SKX - Earnings call transcript Q3 2020

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Operator

Thank you for standing by. This is the conference operator. Welcome to the Skechers Third Quarter 2020 Earnings Conference Call.

As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. ask request follow-up limit all question have opportunity Skechers question to analyst I, the one and only to Instructions] that themselves analyst one to [Operator question. the to allow Skechers. would I turn over like [Operator Instructions] now the to conference to ahead. Please go

Unidentified Company Representative

Thank herein, on conference or including plans, statements the I joining without call Harbor statement. objectives, us the events may that or statements and beliefs, expectations results company now limitation, future read Safe for of estimates Certain you, today. everyone, forward-looking Skechers will statements the risks or contained addressing constitute involve uncertainties.

COVID-XX of to The actual company’s is means by of is at this currently business, the statements. uncertainty differ without and limitation, COVID-XX forward-looking the impact forward-looking call plans results having could result, And the about any the cash has circumstances those conditions, Such on from and pandemic materially response At flow these could the such include, of impact Specifically, pandemic. had company’s change time. pandemic. to this extent as financial of time, the pandemic respect a COVID-XX that in on nature this is with a and there duration operations. the significant results said significant contemplated what dynamic statements

to securities including forward-looking as local statements performance There Exchange to forward-looking Additional apply Users statements U.S. filings by company. the and market or no and business of economic, future and not on laws as that may statements the and review and our they operations. national the current most affect and Operating implied the Form federal unknown that, recent With company’s industry John Commission, description of all involve call with global, flows like Financial Officer, company’s and the turn required Skechers’ of Form results, specifically for and that David the filed risk expressed occur. Chief business, I’d with achievements the conditions, known in Securities limited SEC actual assurance quarterly factors are David? be on reports to forward-looking Vandemore. encouraged Form reports Chief over or reports risks results of report XX-Q, will including any by other cash the to annual Weinberg significant other and Officer, but X-K, can financial XX-K, on the conditions a retail all to general

David Weinberg

and and joining the for conference from quarter are ones you healthy throughout us The seen has pandemic the in I continues impact to markets. loved many today third growth our staying XXXX your you, including a improvements call. return but to Thank meaningful safe. colleagues, for hope quarter Skechers world, second business

kids' model prior decrease the year sign the Third a many collections. our retail billion, footwear, a improvement of need. wholesale the our quarter and quarter, the came growth footwear was men's notable accomplishment our increase health athletic, our and we absence on which learning want have $X.X domestic X.X% brand. selling from environment over and our sales but well-being, a and the as Athletic the of when came an in casual segments the footwear, In particularly before. to believe wheelhouse. from and their our even steadily and apparel improved sandal these working uncertain of casual the with third focus from of our a in relevance wholesale instances results comfort improvements pandemic company's several times product is is growing. home women's back-to-school stronger product, speak they double-digit plan with consumers comfort traditional remotely. quarter We more and our to season primarily people along which business, predominantly from In We our given desire adult focused stabilizing single-digit precisely second encouraging of are Growth each in with experienced of and children significant than our channel our and on still XX.X% a were our from emerge and distribution in resilience and

the many a Our business sales comfortable business. saw wholesale the in our quarter, rising quarterly satisfy returned retailers stable X,XXX than solid pace leading our return experienced with business to differed growth in footwear own more domestic markets to as a for and channels e-commerce many recovery of where and gave of product. other fulfill and open, markets of improvements We sales. stores us growth opportunity demand our but growth are in Skechers our the The has pent-up the and demand to and across worldwide customers sites X.X% of similar result markets Skechers the relevance The geographies direct-to-consumer availability in and in trends reopen.

China where our strong. joint XX% was of business increase was Our an venture business e-commerce in led up XX.X% particularly by

up were overall led subsidiaries and European in well Europe. in fantastic Our Germany by growth Eastern as France as XX.X% Central

store due markets Our double Middle to distributor down was including closures covers our East. several business the largest in ongoing digits distributor, which

shopping stores two remained several in plan markets. including our and direct-to-consumer in locations closed as quarter also few recorded including first quarter, in on Tokyo. stores XX.X%, challenged in closures our including Australia flagship open limited and mostly In although destination locations the Colombia and New de opened store XX business operating in of Skechers in fourth France quarter. quarter and in were pre-COVID retail London hours. premier positive the sales Zealand XX end the One Rivoli, markets we and third concept In Munich the as Shinjuku tourist Oxford all third planned open street We another with as in store the Berlin. stores Rue the key others. consumer quarter the By decreased And international continued and several well many traffic domestic locations. Circus locations to but Scandinavia some However among a in were

in as throughout continued XXX.X% business increasing and box even quarter. stores the our our big e-commerce third we significantly, from our quarter domestic second the showed grow -- in reopened locations improvement the retail fourth from locations our particularly sequential in the That said quarter. brick-and-mortar to However,

invest continue our to direct-to-consumer experience. in We

investments growing for into many fully as We become locations, omnichannel either During are shopping system. and our ecosystems, in up we of our consumers. more now physical connected full-scale began digital quarter a U.S. our consumers preference point-of-sale XXX the pick online sales our channel, or has in-store and And shop with to product a curbside. these necessity to allowing will one experience drive and online e-commerce update to believe integrate our one than a

X,XXX continuing In we XXX opened at third-party our To efforts, XX our to stores, and the strategically company-owned many store for the campaigns to business, most reopening with comfort played Skechers notably XX than World including closed custom third-party and bringing while addition Kershaw, including the taken wholesale ever, support footwear, great stores the of focus, in growth our reopen Clayton We we end. and who Series one adding count the baseball advertising world new stronger business digital have evident in heightened to new this television markets, steps believe and around our protect Champion our improve company-owned world, in have in Skechers achieved with our around quarter to worldwide, we domestic total outdoor channel. cleats. the markets the is in-store, week

As continue enhancing further trend this worldwide, we business. as we well strive as positive digital our to are our infrastructure

expansion in on And be Our the half are square on completed million of remains of facility our which foot X.X center, second to distribution the feet. track. square new working XXXX we we X.X our China to diligently center bringing North American distribution million expect

distribution Colombia, it U.K.-based centers X.X feet We distribution have and new as expect square open to also and well our we end this way million completed center year. center, the to our increased opened expansion of for as e-commerce pave distribution first the in the all by growth Panama business. Also to of bringing European

Canada, our our experience growth. to with chain track and increased Further, we we capacity, centers And on pent-up future are South our line to America, are continue logistics for our be factory e-commerce to product production platforms our Japan the product, for up supply in India. as build ramping as in Europe, needs. demand we We with upgrade

like over call John. the Now, turn to to I'd

John Vandemore

Thank you, David.

I throughout these would demonstrated once resilience again times. we unwavering I are turbulent in like start, to our Before thank has they've the for positioned Skechers see beginning dedication our worldwide, the Their recovery team business. to for Skechers

improved last pandemic This degree businesses Where a in each and improvement grew stark restrictions our situation quarter segments improved to growth and sales weathered years. reminiscent our a our of of total the XX.X%. with business responded, prior returned of as conditions quarter, steadily. normalcy, sales Where persisted was over

major a as view we which year-over-year, X.X% only down were sales Our accomplishment.

normalize value confident will athletic, resonate because Despite growth, on environment, our infrastructure. to global distinctive continues we proposition styles As the casual, a capabilities direct-to-consumer for return trend. distribution Skechers growth with core, and conditions invest worldwide, we consumers. focus current are with further to to are our continue And on our that

by these confident to us investments are propel We quicker worldwide meet to and will continue allowing brand, our scale growing demand.

totaled the kids. year multiple quarter. or turn million billion, $XX.X results. the a International our $XX.X in X.X% demand women's sales sales let's million, men's, fueled prior the increased of currency X.X% quarter decrease On constant to X.X% million Sales categories, $X.X in by third or Now wholesale or quarter from basis, quarter. $XX.X for sales X.X%. decreased and consumer decreased wholesale Domestic a across

distributor-led temporary the XX.X% decreased as XX%. rebounded, X.X%. continuing demand internationally, trends And challenged XX.X% subsidiaries decreased quarter, especially were sales closures. and ventures decrease decrease the grew reflecting in in our of store in and business for the markets. quarter, a e-commerce of traffic reflecting domestically joint XX.X% the impact challenges, consumer channels. both grew up our result Direct-to-consumer China sales distributor Our a XX.X%, XX.X% But

in share, one-time advertising associated in expenses business by favorable XXX.X%. which increased $XXX.X lower related global trade an were million, grants $XX.X nearly due was million $XXX.X with and $XX lower e-commerce diluted $XX.X was as sales million $XXX.X result of prior administrative versus on results was year the was joint to million, million volumes. flat XX.X%, million X.X%, XXX $XX.X international in share was increase year activity our compared warehouse or quarter. as recent the or earnings million million, expenses diluted legal ventures restricted to domestic to Earnings in prior our our to another sales. primarily businesses. our offset X.X%, the the million, increased expenses by was $XX.X or mix by online the $XXX.X or $X.XX increased volume-driven robust $XX.X expenses well these promotional offset distribution $XX.X operating of expenditures. profit charge per Net domestic operations as primarily General to and and cancellation prior increases relatively compared decreased Total of for million, on year, a Gross margin Selling down show income partially by However, Gross with by international of and $XX.X compensation both in to settlement, million. the non-cash million outstanding. million, shares and shift from

the net or income of charge net diluted was for million, outstanding. mentioned, share, diluted million per adjusting previously diluted to share. compensation These $XXX.X $X.XX million, income per one-time year However, or $X.XX compare on non-cash XXX shares $XX.X prior

due XXXX. wholesale December million both Our to to increase million X.X%, Day aiming including of $XXX.X senior in with domestically for position $XX.X actively sheet. in at decrease in the XX, to million was of from XXXX. and Trade both third the debt, year-over-year December primarily XX.X% X% year. to demand, continue increase increase was increase of reflects year-over-year. XXXX, million Total million, XX, facility sales, $X.XX primarily income the to or new domestic first in in were credit $XXX an $XX.X first but manage and our markets. the $X.X related international in The and the we were now XX.X% constructively $XX.X supply was XXXX, or which in $XX.X quarter XX.X% receivable quarter. cash, the from next of Overall, decreased from Total million from expansion levels billion, drawdown confident China. our business quarter of December and center, to compared quarter. tax effective XXXX. higher the well billion as offices $XX.X turning new an We primarily credit portions, inventory of $XXX.X $XX.X the drawdown The at our quarter current long-term was of the our reflecting to largely XX.X% September, especially receivable ended XX, accounts and expenditures million December And quarter end our which unsecured in in from inventory in from $XX.X facility an million a year. levels rate $XXX feel XX, XXXX, million, or million accounts of The declined the the in Capital new senior investments, $XXX as in unsecured equivalents to for for balance X.X% distribution cash our corporate for openings markets, and or is States. and our related inventory XX, related increase Domestic United million or remodels an the increase Singles' a XX, worldwide, December store attributable million to of and inventory levels point-of-sale increase international to prior preparation increases system

our remain our capital focused on priorities, global and direct-to-consumer distribution Our infrastructure. relationships enhancing our strategic investments augmenting

launched applications, majority several including our stores new our mobile capabilities BOPAC systems. a in-store BOPIS digital two we and of domestic website quarter our point-of-sale of in and solutions, and This the refresh

to progress, to expansions and our the pandemic, North European also in new distribution make American center South We on and China facilities. despite our American, continued

in continue Overall, the performance of $XXX the our dynamic have and Kingdom Skechers this between be the with the in million, total million of are to a post-Brexit aforementioned quarter anticipation successfully environment. process remain inclusive pleased center confident logistics $XXX We remainder that of begun opening navigate for to expect projects. new expenditures We will and capital third of environment. also year the now a United we

not to the David will reliably. revenue turn the forecast be closing as we earnings this quarter, call providing for However, remains unpredictable too now, and guidance to remarks. environment I'll over And

David Weinberg

John. you, Thank

last As our remain only the our are experienced this call, at I quarter discussed domestic in which to ability second third highest our digits. agile with quarter which quarterly from and from during very meaningful our decrease and drive at period was performance our of sales the the X.X% channels especially the all in history also year, our improvements pleased pandemic. wholesale, outset we We a in mid-single grew of same business, sales

double in other digits. wholesale was many Additionally, business our and markets up single

price growth especially for ample have and even challenging believe their our product comfort we gravitate reasonable year. appeal. continue the success and of toward this Our We aware and direct-to-consumer as at crisis, exceptionally continue to opportunities diversity including liquidity the improved will the remain consumers confident a up of reopen the in The will consumer countries and since will lives of consumer global in see long-term our an confidence in position strength our future. have health United to sales casual channels in quarter many in business been we be and and backlogs We our many yet actions broad-based grows. are very the and and brand remain near We beneficial worldwide believe, stronger our second during key sheet distribution to athletic and countries demographics our strong balance States.

I call operator for Now, the questions. over like to turn to the would

Operator

Thank you.

Jay begin is first now will UBS. The go [Operator of question-and-answer We question Sole the ahead. session. Instructions] Please from

Jay Sole

Great. and rate tell maybe August how give Thanks then into September business in ask idea there? of like the just States was in about how much. business you business the like U.S. I continued us if you so how September. back-to-school into and the us, October from that flowed the want the sort Can that quarter trending an see United of to exit what September? of trended And in sort

David Weinberg

no was season. defined Basically, there back-to-school

distribution slightly in in comps that's August than a the lower month were the or But closed September and quarter comps higher comps August September for -- coming traditional strength the were of Because higher what comps So, simply the that, saw and slightly equal had August We through. August. between of back-to-school. we the better saw comps July, because in we the individual September. in was September more we

we demand as as outside retail far on holding So, our concerned a retail our up certainly see is business as we far October And comp our to own is improving of be as channel. and basis. in seem

Jay Sole

the just Or a month? part Prime the has comp think October? seen just that affected the you in Do sort is of that improvement in Day you've of

David Weinberg

on our it doubt single as locations to improvement a thing in day. this in would more locations. seen up interested We've world buying retail are gotten difficult It based retail coming was and do We've I be say so up into open more we And around it with has as people find one more one open in basically we reopened going and demand day. that stronger to or since customers the May June. progressively we

Jay Sole

it. did to the the then pandemic SG&A, on one maybe any quarter SG&A specifically? much actions And impact Got just how in quick took due you one

John Vandemore

Well, the non-cash we the charge. onetime as of mentioned driver I mean major SG&A increase is this

you as where we're If business, take against that at charge look can we can do addressing that you because non-operational mitigating by it's we G&A. the decreases to sales actively out see a and

On other well. operating some quite mentioned that by the growth doing fed the over China have flip XX%. expenses. to in needs markets you are additional be that side, We And

still we to they make to have don't And want continuing is chance G&A, opportunities we're we business challenged in recover. are still starve the in consumer or particular beginning traffic operate So, sure malls in that want to to remain in any that that those a to businesses well. manage that dependent bit the aggressively but tourist

their make we starting business to recovering. feed of continue are So way back. don't the recovery the And businesses to to manage to any starve that's continue want we that to it but want we

Jay Sole

Understood. much. Thank you so

Operator

from BNP Please go is Paribas. Vasilescu next Exane of ahead. The question Laurent

Laurent Vasilescu

subsidiaries my then were level, sequentially you for XX% you're two those wholesale they Thanks I mentioned items? how Should and but that for we were quarter? improve that high up think the JVs line about we know, taking giving X% John, fourth up question, quarter. I afternoon. about international in not guidance, the think Good about do assume

John Vandemore

of Laurent. is seeing a you're what of types tale markets Well, it's really two different develop

We're have Europe. activity. quite degree markets normal seeing business We You stabilized mentioned strength that we're of some come There's the growth. largely markets, in and nicely. In respond those have back China. to seeing

individual where the brand with hasn't We to chance have I intervention tremendously are up brand the back others a little consumer When year. things a this that get that's the And on quarter, back markets you maybe get had still broader down In effects current business last the more is there the of extent to growing up the gets of market. Europe normal. in the to that's aspects related then, to effects and think is I remains the struggle expect you we'd those to the and that things couple back restricted, too. have think or to we traffic because usually back where yet are markets normal. well. much aren't can was saw having depending continue it government on impact like other of I the share an the pandemic growth of message, when what a mean But to normal static brand environment pandemic,

markets the which to like Europe as does we're depend rate at back really like of when well. the and effects But it to growth normal, So getting we back couldn't with a other pandemic. the get handful China, happier be upon things of

Laurent Vasilescu

how guys China, quarter? about again, then you're gross margins margin regions? promos was and puts little bps. in giving the And they bit we do And that the think wholesale takes gross international were How just think next high that? What at Was -- down do over helpful. I about Very other we the not driving specifically know, XX level. a

John Vandemore

and the that us in think these We incredibly e-commerce. the I first put in and thing in manifest two up still One, the they the mean, even mentioned pricing we're evidence pleased market you're seeing things. discipline seeing is, challenging with on I that particularly gross margins. you're times our results approaching

little in but markets that's other very right channel story there is a doing bit now gross a some The activity, volume a that in like significant and aspect China with more has shift. promotional been well E-commerce the is in been of bit China. very, increase a margin of accompanied

to channels that are not The up but level. doing other well, quite

Singles' So as a little see shift. a you cycles their elements inducement you're sales other activity days bit evolve mix tend in seeing in too. online there to more a to around part, but like bit Day, of And little promotional an promotional China, because tend something

the So from the promotional the more -- good the feel see entirely bit more Asia, little overall. got almost did mix than that footprint. by but activity more was about We in offset retail international we a we reality gross is benefits more really margin by offset or e-commerce and having within

Laurent Vasilescu

squeeze the that then is distribution that up Very G&A about was to helpful. fourth for if it was more -- if by capacity in warehouse we could about very expense? of due maybe, Thank effect? entirely exit driven non-competition you Or that G&A, do charges, really out John much. quarter one And And constraints? I I is one this the $XX quarter think million. and

John Vandemore

Yeah.

we of others. So excluding G&A. onetime some in costs our really into volume-driven charge, remember, And sales G&A not put it's like costs cost distribution the in

Asia, the saw about, we think instance, minimize the it on lot business that's be where think are depends offsets of volume-driven was working and growth really a those how of In I for largely mix really way to on it to step-up a would e-commerce changes. that best big it. focused us. changes. And you. on significant being honest There's volume-driven with that So about to But the against

Laurent Vasilescu

Very helpful. John. very Thank you much

John Vandemore

Sure.

Operator

The of Please ahead. next from question Greenberger is Morgan Stanley. go Kimberly

Kimberly Greenberger

you orders And nice phenomenon helped original rate and our to was revenue wondering, Thanks. particularly really in growth estimates. revenue quarter? -- I'm depressed catch-up be we would substantial any really expect international get The quarter to next year? quarter. wholesale very there able and the the when quarter upside the all you this surprise quarter to was September June here. in domestically both is Thank Great. from that of third that so much, Was sort lap third organic to any Or catch-up there relative

David Weinberg

able to was you talk view it a year. point don't this catch-up of can in the Well, in organic quarter that of always what when demand in lap I next expect we'll became That's not was a problem. know, terms get year from we It if high in third we to And taken second not growth. quarter. be

the with in there we States have we through There actually there. shortage inventory process what a that matter stood up we the So did high where for That difficulty our were closed probably stores of effect. a when was down process catch-up the as we -- as what saw getting inventory. we increased was inventory And mentioned mean, demand of in I as getting catch-up it opened and an is fact that all John year-over-year. and demand in could inventory were through. our United was

significantly China growth still the we catch-up grow. been started the this resurgence million the places that those And we in world includes the in those we feel up. came The caveat, to and was $XX and set this and we some that We then going opened quarter year in the why for places States. world. growth up momentums like Places the behind is quarter later, when before We pandemic there China a so starting that question we're and the positive significant our as of their from year. open came higher great put back pandemic, in the growth higher the significantly some backlogs I that had quarter, well And but pick that -- will is only are places are are places United was most some quarter. areas as at which have could to we're the also which in The with third second indicate none this pattern. their continue obviously even a for down fourth to U.S., would the was closed had Europe So there speak. growing of on mindset the hit China around Europe, for in but in world only time in those to we that particular do

those watch. only So things are the to

dates. because We line starting. are QX strong haven't a very It's make up that it which as closedowns there been Europe, just order we're production are to that capacity some. countries are in around and some open we'll strong up as We're we're but actually countries But the all in the which volume down, increasing the We we anything. demand showing includes our chasing has seen is get market. demand for increased meet world, their the actually do somewhere obviously seeing feel along into

And serious quarter we certainly how as things year as for will pandemic in more. continue we're the we'll through. which will we into if it the a the goes that question in up first through So power not positive we be on XXXX. is open mode think it's And depending the ready significant and growth we get

Kimberly Greenberger

think brings the inventory Great. the you follow-up, sounds up are to chasing XX%. like inventory. That's fourth excellent. into And me It it's at I I'm balance which quarter. my And looking is total that here on inventory

lacking certain like So in but got aggregate either it's inventory, it you've in maybe looks geographies.

quarter? in the inventory the of about the quarter? do fourth could here then back end feel like in growth to risk be aggregate able curious you you'll just at And the So I'm perhaps order is the to revenue that to the your just in there XX% Or do shortages get appropriate business? hold you how feel feed correct in product regions some inventory

David Weinberg

to everything we is according yes, see think feel is. you catch guess, have the the answer inventory I now we we'll the at first be where I of able question look to part the to to demand.

will our even in a always and there's be case we'll faster high-class to that still problem course have. chasing, a but grow that be would demand Of possibility

XX% some of have inventory you up to is. look its the at the inventory, this you If look it where reason

carrying it's than than and more think John as else faster China through carry start retailer pair we its in As more at in starting going design that's to in U.S. so require said And and per to it China to inventory. inventory And I a more by build online as have wholesaler mind anything it's the building is to you does have keep Singles' what a as sold will pace we we're a Being well Day. you inventory open. stores build. our

will we more, be get But good given So into the somewhat to short think around better will to everybody we world. it's inventory. our use that probably could chase where But hopefully in the it in forecast sit, and we're be we're the quite think I And first as shape We we to we the little of going have what back position have is uncertainty certainly here with we a into have in. and quarter. enough we with year. the what half happy very we go continue but we'll the own

Kimberly Greenberger

rightly And so. so much. Congratulations. Thanks

David Weinberg

Thanks, Thank Kimberly you.

Operator

question from Saad next is of Please Evercore. Omar go The ahead.

Omar Saad

our any Hey. talk obviously I'd talk relative afternoon. others. about bit job you about outperformed Thanks. wholesale Maybe a you really quarter. channel markets I'm the to or Good that resurgences like would and seeing how you're you're Thanks. what's expectations in could -- and balance this you or more dot-com plowing where if which think that in you're businesses? around I lack anywhere obviously largely love and effect that it wondering a And feel should to the businesses again. Nice guys your through? between Europe world closedowns. more I to the know the -- Is are you're I some it strength these lot know we feel behind then of quickly e-commerce, about dot-com DTC to if resources seeing wholesale and driving you you're in impact seeing putting emphasis about And really days? -- reorders? there. a shutter that how growth inventory? think any also starting their from how wholesale latest Is it little Is if

David Weinberg

were first Well, and yes as I'm channel I'll tell you points that far yes, those all you concerned, take wholesale up the as and yes. the part brought

seen have online. We

We demand. have seen

would And it and it need catching certainly anytime the all customers we the inventory here least have lack have demand a our is broad the product still seen down at the of on the that U.S. don't is for product But are very in slow that demand. is future. in inventory there it. our We for impression, it that we're is growth filling, churn I certainly don't The certainly base looking it in the at and

surprising completely. any seen France, been we the In which countries It's have just Europe, decrease. haven't seen starting I down I the retail to think comp, in. people last would in other our Europe. high-demand John It's add in thing in and the deterioration something I or morning. closed we John over in anticipated in talking Actually you mentioned in and Ireland we happen I in the that fear a talk they're an last mean to days. can this what which Europe but our more have people see when of seen could we area Continental hunker a emotional were one haven't yet from On haven't and anything such sales few down. his, we

sure, have now, it's But too too completely, impact. not will significant close early to down if sure I'm right early, just tell. they obviously I'm So we starting. it's

Omar Saad

David. Thanks,

John Vandemore

two just Yes. this side. a wholesale then the I and categories. or was -- actually broad saw that improvement We echo one would like not broad improvement and on reemphasize in It's customers. the

and working. that the sign And we were that's good is kids' a As up. mentioned, product really men's women's

own well Arch in our the Our And we're our also and Max with a our are lot resonating really seeing partners in product of retail, for consumers demand wholesale. channel. with Fit in wholesale our key product really that showing the the Cushioning, year but foci both that's retail

Omar Saad

Thanks, Thanks, John. David.

John Vandemore

you. Thank

David Weinberg

Thanks.

Operator

Svezia Wedbush. is Please of The go Chris next ahead. from question

Chris Svezia

taking Thanks my Good question. for gentlemen. afternoon

David Weinberg

Hi, Chris.

Chris Svezia

I about job. U.S. want nice wholesale. ask to And

on catch and QX? and determines in some the if understand then need can you got to is I'm So have inventory some guess, book you you -- on that's you now reorder. anticipating you you are that specifically to build through guess you've more that the sell you I you at QX growth? just to flowed something can I generate order in of QX what see momentum trying cash level can look Or growth you that still sell-through and product in a it Or build see QX? reorder that the the and represent momentum to of QX? does level sold in is to wait it saw in

how that? So think about do I

David Weinberg

Well that and I believe do we've right well. now, sold in checking we're

channel you you'll sure as seen that your there's I I'm checks So do haven't go through. But backup. any

whole, So COVID would changes any environment as I in we this would TDM anticipate last barring answer it anticipate more. in the the to is

we've what a no demand order still though forward. grown be sell-throughs their one more going knows created to I people where it's -- they still we've and creating what's on because think careful with they're trying growing situation even

I we we so out our an still the an closing much reorders they're barring and possible happened underbought it everyone anything could QX. COVID would QX conservative to perform say was additional is because for that And better. that did which if So get brand for as down, hit increase certainly always comes and QX and just in in

still eye selling well quite in of through happen place. it. see giving ever United would that reason John the wherever that in makes those -- Congress because the checking on to not into for money make it But through. have certainly the things that guidance us But we're for But There's through all QX. we're we're out could that's keep anticipating to I'm good and clouds. an -- that's are nervous to happen. So to it on it hanging, if you we great it we're for this and why will expecting looking which but caveat good, what's positive a obviously do things holiday, still what the continue air the with way be through environment still feeling States and of we power going whole But retail a still lot would those a made all get case

John Vandemore

gave year -- over quarter just And a banner QX out I us point I because for us. also option. We I -- you the last remember growth. was Chris would mean would XX% line top

this out, mind of tough our the So doesn't pandemic the get a that about in keep in better pointed get comp backdrop all opportunity quarter feel an way. pretty really against David that's if we good the to as of

Chris Svezia

just then to And it. the China real growth. on quick just, impressive Got see I Okay. guess

that softness we what I'm I think curious referenced within materially materially? up seen opportunities the the would other there. seems reason the slow they on inventory brands it why what your any saw big risks for I But environment are you it China? mean where it coming the have QX. we've just you're got down far? from momentum events would are are. And in some what Any there? so reason and it Based anticipating -- like What But know stands, slow sustained

John Vandemore

optimistic been I is I about generally we're reality always China served. by well the is largely Yes. it's very mean QX Singles' influenced mean and Day.

the event closely event indications to it. Early watch. watch you we have And then an all So that's have it's are following good. have and that you But to XX/XX.

it couple market checks And those events brands quite performing the does on our So market, certainly based optimistic the generally we're not others at frankly, see all international level in certainly can China. the speaking as business are. we perform. as in two so of that But a to that continue one unfold

performance but seeing what by we're to just overall relative the performance, other the we're very So encouraged brands. also in

David Weinberg

seeing growth month Yes. a good is month. October which a in usually weak we're or smaller And

pretty we everybody that they Singles' it hope the for held Day. well But high for power So up comps are to have through. because continues certainly is up October, gearing so easier

Chris Svezia

Okay.

leave right. And there. Sounds thank the you. good. I'll All best. All it

David Weinberg

Thanks.

Operator

question Susan go Anderson Riley. The B. from next from is ahead. Please

Susan Anderson

a if open hours? running quarter? of seeing take what And guess curious Hi. business. it's talk Nice now that A about little -- Obviously, constrained it job percent there may more just are the Thanks bit weakest then question. bit to is long could continues recover. the just I to quarter. in fleet how and the you of kind the going part for taking retail on also, think I the wondering was you improvement to of be on for my color fourth sequential on But I business. missed you have

John Vandemore

Yeah.

in couple that think I question. of a mind keep things to on

global a estate First retail is, about when we're talking we about talk estate. our

encouraging keep couple So In had really is you the have a the either that. tourism. stores good very of traffic doing to operations Europe, closed the of or majority in good parts handfuls are tended very In of estate, across pleased. what are performance even in that were I But shuttered dependent stores We're upon quarter, of the America there for well. Those environments. we but South to trend. that the really see remain performance restriction we're back not not are also completely seeing mind stores mall-based mall-based on domestically makeup to quarter. very we in that Domestically pretty mean normal, actually because of of almost

mixed a bag. So, it's really

our for solutions. little transitioning are the are that I get bit box are been vast that think some style behind better a mall-based continues And stores stores of operating seeing have normalizes, for Those to while even still situation performance is stores restrictions, that stand-alone news overall. us because dependent generally are are some that hourly that tourism good to restrictions. upon is best on traffic majority The the we big a a it freestanding what are we're observing with basis. as with the warehouse those

traffic So, it though. improve, to all trends continues great. is which We the see

bit that In a and of tend situation to still seeing we're that's better headwind. every a better that we that though, continue the to AURs. think stable, will to And So and remain continues get month. as good each

Susan Anderson

to a are expecting good day XX/XX really you expecting follow-up How on you're It ramping play out? And looks like Great. you That's helpful. China. pretty think really, Do inventory this in up just then, it Or a normal over are brands we how year maybe fight thinking as last promotional will dollars? year? about each be to you that? as more be it look or consumer XX/XX expecting you a are to for Or there.

John Vandemore

I very you performed country. think because as it e-commerce I optimistic, describe well have would in seen generally,

bit still more we effects even as they biased the to a as from China e-commerce towards being continue of Now little right recover characterize the now pandemic.

the But we the pretty opportunity you is quite the been seen marketplace good. the focused past do But the and reality the prepared, better frankly, question. a year-to-date the pretty than we've feel in based is manage lineup, margin against we've season. always big on years. we're think performance it's How selling in brand I

perform. strong to e-commerce have how REITs out, been wait So pointed in for things Year-to-date October we'll see brands. REITs been as strong. But David have to our early have

So Day performs that we're us. be traditionally meaningful performs another XX/XX Singles' for that's us. the very -- because about well period for can right optimistic that, don't in forget what day behind And again,

Susan Anderson

Yeah. sure. That’s

next Good quarter., much. great. luck Thanks so Okay,

John Vandemore

Thank you.

Operator

ahead. question is next The from Cowen of John go & Kernan Please Company.

Jared Orr

Hi, it about was you could e-commerce, with on Orr Jared is that I growing if margin implications it's good for and Congratulations is the internationally. now fast John. both talk quarter. as wondering as This the guys. on domestically

John Vandemore

it recent still E-commerce Yeah. size our into our mean Max our I better line mean Arch performance. our to also commentary. solution. our pleased, of goes where an I is gross above-average lot Very generally, of Fit the solutions we've Cushioning that introductions, Fit there. been overall success also that overall retail and in some be at we with gross continues A scale margin very have traffic with an well do in particular, very, comparatives. is but pleased margin is But us. solution consumer very the environment It's there. our of some of who product for insight benefit probably for driving and

be to behind pleased continue we'll as continue very a to it invest result. And by we So that.

Jared Orr

internationally? So the and domestically is that same

John Vandemore

Yes.

Jared Orr

an Is -- right. margin All margin that that's perspective? also perspective? a gross from that from EBIT Is

John Vandemore

Yes.

Jared Orr

much. All very you right. Thank Congratulations guys.

John Vandemore

Thanks.

Operator

question-and-answer as conference today's concludes call. This well as the session

have You you Thank day. may disconnect and participating, for pleasant lines. your a

Skechers U.S.A. (SKX) 30 Oct 202020 Q3 Earnings call transcript