SKX - Earnings call transcript Q1 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings and welcome to the Skechers first quarter 2018 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded. to conference like to now would turn over the Skechers. I

begin. may You

Unidentified Company Representative

as statements David to business of Certain involve would all statements statements reports including, current but of and Chief or John occur. Weinberg you, Act Litigation Skechers' on results beliefs, SEC company that with achievements of I and read call future within by conditions to XXXX other will the statement. expressed industry operations us report the for will Officer, plans, actual XX-Q, statements Commission, the company's apply may Securities constitute encouraged review David? the that, required for risks global, the the forward-looking Financial Form quarterly results Private of the Such are forward-looking laws the results, including contained and of in they like business, and conference company's as and Harbor with conditions. Thank Securities including, U.S. filings over assurance and X-K expectations Officer, significant federal Operating recent joining or that XX-K, a description securities I Vandemore. known objectives, Skechers on estimates affect and the reports everyone of future addressing Reform limitation, Users risk factors without turn the financial company. Chief not or to statements With national on amended. most call on other annual implied unknown the Exchange Form to by such reports or the and all forward-looking and general to, Form forward-looking filed today. Safe can or limited There as no meaning performance statements the may retail herein the local specifically the economic, market be now events

David Weinberg

for financial us Skechers joining first you and afternoon today quarter review XXXX results. thank Good to

Officer, today Joining discuss me call on financial our the Financial in is Vandemore, results Skechers' who will Chief John detail.

to wholesale, brand. sales record, First growth domestic across XX.X% distribution testament strength global a This three company-owned to wholesale channels, our the a worldwide of retail our marks our and increased stores. we a and quarter quarterly international billion achieved $X.XX result sales Skechers new of relevance is the which

quarter a store and business sales total X.X% sales quarterly to repurchased an and business our record achieving for wholesale a retail primarily to record, XX.X% expanding with a globally, both X.X% XX.X% international joint XX% global X,XXX of subsidiary First new networks stores our sales our highlights with countries, increasing new in shipped, in stores gain XX,XXX worldwide, our European sales XX.X% quarter shares represented our retail domestic due company-owned shipping $X wholesale our of sales million. American venture an North international We in in and retail pairs centers. a cost Skechers of business comp include increase our increase wholesale increase distribution a at

detail. in channels business our to turning Now

lower of the domestic pair, per increased average increase business due the price. wholesale collections was a growth pairs product primarily in the selling The for to with average in of price X.X% result a Our mix X.X% decrease a have quarter. that several and first shipped XX.X% strength

women, Bobs, women's our GOwalk growth Street, including Skechers domestic To achieved the sport The support Go, mid-single-digit D'lites, footwear men double-digit business in Skech-Knit and was gains. multiple including Our Skechers work. growth men's sandals. and our Bobs, and had spring multiple at On lines Joy, Skechers across we targeted the ran media business, quarter sandals, our campaigns and kids and

shoe this look. new and commercial also this women, Skechers who are D'lites Cabello, resurgence Camila of we the digital ran retro Skechers TV new of influencers originator youth D'lites attention forward sought from fashion brought and young style campaign. to a For The

the again our For Houston English and for in featuring Ortiz utilized men's support the the Kirui title both sponsor Marathon we Performance athletes commercials in Romo. we men, were and Howie three Camila Long sponsored we and a Tony in and footwear. David also second Marathon. Skechers Weldon won with victory Performance Further, Spanish. aired running Ortiz, legendary Cabello featuring the time achieving Skechers Los To Angeles our years, new of business, division Skechers athlete, campaign David the

GO golf For business, and GOLF multiple our growing have apparel. we our competing footwear in ambassadors golf leading

weekend, the footwear Golf the in Hawaii, past won wearing this Brooke lead Lotte and apparel. Go Championship Henderson golfer Just Skechers

The combined the heritage new our interest in renewed footwear International our continue believe we domestic wholesale younger channel, our and distribution biggest business the as Skechers quarter. representing leads Lights achieved of the tweens, to new Sport wholesale well we online wholesale In for in commercials. sales, experiencing was as Twinkle to to international are publication, our kids, noted youth and XXXX. January, The represented Comfort two lines in Energy trend our And will strong we was be remains we while For XX.X% become Hypebae XX% consumers us aired evident leading ran the accounts XXXX. in from and quarter. of growth for commercials. total it-shoe and retail offerings Toes media new about attention in

by wholesale first result and which increased joint increase in by of international the growth by or businesses our subsidiary quarter. venture in million was distributor and offset total XX.X% $XX.X business, the The decreased business XX.X%. XX.X% was a our Our

political decrease and XX.X%. with unstable for partners' our our growth, combined of grew timing this shipments. by Further detailing economic our East, quarter, by business international was sales international the Middle of wholly-owned the several joint XX.X% the environment result in key expected, grew the subsidiary and primarily venture As the

million our remains continued business gains. with achieve a which business, subsidiaries retail All pairs first quarter, Germany, the European a Italy to grew and also double with highest of XXX gains. experiencing by in and approximately achieved shipped Canada China double-digit high Skechers of the e-commerce the X.X stores our in freestanding strong growth force quarter. U.K., base of dominant digits sales the Asia strong in Spain X,XXX points dollar approximately a and

In addition, sales considerable dollar in and the and had all Korea Singapore first percentage South India, gains quarter.

We are well distributors with others. we are experiencing Turkey Scandinavia, with and pleased in the as continued several with growth Russia our as

our and partners, and a South Nigeria the quarter. across in total they closed distributor In third-party quarter Portugal, Netherlands, India, Australia, the Switzerland, UAE in by were and still are there growing opened business first and Nine of stores ventures in the owned XXXX. have Japan, East in expecting Skechers Turkey in South stores in England, to-date, bringing the Vietnam. included stores first XX Hungary, stores stores X,XXX each one China, the seven and of Serbia, Denmark, international Korea, quarter, the Middle handles in three owned XX region, franchisees. which Sweden, year-end, network to Our Ukraine branded in third-party Skechers year-end. business two At to some Africa distribution faces third-party in UAE, Greece, challenges the XX the their Italy, second Israel, both each Taiwan, owned in and and improvements Indonesia who Malaysia, operated XX much by joint but opened,

to owned another third-party of XXX to remainder Skechers XXXX. the open stores expect in branded We XXX

the new in the and comp retail will quarter-end, had of increased than remains outside stores was included believe worldwide and businesses. grow the of Garden. store result international that company-owned Three stores company-owned Skechers which the our States. we the in store of quarter. in Covent Our This stores. XX London's international opportunity a of including our X.X% stores and quarter, sales global sales at domestic XX.X% including in business in biggest retail XX.X% faster domestically XX.X%, the sales our we which positive retail to XXX X% we internationally. XX.X% United stores continue XXX our pace In of In opened closed the domestic At business, first we quarter, increase were a

opened flagship concept in the One Beach, new and two we the remodeled Japan far in store in California. stores. La second So other expanded and California Jolla, our in have and Manhattan quarter,

to to XX Skechers XX by XX and of an company-owned XX.X% stores. stores quarter. remodel relocate for XXXX, For expect the our to growth to which open Adding grew our e-commerce was remainder the additional existing XX or business, we domestic

We e-commerce Canada. also operated and sites U.K., have company-owned and in Germany, Spain Chile, the

Now I to financials. will to review John turn the our call over

John Vandemore

you, the with Thanks pleased strategy. to again illustrate potential of tremendous first share which results our I once David. our quarter am growth

the in sales of prior-year was record of of increases and in weakness X.X%, company-owned sales record. of in Middle a global distributor due driven segments, the that including quarter $X.XX international a retail growth domestic East XX.X% our business to all increased our wholesale to over in XX.X%, new wholesale by mentioned. was David quarterly sales First This billion, XX.X%. The the stores despite decline part XX.X%

associated included and year-over-year, development first expenses The improvement to to XX from an subsidiary international compared was million included growth. volumes increased from our continued company's sales, and It and million with our domestic operations of X.X% long-term to costs increased million of distributor million, sales due foreign Earnings wholesale XX.X%. initiatives to as the our and percentage the sales million compared to to $XXX.X XX.X%. points sales to were improvement administrative the strength to company-owned lower of X.X% of sales dilutive sales. in XX to prior-year. XX.X% $XX.X prior-year. sales distribution period. additional from capabilities. increased in XX XX.X% product representing prior-year headcount dollar $XX.X to joint which year Domestic General advertising XX margin or part in $XXX.X wholesale increased and was stores, profit This point a in and company-owned warehousing prior to our improvement increased from to new to sales XXX in venture expenses in It Gross due retail increased quarter. gross was wholesale increase expenses overseas was margin XX.X% up The attributable also gross of and the international to exchange And prior-year and retail $XX.X wholesale in general and support million distributors. as global of increase million, XX.X% the Selling favorable subsidiaries, international $XXX.X growth in as higher to the Excluding $XX.X rates point support due represented international a increase a the basis business greater $XX.X as in expenses basis investment business $XX.X businesses. well $XXX.X our basis growth reflects XX.X% million well up million, accretive quarter. sales administrative primarily up opened support due as was versus the million margins international Skechers of

operating million on quarter higher in due shares diluted $X.XX costs. Net shares was the compared income lower XXX.X on distribution was related outstanding $X.XX prior-year share or outstanding million share anticipated million international or leverage per to $XXX.X XXX.X diluted Our period. than to than million the $XX first per planned for

Our $X.XX of Jobs the Tax income reflecting discrete per benefits tax our share our was of per items tax refinement the tax the benefit earnings with in was certain Cuts X.X%, quarter diluted approximately and the The rate provisions understanding associated Act. of these for share. discrete to primarily various

had rate expect we turning $XXX.X our to diluted and to And cash effective balance in tax or $X.XX for sheet. cash continue now be to approximately XX%. our XXXX million At XX, share. per March to XX% XXXX, equivalents We

timing nine cost we the this repurchase common ability fund million. our authorization. balance shares receivable We accounts simultaneously were $X in to the merchandise our our in executing prospects at DSOs first of of million, including year. to increase while XX, strength began the million sheet year. increase XX,XXX was March debt line stock period $XX.X approximately our of our expansion approximately March and an of with transit, Capital same $XX.X DSOs quarter-end inventory XX increase last million, and primarily and store levels. global our March our to to Class for international to million were quarter primarily days XXXX. same $X.X $XX.X versus in repurchasing receivable in compared attributable compared in million accounts to for remodels of million shares in our at our retired business. was million, $XXX.X for were expectations of and or reflecting the renovations. the three-year We the operations XX $XXX.X at A $XXX inventory, office and growth domestic quarter, remain $XXX Working XX, to sales an XX.X% XX, growth company-owned first a or of last million $XXX.X million Trade billion authorization. pursuant compared was was and which Total the The confident wholesale openings and acquired related March support quarter. million, XXXX, This in at period aforementioned days to is Long-term million and XX expenditures from was XXXX XX, repurchase store million $X.X During our inventory capital XXXX, new increase $X.X international domestic $X.X the $XX.X at corporate

centers or For million retail our to which XX capital as of which company South later openings, an China to to this This estimate includes be may expect expansions ground office year. ongoing approximately here owned worldwide, store distribution break of we million office and some relocations store $XX the our including in XXXX, expansion XX expenditures our expenditures remainder XX capital the related well to as remodels, Bay, additional XX to renovations. $XX excludes

from earnings Turning guidance in second guidance. believe remarks. to for achieve share back and billion sales note, some several the $X.XX of for wholesale the expected we closing to to quarter turn well range With strong our and of diluted the shipments position, David accounts. $X.XX the global this as as now infrastructure international net a quarter new call and domestic distributors billion will To the expanded includes into cash $X.XX. will half product back of key we inventory shift I $X.XXX and the quarter to second of deliveries per year second

David Weinberg

Thank you John.

businesses. The strong XXXX first achievement and The strength worldwide. new of provide they quarter were in of the and diverse our three commitment record quarterly demographic D'lites. we a comfort a record distribution resonating Further, the influencers Skechers to with with our worldwide, Skechers sales with this and the base, and style of and and indicator growing price. To including of audience quarter, achieved product marked want a increases to in our a fashion a marketing Street in our significant resurgence consumers and a relevant record, brand, top and channels at In kids are invest continued sales the right worldwide result the reach forward increased with developing support our men's, women's on an of marketing audience of teams product and direct ambassadors. offering, we broad a team we

the worldwide with to question-and-answer that operations now and the operator the would And to to channels and our our our potential. innovation, Going conference forward, maintain growth call we markets are global well positioned to success logistics begin portion strongest turn call. over for market the growth we like continue To and in product are in investments year believe and years, development we distribution. coming within and our making I in that, this the of to edge these and will proposes ensure continue the

Operator

[Operator Instructions].

FBR. B. go Sinderen ahead. question first from from Van is Please Riley Jeff Our

Jeff Van Sinderen

on change you Good detail there? second can buckets a that an Middle afternoon. Maybe give Just the get what's product receipt part calendar issue, wholesale in orders you to a the Thanks. little guess, on in accounts I to, I how with more through could there is guess sell-through is of we out fashion rates the issues shift or shift, I of differing to East? walk to something Can weather? why of the rule if just else? content I us trying guess, a shifting impact due us of there just sense due your there going of the being Also, are merchandise? half? much wonder are something the why is with if reason? more any bit Is at an

David Weinberg

question. multi-faceted a that's Jeff, Okay.

Jeff Van Sinderen

is. It

David Weinberg

[Indiscernible] number of issues raised. you

The do first partially I which, believe weather. of the is

everything available were it Nothing early, their Europe, was, cycle As running being U.S. still are probably well, and the early. they second had quarter somewhat clean in and were they had the into our for up we have the quarter. to weather marketplace, but inventory they The we slightly slipped so something they we what and checking completed and available took out it picked in the first we if behind. they especially hot that

the season. June, is from they than for also which probably that They to there the back-to-school some simply going online least for things improvements the get was big until the be the going well. an other that's if if So to Middle anticipation do quarter issue quarter. rather of be June July us third the it which July movement East, from would to last includes any won't so the or year, go but go middle ready any movement until at the of coming It end second is second see back forward way

So very we take better a anticipated, done. significantly building to to for we it Also they Europe, weather we it's And In shipped quarter. have them EMEA, third historically a than still lot longer of while a positive prospects concern. in and while start was in higher get quarter. third a going

no there So pick is up. real

to starts third you a have has doesn't what are up be pick so then. from. second If it going very light to little quarter. first then strong, have quarter places and is business So that relatively Europe quarters

things and for for QX, Southeast positive positive doesn't to Asia although QX year-end. and going it's is QX with very of as the a significantly grow news certainly and moving amount QX U.S. from bigger limited QX into

on are believe target. do still we So we

orders deliveries. or don't show shift as third and relevance backlogs a change significant we or rates the than see It's quarter. in and order product incoming the rather Our timing more

very is very QX QX what time months no end have really together, at the anticipating that changes QX, strong had three this feel So than and that put we strong a if ago. up about which we timing we year are modest you other with how a all we and a

Jeff Van Sinderen

Okay. terms and And of Middle East how a moving just anything the is That's obviously QX, I then you in there international we helpful. QX guess, sort are growth us, I about target. give can is about QX as know thinking should and there? don't I we know, think domestic on of

John Vandemore

Yes. This John. is

we just QX think QX. as are the track on forward we saw lull bit due look domestic, David as a to mentioned, timing. I still we of and a It's in we to year for what So anticipated for in have

have comparable year. tough a also We last

shift there about our full-year million that and think, If I prospects, you to they recall, remain David see we of is similarly QX and was were now a timing positioned end two. the after QX. of QX strong the into in the $XX QX exacerbating backlogs mentioned, comparability of very where

Jeff Van Sinderen

Okay. That's helpful.

one just So more.

can a QX? sound give to able be sounds us And what just color any It it issue. timing So there doesn't like like is SG&A is will on leverage you you think you do there product shift. really a then in

John Vandemore

Well, internationally certainly U.S. a that. at figure pretty store at there X% decent issue. product just on and a We the in XX%. generated don't I is comparable both sales think

So issue If not everything there that orders is backlog would certainly the to see, would continues in any with lead indicate the actually certainly and it you product. year do to the the strong well. extraordinarily remains again anything, product believe we for

Jeff Van Sinderen

Okay. on And SG&A then leverage? think in again? Do starting Good. QX you leverage

David Weinberg

so. think would I

same have the we going. that's we in You are is, more of and had the topline prior issue Part year. the where know, have we on of had based

strong pump put of size anticipated. time has of So, more a we anticipating had piece somewhat more to pair more such had little expenses Korea because a business online, uniqueness up handle at the we built to infrastructure is than one and to bigger was the growth up of had but is China shipping that we deleveraged are. business for they that the that's infrastructure a because which coming

able up, leverage positive time again in and So will we very topline start will to to It QX. we do a be again catch for will should be believe that we that that be us. the such

year Jeff, felt a year well. that change QX And Easter you went us to as QX. for would have this like also into remember, we Just last positive be

all comps, going the Bad in quarter. up things was into really the second QX, QX. were weather deliveries to things now issues of into has It's which the with third went then So about saying through sell-throughs that pick all taken starting moves first John tough Easter quarter. very to so nicely, of

believe So all positive. and shifts we the it's are do they

always better maybe shipping did and weather like are the off We we Mother's quicker Day and Father's up first up very quarter will end if Day and holds strong. up in earlier it we pick

Jeff Van Sinderen

my and best Great. quarter of much progresses. luck taking so Thanks as Okay. the questions for

David Weinberg

Thanks.

John Vandemore

Thank you.

Operator

Our next Chris question ahead. from Wedbush is from Svezia go Please Securities.

Chris Svezia

terms $XX QX just deleveraged taking of first, surprise roughly my just so of in was causing the what in it million to FX, upside for expenses. questions. clarify, million another Thanks guess Call revenues. expenses I biggest in to $XX the terms you in generated or

if maybe be it could sort surprised month-and-a-half you to strong expenses and So as call came high so just what the of on walk quarter are? caused you? that really they of as the through What last

John Vandemore

Yes.

David the anticipated. higher remarks distribution it put crucial think the were and bit costs mentioned we had that even a was I in related we than international most

pointed this I mean higher we to see substantially again with China. I in grown think that, beginning some volumes quarter. now as it's of are that out, Dave deal

topline. So executing that say We peak from domiciled it recognize also terms at of Well, in a perspective a little to foreign had distribution exchange translates pains bit benefits as of in on efficiency. its dollar countries. we the that through maybe well, some just cost growing

a dollar the issue. from So exacerbated also perspective, that

forward. in continue and price So international will at have in it's that time, model a the to we markets. success I said, generally we year to point growing and refine related key part for as to had go this speaking, I that them we continue would in expect also, David the of distribution pay the country But of as some you have our but part lump XX% in the at costs think clip again of that's into

Chris Svezia

quarter? Could actually us China much the grew tell maybe in you how

John Vandemore

It was XX%. over

Chris Svezia

to the maybe regard the XX%. inventories, up growth say level with And your in or inventory about whereby in the timing, you some being it the in business add color the growth comfort thoughts about just that aligns the business position? with Could you

David Weinberg

think I at QX back possible to to tried time. anticipating it's usually the QX. take into we have Well, earliest some fair inventory We say shifting

we it early. So piece it significantly unspoken part have taken is that's We don't of have our that of a inventory larger of for. any

As the forward. inventory shifts, as our with that we we end timing we obviously more up and production go modify

we anticipate second And lot perspective, is our or early model, issues So China retail and retail that stores. bigger whether we to building that we go all retail, which got it's second numbers around realize own, do to you our for is that, the a in do model for relatively it our others. from because has quarter it a will of will in it come in inventory begin are own which then China have be through a bigger franchises know with light down the We as with we to quarter. and

to support it an building business is on in inventory stores. as simply to have own bigger We build are which and we the your online China like well earlier basis

don't move You somebody it to on. and sell

we those. to So store had

of stores America increased border amount also forward. inventory just significant are in think as America opening which much of a go have we becoming is our and larger on in South we South we We the

part the Japan in more is big month opened the base their in have first in year. the April have We picked shipping stores of and and Japan up

Japan, significant of amount of well. inventory had and the March, as growth end in we April we one-off in So in expect

taking is from the had trying should early lot the it and stuff So timing, spoken even factory of lot a lot of of to have to new move a get for, around. as business a it it we a it things in need is always it's is policy it if of we

Chris Svezia

the you. And expect outlook any revenue overall walk and and retail? the distributor could in you U.S. to context between give for Just wholesale, just what maybe through color QX international, subsidiary just lastly, relative quarter? Thank you

John Vandemore

The topline?

Chris Svezia

Yes.

John Vandemore

Yes.

on us, in distributors, that wholesale still The domestic for the wholesale of over quarter. better the the probably expect mentioned, a be little we David this it's it mid-single will as probably of that carry couple we pace same been will continue digits. effects slightly, So last quarters, occurred kind down to expect than QX. International the

to continued comps is And again. going to we we see be And down in where do phenomenally have XX% a It's those growth probably the The retail, been think things. then strong. global So expect that's well. the mid-teens forward. range we

Chris Svezia

the Have QX? as they so like up comps April? held What into in you far got been have

John Vandemore

Well, against we this is difficult. are comping Easter last year. But

So but to get week, this to up we after increase. and are Easter down anticipate against to comping we they are back when able like-for-like, be to continue

Chris Svezia

Okay. Thanks best. the very All much.

John Vandemore

Thanks Chris.

Operator

question Co. John next Kernan from is go Our ahead. Cowen & from Please

John Kernan

my question. Hi. afternoon Thanks for Good taking everybody.

John Vandemore

Hi.

John Kernan

And it like implied trouble I past the year income so. a terms SG&A looks growth is think modeling the the guidance is of overall significant dollar growth. obviously point sell-side has had or pretty for on in the statement QX that in the

as of it's You just Thank SG&A the Because volatility think you of QX. are of see lot understand I how the SG&A creating help understand, now progressing and in expectations. terms for guiding rest a I us year? Can to in you leverage, growth just dollar you. rates

John Vandemore

we moment some ensuring the are irritation propel topline We forecast That mean, had distribution. more required I during We help of to to mentioned don't I was quarter. listen, in Yes. that G&A that the an us occurrence that. sure think do the we every we first shy growth was having asserting and optimizing more penny make to about to in at G&A. important we than we growth. haven't that going are That's fund the been that with too

effect down because that to is there high having quarter. because year, to it's benefited will to be we important that's high QX income while they perspective. quality income leverage through that tough when very to continue of the you look to operating not line, balance see for sales for on at operating expect remember I leverage. gross margin distributors the from a think a the those The the sales, sales opportunities distributor some it's lighter flow-through are and we getting

to selling possible. that's the to continue quarters. vision something Ultimately, for We year keep So think is to leverage We opportunities in our look for to leverage. this in that's mind. expense

going at we the So that look was two QX, to much comp be operating in to very together. those leverage Tough main there. challenge

John Kernan

inventory on and obviously just in working of capital that receivable sales. side, Again, excess line growing the the line accounts

do can feel with Just items. And are the year? of line XX%, help in wondering are you you. the those growing the inventory understand East the that with of much and by sales just for reserved I line Middle you geography How into properly How on down this? more Thank channel? composition to us that playing of issues in expect bring you the

John Vandemore

Well, Middle our as basically are a buy far them the specifically. East direct factory. carry nonevent is is inventory We a concerned. distributor. They inventory They from as don't for third-party the

So of was to said, to it's grown continue those I in Like fair for the East, big in especially are It's here the say, growth It's growth for. somewhat. places is a China most stuff grow. inventory as in it the America, we and here well. as Far it's we said spoken South store piece

Our still pace. big a at backlog is

We have just taken it in early.

is spoken commitments a much so physically used the spoken time, for said not we orders and us. purchase how not and about but in our is So for what here what we what have to inventory, have is what for, monitor much at and is past, we for speculative

it means stores. significant change, the inventory building So either for there which hasn't are we a been

which obviously if how quarter. situation based on has and sell-throughs and somewhat fast if more base, depending in the stores sell-through sell-throughs. happen deliver both we customer will we depend less been deliver very and positive have be what China, the for we not, will the could stuff May in their can weather weather base, enough customer just And and and on June. Europe, the So can on U.S. If and or our will. in earlier, certainly And wholesale it our they in to

David Weinberg

They of add levels items. reserve in completely completely all with we both those would matter the I have feel And of with are comfortable we that have are timing with and the reserve comfortable line place. we a we

John Kernan

pretty about excited on cash relative your are just of question And Okay. questions. What market sheet amount the have final And product capital. follow-up is, the for cleanup back-half cycle. after-hours you got just in balance year? then quick most our then significant few of to the you One

was you capital quarter. get wondering are buyback? this just am are I the the wondering, it I year? Thank back-half the fairly a in So first to you just up you. share of thinking how in about step willing small the allocation

John Vandemore

Yes.

side, be that reason that. were to was arrangement, for quarter the lack more a make cash a to had that appetite will repurchase due simply use was It prices prevailing. challenge. mean not And of the the a against at the is rather that modest logistical the is future. certainly of of begin That the I the share foreseeable we executing in certainly On cash

further is amend have We last it be place prices put execute quarter. following prevail have to use that's expenditures as then we it on the that to we to in that some We growth center China. an And There today near-term But the for. distribution particular, want no in the clear, be we going funding on opportunity authorization. authorization. a share need just we certainly to make will sure looking now. be that we do at side going up have to the In repurchase have and

have here some Southern California. in campus occurring We consolidation

the mentioned, first the also as million. was We transition IRS which, $XXX about made we our for payment to tax

prudent unfolds so. it's will to excess approach do but is some So certainly there when continue uses we any allocation to address cash capital monitor and as the feel our we business

David Weinberg

as just styles good spring, and next in now styles newness gold very more that new and Street is for saw And is year just are In both domestically for we you it's D'lites they the are freelines reception QX in the same I had reception, the of which back-to-school some including in products deliver same. stuff part, think concerned, we early of back-half at had great at the of and going to and And starting in men's. internationally far we stage. the early more the as very is the package

So product very we comfortable feel about cycle. the

that will product moving to and develop come we us continue our forward. that to will We way keep continue

John Kernan

All of right. luck. Thanks guys. Best

David Weinberg

Thanks.

Operator

go next from from Nikic is ahead. Wells Our question Please Fargo. Tom

Tom Nikic

we XX one item I it of next. the you had and bips potentially driving line how margin my have Up Thanks I everybody. of gross was volatility. of sort quarter, sort mean, year? on wondering the Hi Can quarter-to-quarter and lot understand line. what's you taking a up question. XXX balance just Thanks. the about of QX help think that over for us the for

David Weinberg

Yes.

This reasons. quarter the margin gross was for a bit of on an two anomaly

business. would what is distributor we the of The sales lower see normally the international lack than wholesale in proportionally first on

rates impact quarter in us The tremendously second price we FX taken that top was in had year-over-year particularly in actions U.K. the the favorable of were markets, of the that on the some for

us So in to the pretty those benefit came quarter. significantly

to experienced also the in overemphasize international a and we consumer mix continue channels. growth direct as general We retail lift segment

help. a was that So

margin. a shift a the the not That's selling is to lower bit bigger again, in the the and by a also product it But are there choose margin movement offset there. to detriment saw determined consumers our selling just of gross moment. bigger we overall gross is I on expectation accounts, mix what I who don't on. come scale, focus think side, if were good QX. see through going On part to we at but of it's know they little But sizable some obviously the of

slight nearly be expectation can't see QX, nothing we So quarter. probably this part of saw mix that we a our to in is but product substantial moment that But for. the you is ultimately control accretion as in some will going as issue at

Tom Nikic

All right.

back you year? but sorry think much quantify revenue it's out did I if the half from of to QX And how missed pushed the this, you

John Vandemore

I digit to I anticipate the between didn't mid modest that that the makes think have single more we otherwise. we decline low expected will difference you, tell rate growth would We it and slight quantify.

Tom Nikic

All right. Thanks.

John Vandemore

Thanks.

Operator

Poser from Susquehanna. next question Sam from is Our Please ahead. go

Sam Poser

you dollars business, QX domestic Good Thank in my please? the to on how question. afternoon. on give from Can moving am dollar wholesale All detail to going for you a us are follow-up QX many Tom's taking questions. I right.

David Weinberg

that we Sam. know don't I want to be that it, about precise

a I last year that to from hopefully also, think year. is slight a to would in But the just QX inflow But this us made improvement. again, I there million into important which slight comparison comment shift recall was enough. think recognize the the QX the decline indicative is QX exacerbates swing again a from thing $XX I

Sam Poser

understand I that.

Okay.

you the tripping seems sort let's have the ago support did of So lastly, year then out, is, full the of spend? aren't And full guidance you six you that. to guided The announced about from spend question why incremental need arise like quarters year and be last-minute to next question And year, any and move certain when weeks want SG&A well be know this QX, the weeks on level a going announced ago it is you you when or to so everybody not heads give guess these or whenever full how in the for be additional know much? the the their much it to so was laid higher. are is, over G&A given people where way I scratch you -- came making shifts then you where wouldn't this

John Vandemore

impacts there Well, always market. would from the going the on point, second to be tell shifts. is There is always you, I

running not, and guide not, believe expertly are quarter you guys other. it We the one our business then to or

one with as easily. in as challenged just responding customer out to we our as running XXXX can consumer in with taste another training aiming given we sure are the on are that and be The make variability from a for for place quarter the business that engine be grow industry. shifts potential ensure profitability and a that have the to par of $X the in structure because to orders shift our growth to We is we ultimately year would pretty quickly or any quarter much year and are topline, to billion that

I appreciate the level full to attaches that year, the same itself there the a quarter. while as on itself the think full now to volatility right year I comment So attaches is it

Sam Poser

And transition then like it about and happened? the G&A when that knew when you

David Weinberg

was a it later Well, event.

to get bigger their was both was we time, had timely much and why as their space lot U.S. were has costs is had concerned, of costs. distribution of business a through We out. to it rent things so pressure the we process and our guidance business. on some At said, and much Europe John by piece online than significant a which and which coming could bigger our had month a labor As in a average put increased It and far on China, bigger initial structure. we the amounts franchises additional more a basis do far as by in with and higher March

come and in on, have said, Japan. March to South We like Japan America in in I had started that April growth and

systems. rush that but topline So the over final put as it a really did top was on put far as was some concerned us strain our

Sam Poser

very luck. Thanks much. Good

David Weinberg

Sam. Thanks

Operator

[Operator Instructions].

ahead. question next is go Laurent from Our from Vasilescu Macquarie. Please

Laurent Vasilescu

Good afternoon. my Thanks for taking questions.

presentation, to think a about out that you XX% and of XX% you between your I help Can XXXX operating at XXXX. put achieving bridge us XXXX? March margins goal of

John Vandemore

say, till would I goal. Well, Absolutely. it's our

would business. the I grow to We the are are spend. if it near-term grow opportunity there we also goal. back And a to require But business going we an may going off G&A you some looking make to of not that remind are to is all that and spending,

you comment we G&A would going customer. do David's We brand's the the ship. augment new is, about out you XX. make think rather XX we dollars? question about would and That's Just another save would do choice image And We rather rather the a QX to in market. times or of ship are secure

profile if to composition, markets. highest you that the again, in in QX we of international irritation So the is going but at I realistic, potential We you, tell globe. also and the it's are G&A And where our across the still growth the markets the we the saw look business those think subject be to was a and ensuring optimizing would still feasible growth operating are margin goal. it's

continue important. the are make will the on operations because are there the optimize to markets looking refine be the to we we able down But So to near-term, sure brand time G&A. in we our in building optimizing growth and those and that's over most

Laurent Vasilescu

growing year? China think other on happening of it XX%. China, by million China? Should think still full in over what's we And $XXX for Very Okay. then grew the any you And on I mentioned comments helpful.

John Vandemore

It's Yes. absolutely goal. the still

even to more it push grow we will can. We if

point, be growth to China attractive is great us to growing market there it the is also think phenomenally into markets benefit highest globe. which is To for to our across new engine of learnings continues and our tap well. one and from I David's most online, a the

So, absolutely.

Laurent Vasilescu

actual versus Great. bips the XXX on just parse out increase. question about And just the benefit? gross Tom's follow-up FX the Could then the impact quarter mix Okay. margin, you a first possibly

John Vandemore

it's benefit Yes. And of were that XXX customer XXX. that note, challenged that a The mix, the just not The XXX. also, FX mix market. fact impact when continues offsets perform maybe successfully. offset FX, basis product it's was we to market to the But get to took just net a the some in was there in mix ago, product The pricing year maybe had we points. that

the think So and and that to FX, product brand call the underwhelms it of think rationale just market. I strength the I in

the change. just as easy as not it's rates So FX

what in markets proven profitable be to that's those those it's I of some and and of that face the did think we ensure remain we in growing to true.

Laurent Vasilescu

function Can rate in up just about your of tax of XX%. help tax and to in year puts full should we cam us think terms range? shy the by step the second think takes you rate the to then And helpful. of get quarter, very That's to meaningful Okay. quarter

John Vandemore

for discrete led a about that Tax and consequences actually to strip an and range favorable our of certainly continue in tell be to preliminary a of actually, evolving had employees of probably needed of a transition adjustment item, rolled as global tax also Yes. law. an minimum Act rate of away higher it aggravate though the certain would tax implementation came we Cuts our There even treated range and as year. we quarter, you that are understanding new we dealing That, normalized little you. requirement, tougher to and toward What the through as the we is historical we that by we expect to I you standard. the that If gave the intangible share-based be that versus of the That's only its those the awards throughout That Jobs going tax as provisions. the million new evaluation will adjustment is an because with to is that In the tax that. though, particular, about we myriad accounting aspects $X end said, through rate. see rate the would probably from

Laurent Vasilescu

Very then helpful. And Okay. last question.

full I line year? think How about think noncontrolling do the that line interest we $XX was item million. for nearly

John Vandemore

It flow continues. those That's a India, piece big are the through. joint ventures of all Asia, China, Southeast where

earn, to each faster grow. The So the but business own percentage the the same of we before don't they the they more as we grow. percentages did Obviously, change number continues significantly.

Laurent Vasilescu

we Should think number about range? that as in million dollars like the $XX

John Vandemore

even certainly four out quite it's always a I come that don't that the know ballpark. quarters but

Laurent Vasilescu

much you and Thank of luck. very Okay. best

Operator

go ahead. next from Please Jimmy Hardt. Crespi, question Chartier Monness, from is The

Jimmy Chartier

Hi. my taking Thanks question. for

at So on year, isn't of expense, so was the have a something taken you is impact similar from as continue perspective first there a grow the or businesses the actions in that distribution to distribution rate as it quarter? can take great those rest that assuming the

John Vandemore

Yes.

that. to continue do we course, Of

set them the facility not are you you at or and becoming this when looking duress, efficient outgrowing up are obviously We world. to a most in way under the is

add in to includes infrastructure which continue will We automation Europe.

United our changed has business We will the have adjust inventory States. to do in the we the to some automation modifications and SKUs flows or way how and

have be set won't repeated so we We to overflow that more up have probably an will than already need.

will center you get most capacity of ship, pairs we have constantly we and and the far, opened to six move have -- years the since looking been starting news making out efficiencies we it while at that get forward. when our distribution leveraging by and good to are U.S. ago, we in So the we is those to

within time growth. will and look we So more over become at efficient this

Jimmy Chartier

the on --? you year, have issue taken though, of rest this So

John Vandemore

we Yes. automation. trying make are some I mean to

Jimmy Chartier

better? So leverage distribution will that you

John Vandemore

it how at. we leverage we There top if to work that are constantly and big the new inroads won't need go I many some will are depends get as quarter. capacity to how quickly do that we third that is, be year. will any answer grow. We for issues question concentrated probably Yes. The because The end, shipments But we how and will expenses. real and how they believe make people into this we

Jimmy Chartier

specifically, more that? talking see cost How China, help on the then the that before and you how about time any we DC in benefit does And start structure the there. far are future to Okay. from into over China

John Vandemore

every it and somewhat place like we process. XX to the to as becomes try you concentrated hoping a life year break different time in system before automated end do it's ready automated China are past. build their in months. business the P&L we even cheaper front item. any else. What capital raises, helps money of we not the is, depreciate to different you you is the there can, more It have and but XX an and over although year. benefits be and periods It more But within of the this We like big every go in and we ground just the up the are forward, had an do because you best automated asset with the to get uses should into all that have what are system, Well, people move next than cheaper

increase and the production, no There biggest a is increase So is no not people. own rent. built,, which the we is building. at on once it's There piece in

that and goes again. the the we operating to issues point to line So have right we the efficient build we to and where more leverage capacity become the Then we tend cycle. repeat next we get until and step

Jimmy Chartier

Thanks All right. and best luck. of

John Vandemore

Thanks.

Operator

Our from Evercore Saad ahead. go question from comes Omar Please final ISI.

Westcott Rochette

Westcott, for on Omar. much. you Thank This very is

First question.

ASP domestic know there domestic Is the your the Is you at Looking as the issue wholesale, in mix so and it well? that gross being a margin margin I in profit changed? much, shift give gross and was a filings. wholesale the down a has

John Vandemore

as slight point customer mix, a is right. show that's will mix, It product to extraordinary. driven consumer detriment, which the a affect Yes. nothing again again, as And both well of mix,

customers I of effect benefit then say, a see the more enjoy mix larger going volume to are to there. you selling you attractive are would that's If terms, quarter, one just who right.

it's in given time. of from customers at concerned just a anything the quarterly shift get mix point So It's the your not that consumers with about. effect demand we and the are you

Westcott Rochette

And your ASP own product are you in mix? terms seeing a of stores similar in mix

David Weinberg

Yes.

John Vandemore

Yes. The margins bit trend. and retail than the were but little saw less ASP was steady, absolutely in we decline the the same general our overall a

Westcott Rochette

quarter, visibility as in expect as far second third similar the quarter, mix shift And see, type we but ASP a will continuing? that you would of

John Vandemore

the and think We ASP to market midseason We increases. slight dramatic season. it even And likely increase our wouldn't not long-running have fairly in in a shift I proportions. probably is volume more a seen declines, current of the than results of trend in see

to we full again that hold So I think year. over the have that's but general, growth would the we against about the it in of backdrop talked that expect see

Westcott Rochette

phenomenally, choppiness do to obviously piece bit little Yes, distribution continue of of your the own up. course. coming And retail of and then stores it

questions are starting just two running that. delayed and going you to of expect Just in are about Or they you new that on sales East? are shipment? make Is kind Do those Middle a lower One, up? back gone what's base? Like a that down?

David Weinberg

Saudi to tough with single being it's piece they Arabia. depend happens will would in the Well, say what on economy That if back. the come biggest

There is hotel. big back have going going work. some are to If news, allowed change the into to lot a in high-powered in the changes is you lot a there. to be are of mix there. There detained a people there look drive. of Women are They

Right rest retail the and having habits a Middle to force seems and them but for going change change it the just moving in much relates everything will to that for are how make people it quickly into and more the of East, selling So tourism then now, that fights trying there And is they positive politically. quasi-war and see impact daily how their environment fast in the those all to on to a sales we general. goes. Yemen

think do It straightens back But to higher don't running believe rate. that we We one never rates know will historical lost sales we as quarter. a from out, back beyond. back. I this year. and the But in happen you that make that So get comes ultimately comes just back will to this do

Westcott Rochette

your product the at more. stores, retail and Right some going retail In one that of of was to your to in it had looking channels, divert of there you your planned are up what retail distributors? it and and are Or kind very you course. take selling distribute And versus run just make that it some to in able you what's to differences that much. of success through Thank delivered big in be of way?

David Weinberg

We The available retail. make not special products only difference don't significant. is any our that's on

of So there pretty because comparable world taking we of all timing. everything some level it is around to we interchangeable around lot much different places with are and the benefits world. feel at inventory That's can early use the one a the

we I don't there is issue. think like significant So said, inventory a

it. stores, certainly, we outlet far inventory to all any it. get that's way, the our it But do And stores world. around means the and we that, production so that's box operating new for our our by don't what can through about move can I we So moved or that necessary it entities into force with

So major concern all. not for at a us

Westcott Rochette

Good Okay. Thank very you much. luck.

David Weinberg

Thank you.

Operator

This like any comment. to I would for the you. session. closing back turn floor question-and-answer concludes to the management Thank

Unidentified Company Representative

like have We statements. us again you on joining call just that the today. forward-looking for may call contained Thank note to today's would

could various results a from SEC. a filings factors great are projected Skechers' of in day. and such As the factors, These with result risk have thank in differ detailed actual materially Again, those risk statements. you

Operator

teleconference. today's concludes This

may thank for you your You this participation. time. your disconnect at Again, lines

Skechers U.S.A. (SKX) 20 Apr 182018 Q1 Earnings call transcript