SKX - Earnings call transcript Q3 2019

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Operator

Greetings. Welcome to the SKECHERS Third Quarter 2019 Earnings Conference Call. [Operator Instructions].

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

begin. may You

Unidentified Company Representative

beliefs, for may I everyone, as Reform Certain on conference meaning future Private addressing SKECHERS contained of the or Thank company of forward-looking the now joining of statements read Act amended. today. or the statements limitation, will including, or statement. Litigation objectives, the call XXXX estimates herein, expectations events you, results without us plans, constitute Safe Securities statements the Harbor within

and known global, and involve apply will implied or statements performance risks, economic, including, and no to, forward-looking forward-looking Such retail such in the by they limited not unknown can results be or specifically, assurance national business achievements industry but There to occur. statements the as local that expressed and company. future general the market conditions, and actual

of X-K filed may review statements XX-Q, securities all report filings Exchange and including the with to Users most federal as by description Securities required quarterly of on the encouraged a business, for XX-K, and conditions. laws annual the Form forward-looking U.S. reports Form significant reports on all company's results reports Commission, the company's recent risk are financial with current factors other other on affect the that SEC and operations of Form

David I that, Chief and Weinberg; Financial Officer, to will Officer, Executive With like Vandemore. Chief to over turn call SKECHERS' John David? the

David Weinberg

quarter The both joining last the resulting today. continued was for XX.X%. thank $XXX.X momentum experienced increase This billion. constant $XXX.X international million third afternoon $X.XX Good of you currency and million businesses basis, our of first an as us increase record XXXX through sales we quarterly and a in new or the over XX.X% On a of or year. domestic flourished, in the was half

XX.X% our continued business growth, representing in drive XX.X%, of the sales international a of an to with increase record quarter. Our

wholesale business. further X% including positions into will international leading We growth also continue domestic in in and the in and our believe Turkey our strong move to well more increase expand the business Japan. markets, Kingdom the all our Germany, to United Spain, stores and added retail we as international we China, growth, power that footprint. and strongest many domestic India, quarter, increases regions, the as a UAE Our Russia grew our as especially open in achieving In

business world, stores. we quarter our acting direct-to-consumer shop At as consumers showcase company-owned experience collection. complete SKECHERS grow, continues to including a had XXX where end, can brand our product the around X,XXX SKECHERS' stores and

business direct-to-consumer included increases sales achieve growth, sales to store quarterly strong Our continue with of X.X% which worldwide. XX.X%, comparable

global our believe our success the comfortable our demand. innovative, products, marketing efforts generate relevant supported is that result create of by and awareness We and XXX-degree

leading footwear, and enter and fashion and running, for and our walk Golf pace from product golf new and slip-resistant Additionally, wide strategy offering women award-winning has occupational us sneaker as specialty best as allowed boots filed retailers. develop gain sales distribution such shoes and a arch with men independent to has diverse fit relaxed, well doors, work as to and

Ceremony Atmos release collaboration, our the limited-edition in continuation the French partnerships property like Additional States. including Asia's the and Line States quarter United Japan and in product in several of and United Europe, the heritage with highlights the premium in of retailers, premium included popular collection SKECHERS' footwear Opening

marking the nearly the X product covering the every Year week runner's York fifth social and world, awarded in appeared Gold September/October quarter, this our and was numerous as available. is the took the product performance on bay and of for shoes. our issue, media key Burst from opinion launches our it trend modern Hyper collection country appearing From to fashion posts height of division, with in sketches global styles runways leaders influencers and sites win top height London Gear in on-trend Milan, Our Razor Run New in year where its in

our future winner, for a in appear our team. local in Dodgers, Los three influencers athletes, of All with and all-star have initiatives, for team To this In signed cleats, marketing support and of will and certain award XXXX. be celebrities to third and on styles range we global Hall Clayton We're our Famer. key performance Kershaw, to training looking playing Star site several Angeles pitcher specifically marketing diverse him, Clayton the SKECHERS' we collaborating of is forward designed the that campaigns. time quarter, and campaigns

sales SKECHERS' around including our offerings our from the readings continued strength is business early from and on world. feedback to accounts see and we direct-to-consumer momentum the testament continuing -- a our growth for key in quarter product our Based diverse record concluded quarter. the numerous for third fourth the markets, demand in

Now turning domestic business in to our detail.

driven This of Further wholesale return comparable to sales increasing domestic by we X%, increase with was X.X%. the growth of X.X%. where in our domestic increased X%, payer business growth direct-to-consumer same-store ship domestically, our an X.X%, saw increased a increased price Our average X.X% by propelling by for quarter. sales with business

high single-digit saw We with in also achieving the acceleration comp. direct-to-consumer month-over-month September business, a

Seattle. states quarter, United retail location opened and In stores across the end, SKECHERS X we quarter States. had eight we At the third stores in closed XXX in company-owned XX

We Casual, new the two of the Gold from another the Sport before stores Sport lines lines, the stores with in two United planned SKECHERS the In and locations. fourth opened in year. expanded have increases and date our Walk business, women's and quarter, also men's Street end Work. came five States, our company-owned remodeled and domestic three biggest To

growth success, that able in BOBS years XXX,XXX is ago. footwear program pleased than States. of to the show been the more the also several We to continuing our help to are pets have its since United inception Due we

Heritage for and our shoes, our numerous campaigns Harry and and numerous Romo for commercials we in support starring our To and Sport domestic Chunky footwear lines, ran digital business, television legends, ads campaigns, Tony GOwalk footwear, Kids men's including magazines marketing football Long. fashion our

and XX.X% on this or to XX.X% XX% basis our reflects growth wholesale United and which on from to the in total our detail a we constant in venture businesses. our show Kingdom looking quarter. and Based direct-to-consumer well subsidiary, the domestic our XX.X% distributor which in sales joint fourth Not in currency feedback Japan. continue our partners, were on international as October quarter. a growth positive venture China, biggest constant at in sales will represented business, transitioned by year, and of currency drivers grew joint powered the increased as believe basis, earlier our business which Mexico, business Sales a The

majority were subsidiaries, and our UAE, distributors Russia, the and growth Turkey region. Spain Additional drivers Germany India, the handles within the and who business in of our our

there Of franchisees. are increase were Specifically, and the partners, business, stores, the in the X.X% with third international increase owned operated was increase X,XXX a sales. XX.X% end, our in quarter. a comparable a distribution X,XXX sales At of XX.X% result international increase retail growth a quarter of direct-to-consumer stores, and store our in joint by those business an of in network wholesale and XXX ventures

X company-owned another X in stores Europe, date quarter, U.K. company-owned fourth have international opened: the In stores X the one two to in To third with and closed. company-owned India, the stores opened quarter, and a two joint third of in planned flagship store end across locations before the XXX opened quarter, In in or stores including third-party including in year, XX XX Serna. Rome. our the Andorra, Ghana venture countries, and first the opened in

XX South in China, included XX XX China. in in store Taiwan, both closed stores third in each in X X and the XX New Indonesia. quarter, Korea Malaysia India, in Australia and openings and including Spain,

opened the XXX the in-store of included South XXX global sporting for year. the far stores boards and and the SKECHERS business, underground China To support remainder in in and Kids events support dance outdoor, the in and are the in to of merger Day events available. Netherlands campaigns in the of U.K., and Six music quarter, America. drove third-party France, and owned Mexico, with SKECHERS where have another Canada festivals television, across digital expected so consumers print to fourth our This

believe Brand international an we of believe and leading Germany. markets Our growth, We leadership and as our in business. particularly we remains will of view proud growth of one awarded into in Shoe the also primary which innovation fourth the the continue driver country had in Career the shipped product is are operate Nearly for that one we Best for of being subsidiaries, our first we SKECHERS from the increases center was pairs SKECHERS. in This the European achievement Germany international marketing resulted quarter, distribution Year quarter. double-digit as every

in years. believe result subsidiary seeing the quarter, in coming region, in Additionally, the conversion will XXXX. strength of significant the the we we additional Mexico and business India are fourth quarter venture the from continue to will in of first feel our both a the With in worldwide to joint a across growth benefiting into every second quarter momentum and are over we which we

over the our to discuss review to John call I'll and turn outlook. Now financials our

John Vandemore

David. you, Thank

sales billion, or currency $XXX.X of $XXX.X $X.XX third or XX.X%. million totaled Our million constant increased sales quarter increase basis, XX.X%. an a On

for a This of the and experienced capabilities. illustrates our our quarterly the strategy represents record company new quarter and power executional

domestically and new to the XX.X% wholesale introduction increase increase stores. headwinds segments a increase by sales and growth sales addition tariffs. and XX.X% driven all in of increase business. of XX.X%, from the of our XX.X%, an our new wholly-owned sales X.X% a the in in sales exchange a Direct-to-consumer in XX.X% was due grew XX Domestic unforeseen a and store X.X% addition of grew foreign XX% this despite increase announcement in X.X% domestic sales net from X.X% region, a every rates SKECHERS direct-to-consumer and International internationally. comparable joint including direct-to-consumer and sales in result increased increased International XX the ventures incremental increase increase stores. store distributor our a and comparable subsidiaries,

in men's Our the primarily domestic growth due to $XX.X and our divisions. quarter, both women's in wholesale million increases sales rising X% to returned or

encouraging $XXX.X sales to fourth increased expansion due to signs up XX.X% our points million million, XX domestic year. among to for profit currently primarily business SKECHERS Gross grow international margin see basis and to continue to in customers compared prior our by $XX.X the was We businesses. Gross margin expect year-over-year. wholesale quarter

in were gross the Our unit, cost tariffs domestic due increases average attributable per to year-over-year which were quarter. domestic partially to our the effective wholesale during gross increased -- lower margins

increased increased Sales to expenses additional businesses, percentage opened growth international sales year year, were million the Total million reflecting as but to million, million increased in spending XX.X% at XX.X% year. and due operations to by in in XX in versus international XX% million -- $X.X at addition operating million by XX.X% company-owned prior new $XXX.X the and flat expenses $XX.X operating increased our -- to operations the to and expenses margin the the General support of basis $XXX.X to of to the in a in or and by from of in $XX.X XX dollar points expenses markets. of $XX.X $XXX.X advertising with million higher our Mexico quarter. to administrative prior stores, million China $XX.X $XX.X terms a improved including that quarter. XX.X% associated XX prior or including Earnings million

per $X.XX share the Net currency $X.XX. outstanding share diluted increased million million On or million XXX.X shares on share in $XXX.X earnings net or $XX.X to constant diluted shares income prior-year $X.XX a to outstanding of basis, period. on income outstanding compared XXX was diluted per diluted diluted million XX.X% per

XX.X% year Act Tax enacted in Our reflecting to the the for effective Cuts XX.X% impact rate XXXX. from quarter in tax primarily the and increased the of income Jobs prior

or full XXXX, balance to We investments, now our rate and XX, for cash September to turning our we of X.X% XX%. $XX.X was had December XXXX, $X of between increase XX% At XX, And XXXX. but million from billion in decrease an the cash, which expect a XX, September equivalents year over be now effective million from or $XX.X tax sheet. and X.X%

new and India invested over former $XXX to minority earlier form our we interest venture a the called of Mexico. in joint joint year, venture We purchase to it in million this

$XXX.X represented share diluted September September of per by were receivable in $X.XX from XX, XXXX, Trade in XXXX. driven X.X% XXXX. $XXX.X million end approximately at higher XX, increase increase investments increase inventory $XXX.X million especially XXXX, Total XX, million, $XX.X accounts at September XX, cash million, from quarter Our outstanding international or or wholesale an December $XXX.X of sales, business. was million an XX.X% of and our an from

portions, Total at of the to increase in Working capital $XX.X The at debt, The $XX.X and support well including current our we in million related were borrowings XX, of primarily to was expectations. $X.XX increase international with levels million million distribution where China, long-term associated distribution was versus our September million XX, to inventory stores first reflects related believe third and to the both our $XXX.X construction Capital leave markets, million our positioned growth approximately in our $XX China. our to billion September capabilities. decreased approximately XXXX. construction quarter compared us of which XXXX. distribution the $X.XX billion worldwide $X.X was related $XX.X million, retail million $XX.X expenditures worldwide for to center center

additional the to relocations. store to our XX For be XX new center includes our Europe, the in approximately construction corporate of to we and remainder China, or expansions the center to stores total existing and capital $XX our X expansion in headquarters our $XX expect million. an remodels, expenditures direct-to-consumer company-owned of XXXX, XX to in distribution of enhancements distribution million This California

of similar guidance. to of range Now the the fourth $X.XX earnings all at and David for now billion in fourth $X.XX X third the segments quarter. sales continue grow to to turning per quarter the of This And be expect in remarks closing quarter incorporates view will net $X.XX. will our turn billion, to currently be to the We to guidance in diluted the rates I'll over that $X.XXX call to share range

David Weinberg

Thank you, John.

the We we retail presented The both XXX environment world planned store flourish, year, the sales. stores with our another momentum political globe. this will developing our significant growing domestic international a by well brick-and-mortar SKECHERS sales experienced will product a around around abroad logistic to wholesale direct-to-consumer growth the continue brand and with the achievement and quarter third is challenges, more given home designing the further and we as Even internationally. capabilities our and quarterly drive businesses. quarter it and Along as propelling the economic and end and in driven third are our and at record these domestically with with and tensions to new we base the believe resident before believe XXX of marketing in infrastructure

off sales Our have strong. fourth quarter started

growing, believe and the are our beyond. backlogs Our we continue on trend positive based through book, this quarter fourth and will order

the over portion to And the the of with that, would conference I now operator to turn begin the like to call. call question-and-answer

Operator

Instructions]. [Operator

Investment is from question first Our UBS Jay Sole with Bank.

Jay Sole

growth. So to up follow just want the sales I on

the could, e-commerce contribution China you sort detail the in sort China. a the you maybe about if wholesale growth If more what had been channels domestic maybe are could you've you about And little specifically, that bit of, talking the talk and, color, you that growth to of get online what growth from you've there? initiatives terms came X% of, if priced. rate in to driver in

some If you help terrific. will can us give be that there,

David Weinberg

some add happy color. Absolutely to Dave. Yes,

as stores it to arrives through As are agnostic of direct-to-consumer we retail a we know, or or the you whether online. our from -- one we sales look when standpoint, at not

call, XX%. it percent headwinds. really we to XXs good on currency the basis, the than this is coming sales performance saw China, rate from strength Obviously, China, thing on over [ph] we of internationally, quarter very brick-and-mortar, the U.S., encouraging in off rather it's it really is mentioned about constant a with. e-com comparable begin think numbers the store also was But meaningfully it robust as a the think was grew base. in a given the out both. smaller was those that driver In a I XX%, growth the in significant higher starting I

we about to headwinds the strip opportunity, rate it average so recall, that foreign the the QX. been This the last X on that to saw it's return close It's or demand were quarter growth product. for I for the take to that quarter-on-quarter X.X, saw The fruition We just all we [ph] ended in if though, what encouraged was X.X [ph] growth even year-over-year lawn significant to you are to domestic it provided out we is again, what months currency are we that we X.X but with growth number, domestic and have by fourth you closer backlogs, the you XX% well. definitely much expect we've you we And a of China. of hate see. say what wholesale X foresight after now. about and a an quarter were we in in talking If about QX the in when we some there as

Jay Sole

Got FX. if a are if those been? up sounds each was can that X of have on could it might the like tariffs quantify is then follow impact, significant it there you margin, fourth And small a might a it. impact if on possible of gross sort have mix I would drivers Is and of effect

John Vandemore

Yes, those there the felt that of other. impact into it markets, say way to FX mix I determined from abundant don't get were the in elements or quarter. Those of that some broadly, was markets, and price international was tariffs that were there where Domestically, came other some are out by the want to of cost new obviously benefits, positive details bit broader the early pressure those impact a as the we the in well a came the one markets. broadly are few some irrespective as through other

Operator

Laurent Research. Vasilescu Our next Macquarie from question with is

Laurent Vasilescu

between anything that fourth implying that on think consider we think should XQ into wholesale? domestic different John, prepared similar that's And like or remarks, last in front? should in the segments shift that was if more across the said to quarter. for that there the we mid-single-digit I expect your growth you any XQ case, Is

John Vandemore

to similar could for trying we're in that we saw, good timing some that at as going guideposts any moment. plus or to given are be be give on anything we've of Yes, But isn't from you be to front the to rates to mentioned timing. the segment, some I minus that what is think on that, There we standpoint tends a planning latebreaking. domestic before use,

we inventory planning in as wholesale. will particular that preparing tariffs have a as on from forthcoming have hitting hand. for not it the December for We we're have we're in because currently we what on be that well and anything domestic the could But that standpoint, timing already

Laurent Vasilescu

Okay. Thank you.

how question term was Jay's surprising it mean about on follow near see think just margins As gross TMs thoughts up we pleasantly up? then on gross quarter, I up are maybe margins, should to fourth for to fourth so do XB And do about we year, think quarter. as we XA next List without we factors next we into guidance think think, year? mitigation Any getting consider? and should about how just

John Vandemore

the for to probably where flat, at is quarter, on come the down moment just maybe you fourth gross even It's direct were something slightly. margins we

We are the tariffs. first round XA still the impact absorbing of of

mitigation those of We've place elements to We ongoing. are the the some efforts, of the increase have benefit decisions customers. our in put to certain in absorb term made short

take exactly more offset have is how turn helped sales -- by once flat we XX maybe at I'd more obviously mix differential point sales XX to out. have we'll think potentially I to right We that, slightly, continue now, handle mean do a quantum to benefit you and better trend but bps. to into down on I So and a direct-to-consumers that to the holiday internationally there account overall that

Laurent Vasilescu

on last question, is then G&A. And Okay. John,

growth going China? the into international that And on $XX and kind can Mexico Any how G&A should quarter? for we looks meaningfully quarter? think the you was quarters. it about fourth in we implies the the the domestic forward X that like And thought after, fourth should first for million how it muted of, then out G&A, up think On parse about that the increase,

John Vandemore

don't on the the Mexico the lot and overly other that G&A a combined than elsewhere you're I were want precise Yes, of to tell The in growth increase. picking probably of numbers than further business. I'll seeing remainder XX% be that international support, China you more

domestic that and affects The business to direct-to-consumer the other business. the driver that major certainly also consumer I international but mentioned is direct domestic

support -- distribution, keep were distribution the which, keep they and was up in cost are wholesale, what there. putting where was it costs impacting investments And the as [indiscernible]. the at both are then looking We domestic payers, largely we that the business so that in the the supports we by relationships of the quarter, operating broader in about elements I some or that when goods of keep and we reflects just with know, shipped, we're our you of again, G&A business saw those made mind, Todd, in business. just sold to volume the of You and to business think, warehousing are ability certainly mind that this is that that. associated there most others at prominently leverage we're proud is the as opportunity G&A benefits the looking well say certainly we profile,

Operator

with Our next question ISI. is Saad from Evercore Omar

Omar Saad

jumped you about especially John that out some in the that market in and has the when quarters, combined at Board. you're rebound, to consistently business of couple of more performed thing One into the able drive how the consistently us of really being last management Can think significant how is talk appreciates? the think about we evolved the sales, increase margin the we coming in the operating --

John Vandemore

so that to a take that think of I'll piece on contributes everybody well. Well, I as

of taken built startups into I coming been you've absorbing fruition the behind think the which input significant running the and seen to what just about think John I us past a in and it but what significant had we talked India, piece well. past. and in certainly we've We've Mexico as have

and how joint that into is or taken from and distributor We is have it to our drive we might to we the have risk unquestionable amounts no no much we have the what have have what venture. push see prior startups marketplace take a to to we business it over and

marketplaces. world there's of what you're think the I more not is together, around and an So the to world consistency new grow any seeing as influx tends

growing in continue to really places those continue of they up the they you're even now, are leverage, business, year before. better not the none what a what is to places, what than the seeing on relative believe the So basis full deleverage reform if did their they we is of potential all maturity to

So Chile would are right they barring where have in something like obviously that things much more business Kong based through going that which to do or that it while in process. and grow. have turmoil closed now, mature happen we sometimes something complications a have politically, we they very is to predictable growth critical few on down, Hong more push invest And as mass, hit are do more continues we we somewhat and go their as they --

Omar Saad

an cycle we've investments the that or make maybe that headroom feel been seeing? need have that or there ahead Is see digital got accelerated like the you consistent to investment feel room more trends you and we predictable you that about

Brian Goldner

Well, make we've to started already some.

it's in had So that the assume, grow States, us ventures, starting it United leverage all out already carry assume, it in marketplaces. to you for we've now it we continues leverage. It's as just or worldwide, to to would growing new will like it

some We will carry to centers increased and time. able distribution already continue upgrade it be talking come biggest capacity begun going about been a within the to one in on investment to and as we've at the to past yet to is lower invest

now just starting newer rather scratch. So itself investments significant continue I to mature think business a will upon now that That's from like leverage that's to than that leverage. will require

Operator

Chris with from Wedbush is Securities. question Svezia Our next

Christopher Svezia

on you, I for John, guess have wholesale. I a just U.S. one first,

for to the get slightly year on you've your with kind about of in wholesale, implies X% flat think talked I QX in QX. up double-digit growth to there previously

wholesale, if to think about trajectory as XXXX. going you color back up kind into rate mid-single-digit any the forward think this that about segment, given then address And forward if you thoughts there Is and that level sort going made we growth helpful. about throughout observation think Any are you wonder should be a of a growth of, the again? will could Just that? we about, ramp maybe Just relative year? we about that prior U.S. secondarily, on to comments what

John Vandemore

depending within growth or goal, We Certainly We Yes. we've the where mean, see here see goal. that impact. off quarter. guess, The eyes But flat. so I about in that's we the are order continue again, markets by probably a see that's we But there. shipments our attempting sight. to to already in bound there so taking spoken still is the to on one get close guidance of. our domestic that's the few we're timing a the It's reality our it's you something not That's to in the season of that fourth in still, backlogs, I be is expect factor. so going return can still our flows. on holiday

what books as we now could are much up. -- is encouraging that so to further right far very But As you year very extrapolating what see signs. that XXXX, I far, it encouraging, we see order in remains into tell still early build terms of full

the that which think unknown. take tariffs is I an of to we impact the consideration, have also there's into

And as some that that brand. an there's take the absorb far, we've volume out capacity. to because flown baking in or the So impacted aid we're there to it instances, chain volume some to still or every to on them of to But in supply our dealers help SKECHERS to through bookings those that choosing maintain the materially that really again, them has not through booking hasn't react retailers seen the continue pace. the have potential

Robert Greenberg

at it we talk base, but year-over-year distributed about would had that growth incoming SKECHERS, dramatic. be and upbeat was evenly though I'll with even some along from order a fairly often ever don't on the as rate I usual and stuff, of we've that pass our little Christopher, subsidiary that best and more is the our domestic

up or that, sit we So December fourth to like any things shifts what know we've, we today in we here from the be we that or versa January will as vice barring quarter. with know,

We up quarter. the in first will be

We have first high where we to rates. quarter least booked mid growth single-digit to a point anticipate at

small capacity here from may Now hard quarter, first fourth might that January and a slightly in as be we be, both quarter slightly quarters we a moving we to December mid-singles sit if grow wouldn't above to bigger it slips. believe of to would have and it the even

and have pace at come indicate dramatic that in backlog the So a that we've orders and growth received happens. positive

as back Now have but of the be got back-to-school year, for cycle said, from the as John on the our into to we significant a reception front lodges don't of me slow point. would gives macro certainly gives economic somewhere a that think XXXX down -- a that us changes major indication result from of the or certainly I and barring anyway shift

Christopher Svezia

never than you the I've color optimistic, I to appreciate you, and so Okay. for that. be Thank known Dave, less

David Weinberg

within always But reason.

Christopher Svezia

Just you've nice in on direct-to-consumer seen globally. a the acceleration comp the side,

any thoughts got is easy about comparison that loyalty, first and are as done level? accelerate, we on given QX, cycle to sustainable, it side, rates think even some have if we've conversion initiatives the next of you you the easy as of still direct-to-consumer half an year, Just fair on these that growth you've not into think some this from still e-commerce,

David Weinberg

over weeks direction. that's October we telling the group X from having year on October, most the September comps always I in the we into we bring sign think the what comp obviously to store weeks the DTC to think -- what positive acceleration of first and will certainly significant and X What that fact possible. so in a quarter we've in in not in of so going is the had first sign smallest the the is rate the for across sense of anything is quarter way a growth of prior Well, one such But year, a month know one. in positive last an the of basis usually

Christopher Svezia

distribution on just for completed? the Final the efficiencies anticipate When automation me, all being Just about any European getting on can P&L, some center. Okay. the flowing we through that? thing thoughts timing

David Weinberg

Well, the is most QX. obvious part

are in We in so get we testing that and be to now, changes running any of some up the and quarter. [indiscernible] first barring hope flowthrough

Operator

question Duffy next from Stifel. is Jim with Our

Unidentified Analyst

your that does curious type I is the motor international is you for was This thinking to wholesale Mexico in retail. lift McGolden as the what it change and Is on within within from Peter structure early markets? of as of ship Jim. and saw other tracking plans, any your it business, from international

David Weinberg

with expected, for market. as incremental was Mexico what this to to be have still year We better, It's a perform business. hopes high continues licensing to honest slightly you. the

to So the our it last But it's international wholesale really, out contributed, sequentially But just level. year-over-year point nicely if grew in saw addition any at even I draw without high grow quite you teens conclusions. from would it basis, quarter. look Mexico, tough a that you business of the

regions, across of this the remarkable our about of businesses. is quarter, the really last, is across think I how and pervasive all our the So thing growth all

Unidentified Analyst

to Are bets And a made consumers for product bit regions inventory in there specific then speak that excess are there holiday into could or about looking you're heading any you product you've that that rescission specifically? respond holiday? any little to seeing categories you're into or

John Vandemore

Yes. is given I mean, inventory is it of where is. positioned the most mentioned growth international. well I that

terms take bets, of a don't we In of lot bets.

we out come standpoint, I inventory is will right incremental product we very place We're we've have an The We lot in consolidated feel are only about point like inventory what we've last from would Mexico, something I both that sign. though inventory like in the encouraging again, a got you a right so new tremendous year. what excited we it's think response the a sell-through thing tell of the that that's and wouldn't to grow. seeing seen backlog, the to terms very in of product.

is which joint well in So there's licensed what the now was a on a is a board piece relationship venture, taking as as total. of overall just of which inventory that the previously

David Weinberg

also for growing. wholesale And everybody, should had point the that churn than business. business that is historically, a our We slower out direct-to-consumer Yes.

because carrying are piece. turns that got inventory you same the shifts, more so little a quite as wholesale to be we'll as the So in as not direct-to-consumer a grows bigger that as keep mind

Operator

with question is next Tom Our from Wells Fargo. Nikic

Tom Nikic

just about tariffs. to ask I want

have the you an impact how it guidance impact of affected You no Newark's Can embedded you just in would maybe QX not but mentioned us that of in you that the and DPC business reason QX DPC? but the gave a Is wholesale you there wholesale is today? help magnitude in of understand why saw kind U.S. mention much maybe region. of

John Vandemore

take will of stores. implement we wasn't the reach to the held the will because that fourth That wholesale that or retail of out, the Those had product significant effect, haven't going frankly, into the impact predominantly in also overall ability the But a back came our mediation into will inventory that's in Yes. quarter. fourth I of out. point for impact are quite in went cost begin yield on domestic the mistimed long-term they basis. was it to in all in It quarter. that product, expect right to in our of go mean what while we the the newly I'll effect tariffed tariffs a strategies. also the sense

being that working vis-a-vis our account domestic are out little wholesale perfectly. timing and our the the we not margins conservative for overall possibility bit of all guidance margin and to So a tariffs

looking we you, of looking concessions U.S., the probably underway. XXXX, we've vendor are looking be sooner aggressive effect. efforts into I points those in the very -- X obviously think this mentioned but quarter on at the and long-term, change distribution that's all we've about to However, perhaps And at mediation All the of that happen have would tell at before, strategies We'll been potential price. becomes today. to put efforts a first really we place that working mitigated after that the

Tom Nikic

more And me. for just one

QX of this sort a QX you've a up On was year, growth was growth of was dramatic the rate. XX%, QX think, rates range I the expenses, pretty, up wide up in which sort X%, G&A was X%, of, change had

drove was higher volatility sort can I that And what of a appreciated. but just, guidepost G&A give than line that did some be you would rate What know G&A steady-state you Just of there come you that? G&A in us fairly have growth expected? quarterly in the it -- for,

John Vandemore

to bound of going top this rate, level what really I growth expenses what that for bit to will operating We that we're Yes. the little instance, quarters. part at compliment to matching we're that's putting point the lower the managing. the on looking we you components to did globe. standpoint. the quarter said media. and Again, growth is that end press that's press we line in But the the going to opportunity X I out to that that see towards This this precisely was of of marketing, an across is back vary upper from a In in obviously, in contributed rate prior or and our from to top that. a that us we're the be G&A, quarter-to-quarter. bound, the one decision this to for the product which get hadn't and quarter done us that is is work we've to more dollars operating something continue to growth thought invest to the resonating were upper

quite opportunistic to brand an resonate lineup. press on that's the more So of frankly, spend great see continue the media against this product to really

Going forward, the that keep place previously, trying to or had which at growth we again, line keep talked better. is rate parameters about a we'll in it top

Sometimes, it on quarter-on-quarter. varies

approach that We've XXX-degree into we a we got the this quarter David you mentioned. consumers want think again that can press advertising and product. because have make awareness good up hot sure gets I expect we and line to will

Tom Nikic

exactly growth sales getting job growth. the Nice in line with SG&A

John Vandemore

I appreciate that. Thank you.

Operator

Group. Sam Our next Financial Poser is with Susquehanna question from

Samuel Poser

thought inventory just follow you're what because, us on inventory Mexico? I right that in inventory? up is of and support the you bringing was some the of a Can inventory for that you for tariffs one. now idea mean, of Can lot to -- preemptive incremental U.S.? we in us give ton for Can any a Number of it apples-to-apples in came the I early some it that

John Vandemore

mix enough it absolutely react. a to and bit is wasn't an It overall of component have wintry because that time There preeminent. Yes. the was little enormous we didn't

within to the weeks, didn't recall, tariffs spoke you were last they And then of and a exist. subsequently we when couple tweeted If enacted. you,

little say, of accounting. inventory the introduction year-on-year Mexico into to I would growth is attributable a with tariff the the bit growth there's of in in X/X inventory associated of the inaction. So the probably inventory

a contributor it's for So certain.

Samuel Poser

mix what growth as right noise. changing as, a looking Okay. think I now the -- Because have is in is you that -- I And do turn unless is inventory? would the you mentioned then judge that it so of -- the think mentioned question given the you I is of, turn you go-forward we turn because you of DTC what year-over-year think can the you are David, forward way about, is guys sort the but slowdown. that the the when guess the

David Weinberg

inventory. really wholesale before, Well, the as we've said we on don't significantly speculate

that relatively in us So XX XX to that quickly, turns turns days. probably for

and as or retail turn a XX-day have an XXX-day think transit plus, replenishments, on business believe probably to flows with direct-to-consumer. especially would the probably I inventory, in XX XX-day it come the you a because the anticipate on they we include a

account this holding have inventory ourselves right component. our but some do you and you X if were this for that significant for with look as as not China it's So to well for take into as retail there minute slight that increases Europe,

So out all them pieces one significantly. of and sticks they're no bit little

Samuel Poser

much the Maybe how of of was mean, you year weeks looking -- I DTC overall could you're versus -- year? when forward going -- not growth your it of this XX% ask help inventory others supply the to this DPC last in the your a is than what way, that break your of any inventory you And lot something us year-over-year percentage let and entry that what percentage, see bananas, versus because me forward. up more your inventor growth for sales just go up are

it all how together, please? is So maybe could us you give more that gets -- specifics put on

David Weinberg

Well, we but you. it take and a we'll you can give look we'll to have to it to give

XX more have stores. We

with we in XXX,XXX up of a pairs, If inventory, could you just size of the excess significant average stores in be end take pairs. XXX,XXX, number of the

opened into stores and take then the in that of just itself XX and a gets obviously opened going stores put we goes is account So physically domiciled you there. that's into dollars and out million are few in that the quarter,

track that head. So it for don't you. will number my get I I in

John Vandemore

to that see add attach doors increasing business, to keep that, but business, inventory store can that you rate just have growth e-commerce in direct-to-consumer of more obviously equivalent becoming not component that And also a with Sam, need the -- pronounced facility don't you in-house. our mind an to you number e-commerce that's

David Weinberg

look stores, [indiscernible] growing fast out stores. a That's XX

Samuel Poser

Got you.

bit the -- when the or are lastly, think dive driving give men's, sort categories, -- gender? in of of, what do you I can and us more? some on, guess, details have of, Because And subcategories lagging you by still, the categories are really work into which the a drivers? and that's then can the -- really categories you the sort Okay. little it, about just gender you I style? the talked opportunity? What's more

David Weinberg

be through but I a a takes walk things category time it'll It to think... we those have. long Well, long

Samuel Poser

you some and of not you be? -- We've you men's sort men. BOBS which but works. need isn't positioning versus give heard Can vis-a-vis -- not mentioned us where they of to doing women's and mentioned components men's, some You in general Can there? quite that

David Weinberg

our what quite you've whole women's a heard back performing what women's from is business percentage business I on growth delayed held wholesale grown so about it I bigger Well, obviously its know don't has own. well think domestic and is faster is -- gets or is. the than women's,

know, get divided. you and -- So categories

have many We subs.

that single -- come is have we direct shelf GOwalk to past, category in said play not to more and we go, to the shelf but and more basis. true styles a quite selling we and a go a consumer not space our on space, that significant back. one-on-one is dependent categories have Obviously, trade and with. as that on personal has and because we well more come taking now, do something in GOwalk especially showing it's we through different moving more quickly can are on We're are increase, have we I we increases. which single a think what things style, dependent

to just grow. to to grow, continues it women's continues grown and think fill and men's has grow I out,

believe some had that in the issues light marketplace, it lighted We've a at tunnel getting end as the and comps is footwear sales exists. but kid's the the seen think, makes the lot of we I've at I the difficult

doing category. base. something doing coming But do I we just business it is well, very a as enough. it. broad what very X we our develop X well, kids categories, one the months know doing think And lot we not category concentrate this getting by issues of are geographically to in or broad-based, brought when or a product to is that's back, bring well it's had product, tend Back-to-School, or a and women's movement we're performance other next is time, isn't on And will well There's the adult well So think in on category of with to We it or we'll X about. we bring it back. them new what to tend you back, not we're you

Robert Greenberg

that. Sam, I to add would just

ask would our getting You the know, I doing of channel checks you checks, to that we're domestic. just all in most recognize channel

So it's not holds always true what domestic holding internationally. for market, it's

strongly it's a that the in the outside before. been so U.S. that is there's category -- U.S., if And has there's performance seen

of just the mentioned, most hugely footprint broad that's, the So rates again, encouraging growth on addition another that across the in growth put account brand. David global of And when compressive top you we're the take divisions as to sign the up. seeing we into line

Samuel Poser

luck holiday Good in the season.

John Vandemore

you. Thank

Operator

Our with Greenberger Stanley's. from Morgan next question is Kimberly

Unidentified Analyst

about think long-term provide how expecting. We your well as us as could on year-over-year guys to hoping want was but outlook to is you have nice This were guys of pretty you be what Street Alex shy little an Greenberger. you touch may was a for operating XQ This as for forward. delivered, move expansion on Kimberly it questions maybe targets you the just medium

David Weinberg

Yes.

So in the two the contributing quarters operating of to think noteworthy expansion follows quarter, margin it's our it in one, line. the we I that saw

forward to to kind As slightly. of, up look to expect we flat we be, QX,

is aim moment that particular nuance going tariffs. to impact our in mentioned up of in flatter impact of the to the to the Some we objective margin be fourth earlier gross the the But of at around be the is quarter.

goals, in long-term what our have the of with remain consistent we terms past. In said they

is guide. if successful is growth increasing The long-term in not we because rates see that only investments beyond. give so we low for drive as invest rate that now there between the driving We we operating the that this seeing of we expect We're harvest been of range growth margin. we've We believe as that is before. achieve those above-market caveat changing year operating to will the line rest teens want you're brand to an to the in runway, to to certainly in growth invest far in has and the can mentioned -- will long continue as QX of continued these this margins success opportunity that on top our an and

Operator

is question final from Susan with Anderson our B. Riley And FBR.

Susan Anderson

follow-up a really quick guess the kid's on I just business.

it us fully comparison just maybe the like the when you tougher quarter. sounds cycle negative you it lighter in for was So start remind footwear? Can the the

David Weinberg

next in through. trends start to a quarter the very to first comp of point, some year positive cycle we'll we're year it's difficult very that year for second will of first before. in -- year David's last quarter it the it Yes, successful start certainly kid's now next and a seeing and Again, and was product

be So of believe soon if range returning growth that stability, we'll to not, business. in kid's a to getting closer the

Unidentified Analyst

more one Great. And question. just I guess

guess, I could that Golf shops, getting opportunity longer do think think that the green I potentially you you guys? mentioned something grass could needle term? the line some you Is how into be for on move big the

John Vandemore

around it's have. the the going at in worldwide and another closet is I their our just imaging world, and core picking nice up we're us the it and so is forward. that's big and way are just I think look for it only to needle customers keep male both moves that think a it top-of-mind But with, we looking to us piece begin that golfer, in golf to in it female and and

technical it our any and of along it move core and it we can quality just show But we do it think customer, what an keeps mind build. making in to umbrella go. older and product what because shoe, comfortable just particular use in we is of the as for golf does So with and as top can the demographics we

go. to the positive. it's we very can So brand It's looks the just addition brand like and think an

Operator

reached the session to question-and-answer would for like have over turn the back as conference. the conference we of gentlemen, to the end and well Ladies closing the I remarks. company as

Unidentified Company Representative

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

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

Skechers U.S.A. (SKX) 22 Oct 192019 Q3 Earnings call transcript