7% from December 31, 2023, due to working capital changes as well as $60.0 million of share repurchases and capital expenditures of $57.1 million. Decreases were partially offset by increased earnings.

Inventory was $1.36 billion, a decrease of $164.8 million or 10.8% from December 31, 2023.

Share Repurchase

During the first quarter, the Company repurchased 1.0 million shares of its Class A common stock at a cost of $60.0 million. As of March 31, 2024, $205.7 million remained available under the Company’s share repurchase program.

Outlook

For the second quarter of 2024, the Company believes it will achieve sales between $2.175 and $2.225 billion and diluted earnings per share of between $0.85 and $0.90. Further, the Company believes that for the fiscal year 2024, it will achieve sales between $8.725 and $8.875 billion and diluted earnings per share of between $3.95 and $4.10.

Store Count

 

 

Number of Stores

 

 

December 31, 2023

 

 

Opened

 

 

Closed

 

 

March 31, 2024

Domestic stores

 

 

563

 

 

10

 

 

(8

)

 

 

565

International stores

 

 

1,085

 

 

42

 

 

(21

)

 

 

1,106

Distributor, licensee and franchise stores

 

 

3,520

 

 

95

 

 

(83

)

 

 

3,532

Total Skechers stores

 

 

5,168

 

 

147

 

 

(112

)

 

 

5,203

First Quarter 2024 Conference Call

The Company will host a conference call at 4:30 p.m. ET / 1:30 p.m. PT on April 25, 2024 to discuss its first quarter 2024 financial results. The call can be accessed on the Investor Relations section of the Company’s website at investors.skechers.com. For those unable to participate during the live broadcast, a replay will be available beginning April 25, 2024, at 7:30 p.m. ET, through May 9, 2024, at 11:59 p.m. ET. To access the replay, dial 844-512-2921 (U.S.) or 412-317-6671 (International) and use passcode: 13745028.

About Skechers U.S.A., Inc.

Skechers, The Comfort Technology Company® based in Southern California, designs, develops and markets a diverse range of lifestyle and performance footwear, apparel and accessories for men, women and children. The Company’s collections are available in 180 countries and territories through department and specialty stores, and direct to consumers through digital stores and approximately 5,200 Company- and third-party-owned physical retail stores. A Fortune 500® company, Skechers manages its international business through a network of wholly-owned subsidiaries, joint venture partners, and distributors. For more information, please visit about.skechers.com and follow us on Facebook, Instagram and TikTok.

Reference in this press release to “Sales” refers to Skechers’ net sales reported under GAAP. This announcement contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may include, without limitation, Skechers’ future domestic and international growth, financial results and operations including expected net sales and earnings, its development of new products, future demand for its products, its planned domestic and international expansion, opening of new stores and additional expenditures, and advertising and marketing initiatives. Forward-looking statements can be identified by the use of forward-looking language such as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “plan,” “project,” “will,” “could,” “may,” “might,” or any variations of such words with similar meanings. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in forward-looking statements. Factors that might cause or contribute to such differences include the disruption of business and operations due to` delays or disruptions in our supply chain; international economic, political and market conditions including the effects of inflation and foreign currency exchange rate fluctuations around the world, the challenging consumer retail markets in the United States and the impact of wars, acts of war and other conflicts around the world; sustaining, managing and forecasting costs and proper inventory levels; losing any significant customers; decreased demand by industry retailers and cancellation of order commitments due to the lack of popularity of particular designs and/or categories of products; maintaining brand image and intense competition among sellers of footwear for consumers, especially in the highly competitive performance footwear market; anticipating, identifying, interpreting or forecasting changes in fashion trends, consumer demand for the products and the various market factors described above; sales levels during the spring, back-to-school and holiday selling seasons; and other factors referenced or incorporated by reference in Skechers’ annual report on Form 10-K for the year ended December 31, 2023. Taking these and other risk factors, the dynamic nature of these circumstances means that what is stated in this press release could change at any time, and as a result, actual results could differ materially from those contemplated by such forward-looking statements. The risks included here are not exhaustive. Skechers operates in a very competitive and rapidly changing environment. New risks emerge from time to time and we cannot predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, you should not place undue reliance on forward-looking statements as a prediction of actual results. Moreover, reported results should not be considered an indication of future performance.

SKECHERS U.S.A., INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

 

 

 

As of

 

 

As of

 

(in thousands)

 

March 31, 2024

 

 

December 31, 2023

 

ASSETS

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,020,458

 

 

$

1,189,910

 

Short-term investments

 

 

88,564

 

 

 

72,595

 

Trade accounts receivable, net

 

 

1,158,384

 

 

 

860,300

 

Other receivables

 

 

76,632

 

 

 

82,253

 

Inventory

 

 

1,360,630

 

 

 

1,525,409

 

Prepaid expenses and other

 

 

225,726

 

 

 

222,137

 

Total current assets

 

 

3,930,394

 

 

 

3,952,604

 

Property, plant and equipment, net

 

 

1,519,463

 

 

 

1,506,690

 

Operating lease right-of-use assets

 

 

1,298,349

 

 

 

1,276,171

 

Deferred tax assets

 

 

447,085

 

 

 

450,574

 

Long-term investments

 

 

143,503

 

 

 

123,996

 

Goodwill

 

 

101,230

 

 

 

101,230

 

Other assets, net

 

 

127,416

 

 

 

136,086

 

Total non-current assets

 

 

3,637,046

 

 

 

3,594,747

 

TOTAL ASSETS

 

$

7,567,440

 

 

$

7,547,351

 

LIABILITIES AND EQUITY

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

828,824

 

 

$

1,008,001

 

Accrued expenses

 

 

302,213

 

 

 

320,105

 

Operating lease liabilities

 

 

277,733

 

 

 

274,296

 

Current installments of long-term borrowings

 

 

233,756

 

 

 

46,571

 

Short-term borrowings

 

 

 

 

 

11,894

 

Total current liabilities

 

 

1,642,526

 

 

 

1,660,867

 

Long-term operating lease liabilities

 

 

1,122,157

 

 

 

1,108,110

 

Long-term borrowings

 

 

112,536

 

 

 

242,944

 

Deferred tax liabilities

 

 

12,167

 

 

 

12,594

 

Other long-term liabilities

 

 

124,363

 

 

 

122,794

 

Total non-current liabilities

 

 

1,371,223

 

 

 

1,486,442

 

Total liabilities

 

 

3,013,749

 

 

 

3,147,309

 

Stockholders’ equity

 

 

 

 

 

 

Preferred Stock

 

 

 

 

 

 

Class A Common Stock

 

 

132

 

 

 

133

 

Class B Common Stock

 

 

20

 

 

 

20

 

Additional paid-in capital

 

 

228,594

 

 

 

295,847

 

Accumulated other comprehensive loss

 

 

(86,020

)

 

 

(73,388

)

Retained earnings

 

 

4,003,352

 

 

 

3,796,730

 

Skechers U.S.A., Inc. equity

 

 

4,146,078

 

 

 

4,019,342

 

Noncontrolling interests

 

 

407,613

 

 

 

380,700

 

Total stockholders' equity

 

 

4,553,691

 

 

 

4,400,042

 

TOTAL LIABILITIES AND EQUITY

 

$

7,567,440

 

 

$

7,547,351

 

SKECHERS U.S.A., INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings

(Unaudited)

 

 

 

Three Months Ended March 31,

(in thousands, except per share data)

 

2024

 

 

2023

Sales

 

$

2,251,587

 

 

$

2,001,928

Cost of sales

 

 

1,069,953

 

 

 

1,023,349

Gross profit

 

 

1,181,634

 

 

 

978,579

Operating expenses

 

 

 

 

Selling

 

 

156,501

 

 

 

128,560

General and administrative

 

 

726,335

 

 

 

626,442

Total operating expenses

 

 

882,836

 

 

 

755,002

Earnings from operations

 

 

298,798

 

 

 

223,577

Other (expense) income

 

 

(2,050

)

 

 

9,923

Earnings before income taxes

 

 

296,748

 

 

 

233,500

Income tax expense

 

 

56,370

 

 

 

43,216

Net earnings

 

 

240,378

 

 

 

190,284

Less: Net earnings attributable to noncontrolling interests

 

 

33,756

 

 

 

29,841

Net earnings attributable to Skechers U.S.A., Inc.

 

$

206,622

 

 

$

160,443

Net earnings per share attributable to Skechers U.S.A., Inc.

 

 

 

 

Basic

 

$

1.35

 

 

$

1.03

Diluted

 

$

1.33

 

 

$

1.02

Weighted-average shares used in calculating net earnings per share attributable to Skechers U.S.A., Inc.

 

 

 

 

Basic

 

 

152,918

 

 

 

155,140

Diluted

 

 

155,119

 

 

 

156,755

SKECHERS U.S.A., INC. AND SUBSIDIARIES

Supplemental Financial Information

(Unaudited)

 

Segment Information

 

Three Months Ended March 31,

 

 

Change

 

(in millions)

 

2024

 

 

2023

 

 

$

 

 

%

 

Wholesale sales

 

$

1,421.7

 

 

$

1,294.6

 

 

 

127.1

 

 

 

9.8

 

Gross profit

 

 

636.0

 

 

 

512.0

 

 

 

124.0

 

 

 

24.2

 

Gross margin

 

 

44.7

%

 

 

39.6

%

 

 

 

 

520 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct-to-Consumer sales

 

$

829.9

 

 

$

707.3

 

 

 

122.6

 

 

 

17.3

 

Gross profit

 

 

545.6

 

 

 

466.6

 

 

 

79.0

 

 

 

16.9

 

Gross margin

 

 

65.7

%

 

 

66.0

%

 

 

 

 

(20) bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total sales

 

$

2,251.6

 

 

$

2,001.9

 

 

 

249.7

 

 

 

12.5

 

Gross profit

 

 

1,181.6

 

 

 

978.6

 

 

 

203.0

 

 

 

20.7

 

Gross margin

 

 

52.5

%

 

 

48.9

%

 

 

 

 

360 bps

 

Additional Sales Information

 

Three Months Ended March 31,

 

 

Change

 

(in millions)

 

2024

 

 

2023

 

 

$

 

 

%

 

Geographic sales

 

 

 

 

 

 

 

 

 

 

 

 

Domestic

 

 

 

 

 

 

 

 

 

 

 

 

Wholesale

 

$

476.0

 

 

$

441.9

 

 

 

34.1

 

 

 

7.7

 

Direct-to-Consumer

 

 

322.8

 

 

 

299.0

 

 

 

23.8

 

 

 

8.0

 

Total domestic sales

 

 

798.8

 

 

 

740.9

 

 

 

57.9

 

 

 

7.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International

 

 

 

 

 

 

 

 

 

 

 

 

Wholesale

 

 

945.7

 

 

 

852.6

 

 

 

93.1

 

 

 

10.9

 

Direct-to-Consumer

 

 

507.1

 

 

 

408.4

 

 

 

98.7

 

 

 

24.1

 

Total international sales

 

 

1,452.8

 

 

 

1,261.0

 

 

 

191.8

 

 

 

15.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total sales

 

$

2,251.6

 

 

$

2,001.9

 

 

 

249.7

 

 

 

12.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regional sales

 

 

 

 

 

 

 

 

 

 

 

 

Americas (AMER)

 

$

1,019.5

 

 

$

945.9

 

 

 

73.6

 

 

 

7.8

 

Europe, Middle East & Africa (EMEA)

 

 

627.6

 

 

 

534.5

 

 

 

93.1

 

 

 

17.4

 

Asia Pacific (APAC)

 

 

604.5

 

 

 

521.5

 

 

 

83.0

 

 

 

15.9

 

Total sales

 

$

2,251.6

 

 

$

2,001.9

 

 

 

249.7

 

 

 

12.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

China sales

 

$

319.5

 

 

$

282.0

 

 

 

37.5

 

 

 

13.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distributor sales

 

$

125.9

 

 

$

103.9

 

 

 

22.0

 

 

 

21.2

 

SKECHERS U.S.A., INC. AND SUBSIDIARIES Reconciliation of GAAP Earnings Financial Measures to Corresponding Non-GAAP Financial Measures (Unaudited)

Constant Currency Adjustment (Non-GAAP Financial Measure)

We evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of period-over-period fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our results of operations, thereby facilitating period-to-period comparisons of our business performance and is consistent with how management evaluates the Company’s performance. We calculate constant currency percentages by converting our current period local currency financial results using the prior-period exchange rates and comparing these adjusted amounts to our prior period reported results.

 

 

Three Months Ended March 31,

 

 

2024

 

 

2023

 

Change

(in millions, except per share data)

 

Reported GAAP Measure

 

Constant Currency Adjustment

 

Adjusted for Non-GAAP Measures

 

Reported GAAP Measure

 

$

 

%

Sales

 

$

2,251.6

 

 

$

18.2

 

$

2,269.8

 

$

2,001.9

 

 

267.9

 

 

 

13.4

 

Cost of sales

 

 

1,070.0

 

 

 

6.9

 

 

1,076.9

 

 

1,023.3

 

 

53.6

 

 

 

5.2

 

Gross profit

 

 

1,181.6

 

 

 

11.3

 

 

1,192.9

 

 

978.6

 

 

214.3

 

 

 

21.9

 

Operating expenses

 

 

882.8

 

 

 

8.7

 

 

891.5

 

 

755.0

 

 

136.5

 

 

 

18.1

 

Earnings from operations

 

 

298.8

 

 

 

2.6

 

 

301.4

 

 

223.6

 

 

77.8

 

 

 

34.8

 

Other income (expense)

 

 

(2.0

)

 

 

4.3

 

 

2.3

 

 

9.8

 

 

(7.5

)

 

 

(76.5

)

Income tax expense

 

 

56.4

 

 

 

0.6

 

 

57.0

 

 

43.2

 

 

13.8

 

 

 

31.9

 

Less: Noncontrolling interests

 

 

33.8

 

 

 

1.0

 

 

34.8

 

 

29.8

 

 

5.0

 

 

 

16.6

 

Net earnings attributable to Skechers U.S.A., Inc.

 

$

206.6

 

 

$

5.3

 

$

211.9

 

$

160.4

 

 

51.5

 

 

 

32.1

 

Diluted earnings per share

 

$

1.33

 

 

$

0.04

 

$

1.37

 

$

1.02

 

 

0.35

 

 

 

34.3

 

 

Investor Relations Sonia Reback Eunice Han investors@skechers.com

Press Jennifer Clay jennc@skechers.com

Source: Skechers U.S.A., Inc.

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