SKX - Earnings call transcript Q4 2020

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Operator

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

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

Unidentified Company Representative

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

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

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

David Weinberg

are fourth year and Thank XXXX you colleagues, for our joining and you, healthy. conference your for loved today staying ones end quarter and I safe hope us call.

would the we pandemic dedication improvements Skechers like your the storm in meaningful our we store the which with quarter, and reduced challenges, impacted growth closures of the and such countries. Skechers fourth the countries hard Many global of businesses Before temporary segments past begin, I in team Even key shape to health faced surge year crisis this negatively around ongoing several resilience without as in couldn't and in world, in experienced We resulting have their challenges. another work. thank traffic. faced good incredible the all weathered such and for

business. improvement the quarter continuing a of fourth was and of fourth decrease which quarter half prior the quarter Our year a notably billion, X%, illustrating X% were nearly a sales from of sequential record the $X.XX recovery from our third

focus domestic vaccinations were online our well. pickup in year, as store directed a led high in the with many open, the The and was business partially our a XX% resulting to as in comfort extremely to flow domestic reduced Skechers direct-to-consumer men's which as by decline our fulfill our to improvement restrictions value XXXX the believe and by increase year-over-year as of initiatives, distribution in over in The of product and result a e-commerce quarter to our domestic though continued markets our as the cornerstone In along and to we development, growth product many the negatively growth searched business decrease at the China, We least and key desired pandemic traffic in continues the strong design nearly government the and our and increase we in increase were able the those ease. X.X% which from which quarter States. increase domestic from impacted was our With international across With sales, fresh came value. our a style in sales direct-to-consumer offset inventory In continue consumers a foot to will Skechers United choice at tourism. was in and a work the that guidelines, impacted walking to X.X% channels. Europe and year, and Latin essential by consumers channel, XXX.X% as by inherent well comfort demand America. delivered Throughout holiday overall home receive business of stores, and shop on single-digit expect business. well more primarily growth was our direct-to-consumer working an people are our a traffic all, domestic improvement of decreased strategically in in due footwear, and brick-and-mortar fourth result see first quarter in sales athletic the experience business, our wholesale and perform the workers at of of including home. business, natural in domestic we X.X% improving to X.X% be fourth season, stay for of locations stores Our casuals, in customers our through sales wholesale X.X% to half brick-and-mortar decline

omnichannel our are both e-commerce We our our our we enhancements improve offering. believe to system and point-of-sales we will are further now of to to connect loyalty better completing update channel the finalizing within program, which

as for and international a currently on year, domestic will many our coming brand experience to we better channel Europe for view and launch that and new regions. increased plan to this in both sites America, our we meaningful opportunity continue channel significantly sites as operate, We as consumers both an well Skechers sales new e-commerce sales South as for across provide which growth,

was Latin decreased a and X.X% direct-to-consumer Our traffic home primarily decline decreased international total, closures the our pandemic XX%. approximately in hours In due and were with stores operating markets in and closures temporary the X.X% in reduced which hours XX% traffic reduced approximately as and temporary by States, reduced hours to at again consumer business lower store direct-to-consumer United In stay Skechers continued. Europe, spread at numerous Canada guidelines, segment America. was

with owned XX% a locations closed company company-owned are of stores, company-owned quarter, Skechers We international we while did locations, of fourth impacted the direct-to-consumer number note, international days first international store of our opening were have the store X the our most total available X Munich. XXX reduced stores Shenzhen. our the sell opened locations to days X.X%. of stores countries count are stores we quarter, The dedicated XX bringing addition Skechers opened fourth of in the In closed United expected traffic quarter. quarter An third across by to hours XX% quarterly to Skechers in effectively decreased the to still flagship during For of due domestic due closed including another date local lost in fourth were and end health another including States first first trending which quarter remain stores restrictions, we to quarter, Today, were the X in fourth nearly By the stores XX reduced our available are quarter end closed in sales At our Resort to in stores Hills All store guidelines. at hours. a locations XX same experience or due improvement Golf government end party while XX company-owned of to to quarter, sequential close. the some opened in have positive, to and To quarter. the and that Mission golf business others at XXXX. the the are China regions open our guidelines.

the the improved third sales same over than and last year international quarter. X.X% sequentially period higher X.X% Our

as and the in wholesale year. the last increase XX.X% an an international Chile was and in increases improvements business China subsidiaries well of in Spain. our of Europe was X.X% result and fourth quarter led of our increase XX.X%. joint subsidiary across The the and exceptional Latin by This Our improved with as Germany, with XX.X% Kingdom from in United business growth America in venture

the by new China but center opening half during on covers distribution but new bring to As XXXX. and remains selling North some post a To the challenged and Sunday. POS The we the and former platforms, only centers Kingdom including for and chain you of we Romo States, support X.X distributor open commercials our closures our included on serve store center business with of and due new a we distribution will East. largest capabilities. square square and remain Brexit which coming cushioning, took anticipate the a a working environment. of believe in Tony distribution this were To markets the our see on markets showing to steps support many countries focused for commentator full XX.X% our the in campaign are automation the million who initiatives in midyear to business signs our center with ongoing lead feet of men's, efforts logistic was in our our track to XXXX have our This for in BOPAC our including commercial in implementation the of will and period, markets, several will foot with advertising year max which to kids. addition Super during in distribution United pandemic, supply NFL for down to digital the also region recovery. e-commerce Columbia, Middle the Skechers distributor, We Along first and due the facility enhanced million enhance systems Bowl United expansion the quarterback expected, marketing continue not American center key in a comfort X.X years, support production women holiday BOPIS

where markets we to demand prudently open, flow During this manage impacted are spend our we where sales in possible. time, continue still and inventory will drive the to fulfill of

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

John Vandemore

extremely strong sell-through Multiple significant gross brand was reduced hours. this, margins. exception. Thank you, Despite challenging David. store including performed fourth the Skechers year was well quarter with encouraging the experience exceptionally and an and and markets closures operating to restrictions, continue no XXXX operating

of In uncertainty while to effectively the addition, investments making this the navigate continued future. Skechers the environment, for organization

we XXXX, of our on similar to confident expanding direct-to-consumer strength expect challenges and the our are focused brand relationships value. deliver will strategy footprint least increasing at of and we the half Skechers for of execution shareholder our the While resilience that international continue the first and growth

let's record quarter a million the across sell-through prior increased the constant Now, to company. broad turn encouraging in is the customer a year. for fueled of sales basis, X.X% notable results. billion, wholesale operating consumer current International or strength believe this wholesale currency sales Domestic quarter quarter totaled the when X.X%. X.X% decreased a below in $X.XX environment considering quarter. or accomplishment fourth million decrease multiple sales and the X.X a We sales that and half of last a represented X.XX% $XX.X $X fourth both On Sales million, categories. increased year types or in the by

XX.X%, by and led and XX.X% Latin grew which Europe, XX.X%, up America were subsidiaries Our respectively.

sales distributor temporary our Direct-to-consumer both internationally, operating around driven several the consumer and December's store the XX/XX Day a strong event. joint XX.X%, grew result of reflecting the X.X%, offset in XX.X% impact Singles' the were channel by China in quarter. distributor expected, XX.X% particularly Our e-commerce a performance, decreased reflecting decrease in or challenges business, X.X% million traffic of in These as closures which decrease and challenged were decreased X.X% quarter, acute domestically increases by $XX.X managed sales restrictions. and up markets. ventures trend our

XX.X% or to the to $X.X million General expenses by primarily by and in international $X.XX increased was increased favorable Selling Gross million Administrative the innovative drove expenses domestic demand domestic another wholesale However, or earnings of and an these our income operations Cushioning an was was driven over $XX.X to strong outstanding. price, partially Margin sell prior and million prior higher in versus increase through $XX.X our or $XX.X of increase both online driven in average sales one-time, million, primarily prices where operating primarily XXX.X diluted digital a increased $XX.X million year, $XXX.X our of or offset for million. increase volume shares average per channels. of and points Arch e-commerce creation in million, due expenses business domestic results advertising $XX.X earnings Earnings price result distribution selling and Fit on increased warehouse full to through $XX.X by share million like quarter. XXX.X%. by the selling expenses of X.X% by year. which $XXX.X Gross in Net million businesses. benefit $XX.X million of basis up e-commerce million were million. $XX.X discrete of prior international and XXX tax X.X% diluted Net higher. several included compared were platforms profit a mix domestic versus from to $XXX.X Total million Max

of $X.XX. These share or share $X.XX shares earnings to year million on one-time $XX.X the XXX.X income effects adjusted benefit were prior of Excluding per per tax diluted compared net this diluted million diluted outstanding.

from of Our cash And to the quarter income billion XXXX. now million $XXX.X and an reflects was with facility. of cash borrowings which rate turning on quarter or XX, equivalents, ended inventories, a was XX%. outstanding unsecured senior million XX.X% negative balance We increase $X.XX for our sheet. The the effective company's $XXX.X credit a tax primarily in the December

in $XXX.X million. to receivable year. business a demand of However, the our and constructively California. related to decrease we year Capital the the third to owned investments $XX.X million, manage cash million XX, million X% balance of debt Total The venture were million expenditures about billion, distribution $XXX both is portions $X.XX due actively by position from $XX.X customer for December supply end. offices first December accounts quarter reflects compared and expansion the levels $XX.X decrease related December center equivalents stores, to domestic at XXXX. unsecured in X% current million, our nearly lower including the XXXX the to was joint meet in positioning those fourth prior credit our XXXX. to largely at grew quarter in million million increase over $X long-term our inventory offset China, retail capital our related the $XX.X by and end partially were this inventory higher even senior from our European distribution receivable $XXX versus for and at accounts in were primarily or to of The XXXX. of new million lower facility quarter million support XX, quarter. attributable and center, primarily $XX of which and confident or technologies and net of new inventories, sales. $XX.X year-over-year to $XX.X China related domestic million corporate cash Overall, of expenditures, to drawdown in million of sales Total $XXX in decrease China inventories XX, in the borrowings inventories inventory to The Trade a was growth. continue decrease declined feel distributor

a focused The Our be our like challenge. ongoing capital of million. capital augmenting and investments distribution all In our XXXX, between capabilities on XXXX priorities, was we global direct-to-consumer strategic remains fourth to $XXX and expect infrastructure. our expenditures total quarter, $XXX enhancing

However, performance. we saw many encouraging trends our

balance distinctive that sheet poised Skechers brand gives proposition, and a us return to and Our XXXX compelling beyond. in for and is competence strength, value growth healthy continued

David closing will not remains call this And environment forecast unpredictable guidance retail for due over as quarter, the to in I'll reliably. to the uncertainty to be remarks. turn too marketplace, the now, However, continued we providing the

David Weinberg

the across Skechers A new you, a Thank and business record, fourth year quarter strong. segments achieved while sales John. brand exceptionally ago, trends all were

of health as for online notable biggest accomplishment model, our by meaningful the diversity X% due distribution crisis, in Kingdom. business, was demand product, digit the domestic quarter wholesale result with Skechers to and the the well our revenue to face managing growth, ongoing a fourth challenges This sales as was our continue and United X.X% year Now strength of strong growth to important continued increased we to only our of prior efforts from brand the and Skechers the Germany international including markets, our inventory. maximizing drive most many in our business China, value as efficiently and record. in triple

to and see product continue design. consumers We at products with our our value resonating the forefront with of comfort, style

during We these brand times. are difficult a footwear key

and ourselves sheet both growth. balance strong exceptionally an success position the to liquidity important have future in and to quarter ample for We our

global channels, our many have global the we and by initiatives, backlogs believe to in of remain for through our We half our product growth positive be countries. of many health our improved efforts and pandemic many cautious the are to business relevance continue sign near in XXXX. brands impacted Our for the long-term. first develop across strategic in the the crisis, distribution new we a Though the will both confident and innovations opportunities

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

Operator

instructions] from UBS. from proceed with your Sole [Operator comes first question. line question Jay of Our Please

Jay Sole

thank Great, so you much.

that to Hello. of inventory of year? things normal that times create would be to ability or and in opportunity type talking spread have So the the of sort or is, you see similar April my half reopens you are there if lead and the sooner impacted. about a is, quarter vaccine is you year would as Can first you're gets why that half a sense year it, will that second of May, be a a as the the know question of on of just sort like of still and sort the constrained out give of back timing maybe the us recovery an world on distributed for and the more first limitation

David Weinberg

were over we I'll on mute. start Sorry, again. all

but than of What still and came least Europe full Sorry, in that. but which most January the we know are half and at was out see pandemic good through resurgence. the any or in Anyway, are of the given time going the don’t to can all last did off anybody significant play, should before should we we the guideline else that closures pandemic. about we under February, strength. had of our more a come record at try we've state out started I Actually, first be the would January strong vaccine that very we closure

no lead the we that think it in and distributors from if I different very than with than about fourth we quicker would in doing around that the down to good certainly a of fact that mean, issues that quarter as fairly much on port inventory most. weren't you had have job we would it, have for ahead The the still quarter cleanup we're if else think we hit We while we with even that world, a to had and if quicker anybody substantial would significantly So strong significant opens opportunities are they made we impacts a anticipate opens broken be are. of shortly. where full retail even. the have better that we have

a managing recovery but significantly. England inventory as a that anything in from even have as having because some strong open there, the other of out the up product the and second in getting new from preclude should prior us don't issues would that early Some rules, we very production quarter, facility than

Jay Sole

then about, how year from should then, just okay. on about the I'm and we now. G&A think G&A, a we and should think missed on more, it it, one interested I And Got

have cuts, the cost has know hundreds things and next of of reopen to some year that. of companies stores probably a and lot as come obviously, like back of You pandemic millions that done,

made of about actually come would more to year, given not have there's like you or how P&L normal next think back to in adjustments you we G&A much this G&A a year, have Q re-added If get excess you and next know year, Q probably when has of into the say the year that this four quarter four in quarter, XXXX? a year, was some that be next of we of lot that this

David Weinberg

where is depreciation. about when can, there like think I about mean, the you reduce to good Yeah, even and G&A rent can't we've example. think you think, while recovery reduce I you this we our costs we and about think of retail shape a variable quarter still and taken action fixed business the aggressive if costs

So this they you're even between clearly businesses that can't up historically were the as in quarter that and have would leverage making sales struggle a well gap. others seeing as

very health of next a I just see that line we As sight line our in of caution into you great good obviously would top year, forward recovery, many businesses. look we into saw while

that leverageable, of that back This We point need year. there operating to side people margin to of a to a a it's to quarter the believe, costs is there to lag get where are but we going this lot are retail bit. hard out it's took

G&A In fact, this saw lockdown we first is the where quarter since the grow.

entirely, there's compensation went some entirely out went year. this So need out some that some that come that costs labor compensation back, to incentive

leverage, would I through of even back the the little would distributor our inability will it is, to getting to side, flow G&A margin degree that leverage, normally our because what a G&A a norm So retail and largely spending. be to stickier operating on expect

The year we'll in think better, caution XXXX. In expanded we the in to but of the element noted several center in other year would UK. additional We our jurisdictions. XXXX I only next is retail really expect that will infrastructure. We ahead point, investments we distribution course a a look as added we the a went lot get for in gets with of over we important So distribution do lot that progressively leverageable better. its assuming to back things trail still

finally this China will center online distribution likely have our go We year.

open. do of to on from in see going So those in they little increments which the the we year of early get up bit introduction a headwinds to tough efficiency, is to they until peak are which

drag we of to there but be to those that, when year operation, early we So investments, expect a beyond and those opportunity. that added also next get leverage an operating once that's drive contribute bit will margin little owing

Jay Sole

it. Got

so thank you much. Okay,

Operator

line next BNP Our question comes Laurent Exane of from with Please your with proceed Paribas, Vasilescu question. the

Laurent Vasilescu

good we Hi, David was my up could was into question, I to it about do Q, million year. looks XQ, plus a for very John considering and $XXX strong for thank and brands. we then one lot just revenues revenues was that, in the that 'XX? what got going as yet how be year congrats about half XX%, down your conversely, How the get much momentum. cut and ask think region XQ. in in locked for XQ parse momentum most as Europe in you about the you part May China you'd on well afternoon, China and taking you, number for and for was It really full out China drove like last of think do

John Vandemore

up stores strong, because Well, opened share, time I market and up from and very through strong carried the the very we had quarter, all picked that the way the a quarter. fourth first if fourth European side, they significant opened, think they that

haven't product close to we want quite quarter when have through customers, knowing period think through time even that significant in so fourth up, they I certainly they to be up, because behind a of to our well strong wholesale and continued chased ones declines be the As we that in our they open they when didn't significant came we the a take sold a open most larger business, started it January, strong of down we seen for and will inventory, contributor when last time. open opening, to we

So a couple were almost pretty showings that but even great ones the the for close small positive a was had country, there. much board quarter, but all they every a We've positive, in and positive across down. all, were with it's

fact So the inventory counting the willing to not that again. on strength when we take that open and are you the there risk of us are and that people brand shows

closed. give and hope how schedule, to which guidance Now, chance end a spring on the sell a to because the latest, they're March quickly that long still the they limitation continue February, We reason into significant on season. supply depending through there's early no going open to has at would mid is

David Weinberg

But, terms the XXXX. businesses, in looking I to actually to where and suffice next few looking get quite into our to we're it to country. I be optimistic growth look ’XX. of can don't not a by beyond want we and But There's frankly, pacing of to year really China. Yes, we're isolated really totality a that have get pretty think brand of say, applies in update last won't in forward about the next where we very in significant take at relative because as was bit it China a shutdown, fact really specifics makes year The year. views will that this in sense. we little odd China instances QX beginning there to

those tremendous a brand brand you I think both next outsized. you're optimism is, going to seeing look year continued us know, the growth and what gives little QX that in about market, and the the are numbers in So beyond. But where can go, of

Laurent Vasilescu

e-commerce as level? about we high And that of do sales you're gross know, kind continuing but see overall follow guidance, then question, gross up to they then talk you think giving margin John, a as three the segments. for by XQ? that? about what strong were the drove momentum across across I the Was of the year? it much And driven helpful. very board we maybe, margins, was Can your e-commerce? That's how How a percentage not

John Vandemore

we for to e-commerce, what sales describe We it. of overall say through. we is sales. we noise. very I price exactly us, so saw but is year again, margin us. distributor that to Distributor full in XQ which bit a in when script. wholesale is a lower of through a is proportion tend quarter, last the high Yes, gross a to good higher sell from fourth would It probably strong versus We the gross saw be into gross contributions at a margins for of flow the compares and there's creative best do carry margin. lot our look good excluded had that, the we international what they saw example with line mentioned way regard And

As normalized I believe of what forward, call we I toward, look you'll a the level a XXXX. things see bit normalize XXXX, kind or more

We increased will back. contribution some from be international benefits retail, China from because get from will

terms We are life of out are seeing in particular, for shipping us. and in cost there landed a concerns costing, though few headwinds as product

against getting because our won't and be So, stability as a the to point we towards probably we're significant margin increases benefit. much view, mixed any moderate going as normalized versus

Laurent Vasilescu

very much, Okay best you luck. helpful. very Thank of and

John Vandemore

Laurent. you, Thank

Operator

with comes Our Greenberger question. next proceed the with your Please line question Morgan Stanley. of from Kimberly

Kimberly Greenberger

much. shopping you're XXXX so would today, is would about not about when the how should thanks ask wanted for Great, way think have look it giving more just revenue understanding necessary the are look your way path revenue the vaccine normal for XXXX, like? guidance about to on I and we back you in revenue consumers, were year how it might expectations Is what develop that? the to what internally and order rollout this normally, conditions thinking behaving in and you it

John Vandemore

the line earlier, opportunity shows quarter still in been the us had headwind, impacts the I closes, key business. government to encouraged this on direct-to-consumer And is, that on restrictions the I impact you grow market. by obviously think top I'm That's hours in the basis. retail at has distributors our mean, last their as mentioned our path, actually revenue obviously, significant on a significant the seen most mandated headwind close quarter; the tremendous brand very pretty David directly and channel, downs, the it's that operating moment we've

growing beyond instances that. relative get is they lockdowns be been, our But by, certainly lot occur, you it we're look and traffic, against opportunities year say, kind about which opportunities swing restrictions mall influenced has will hours 'XX the of continuing been foot our really operating in should to that per biggest a the at locations factor. in particular encouraged or I pretty diminished. significantly would on baseline, continuing actually to So as definitely of

David Weinberg

significant take believe that just it don't and here, am also to I'd consumers. we what to would we get like to push; shows be I our add, very can do I to what think able need I confident it

come because significant we that If that X% would that in need were and the care before places our XX XXX% outstrip the personally of decline, open to and believe to I back we personally would I don't to gained give own increased would patterns are And places because through are we a pattern. growth And big through of of store in growth piece only share going back it have could be market of closures that business that have as open. there's we we've point all places do those and results you seen to a that open. start them, our you one getting demand take saw go the anticipate the distributors. them half the to those see, the followed with of

Kimberly Greenberger

highlight year in a commerce, Right, your retail is a revenue full which for is well yes, Can very very fourth think ecommerce My and XXXX. up remind was the year, e question you just revenue I this sit much the percentage revenue in both the also as and point? of at full the on does here where quarter fourth us showcased resilience really QX quarter. follow for

John Vandemore

that if our So a pretty of mentioned total. joint of obviously look we It's gets but you at a it's in thing at of a in it revenue relative base. have look although locations e-commerce first when the that you chunk China, the wholesale I most is the is, the couple because actually reported in sizable venture. it significant, different

would we XX% previously number how ton of a provided. far but continue. specifics north, north our of of it's of into I to definitely that. that domestic number, and this north want we don't I can terms about think you, tell its And sticky, get In it that's

you in sales. relative distributor double If it's business. all keep our meaningful probably percentage with revenue that's commerce a in right as Again, declines bring totality that of of Yes, sales our e now. some the to mind in pretty I XX%

ecommerce somewhat that not that's this So overall would point, at diluting the revenue sales. impact because be of those the

Kimberly Greenberger

segment? Okay, it's mean more the retail when you direct-to-consumer John, so X.X say of you billion just to the like clarify, in like, XX%

John Vandemore

quarter. Well, points to giving I the reference was you fourth

retail of it's north say in the In north total, XX. So I segment, around it's it's XX%. of would

Kimberly Greenberger

great. Thanks for so that. much Okay,

John Vandemore

Sure.

Operator

of line the Deutsche from Carbone Please your comes question next Gaby Bank. question. Our with with proceed

Gabriella Carbone

half domestic of was My seeing if a in orders, in business. and I wholesale here that you're put of wondering afternoon. on could back ahead, on the nice results Hi, kind spring just about question you what good that? touch is you terms thinking you're how channel pretty the moving

John Vandemore

domestic that's results year-over-year. wholesale increasing that the last comparing the Well, pandemic, are have the even I had prepared in fit the think been mentioned year. would we before comment of as only remarks backlogs time into And we're I the

time we rough, are demand this backlogs our last year. than even significantly So the feel it was higher is

have the growth on how rolls depending side. wholesale pandemic continuing we domestic out, the of in anticipation So

David Weinberg

I even we 'XX. even add a out quarter of timing shifts that had would to into few this Gaby,

it in So a growth is here second we up better wholesale, timing deliveries. could think even row domestic I weren't the have put the again if which been quarter for some

broad that's there's backlog seeing, the that's, there saw good time. again, struggling, it's a in and the sell we even in customers out encouraging we're definitely encouraging And this though that's quarter numbers, through. So what product take on some and

Gabriella Carbone

should be new about, rent Got and comment going follow quick how and and on thinking the ahead, on, can a you openings it. with anything what moving up with just store Thanks maybe negotiations? we

John Vandemore

to the affair. because that already certainly in going going for negotiations, ongoing with an a net as as modest, markets. restructuring much opportunity mostly we were think seen Yes, next focused for discussions I get executed out are closures, that's out and some to historical of Usually we've the we've taking quarter, any is occur, during good leases, the of discussion and we're before do renewal lot relative can. know, on rent significant those a directions, international those near you have term be major on a quarter. The a end to but I I any about pretty benefit and seen, store extend the rent best year. change earlier we would as in arm mentioned wouldn't the say hold of comments, his this of in we'll openings David to year the basis our more advantage

know, So you But significant years openings, definitely think of don't years. that's see prior opportunity. stepped from I of to kind to of a down couple going you store that, the the be pace will most recent

Gabriella Carbone

so much color. Great, you for thank the

John Vandemore

you, Thank Gaby.

Operator

line Please your Susan Our comes next from Anderson with B. question. proceed with question of Riley.

Susan Anderson

the you It more that job margin taking up correct? margin. your XXXX And like earlier nice and guess my look to mixed some sounded did to thanks as Hi, margin? say gross there is normalized a from just as I a gross XXXX for the gross quarter. the normalizes, that follow be on in managing may question comments pressure shift

John Vandemore

in direct-to-consumer, extent to of of a by term, be response, with to Well, don't retail influenced particular as mixed kind mix a we that source then, probably the the from on a quarter, we of favorable to the that bit a mix. flat, that some up bit kind extent Overall, headwind would received would that expect and mentioned pressures be become down some from transit this this be offsetting to pricing, challenge, something expect be near we've heavily of we tailwind mix business some have factors, handful less recovers, saw And a of come bit tailwind. pressure and there builds seeing, you A would we the a Again, retail, perhaps that be an see a headwind would different more continue. a as to we've absolutely, we will see is headwind. that's will in cost continue your of but first a to benefits almost question back. your of but I closures will I that bit more costs guide XXXX, relative year of slightly, are definitely which

Susan Anderson

down, within stores Dick's just open more saw Got quarter like we think I how their, golf kind very but with that market, on could I'm know, the about golf the on of maybe, and about that was obviously strong driver in fourth report how, you it, And or curious bumpiness you even XXXX. just being talked Singles a was? the stores in I should guess strength bumpiness store, after of how Day, that the their elsewhere, there. kind flowing talk opportunity of you how or stores through first year think okay. And get on past we over quarter that last curious much we growth and about you then XXXX, And China then potentially up obviously, then a much something? just open if

John Vandemore

I mean, be disposition, Well, China continues issue. I I in to think our mean, a it's China, extraordinarily it's just, general again, comparability favorable.

really benefit the but into hopes it terms degree overall have quarter what the We law expectation Obviously that high aren't brick-and-mortar you're next e-commerce. the, the China as of puts dollar maybe but our the growth common very from faring of your comparisons, but the get China of would far quarter back characterize first registering pole it's terms. mean, some hearing certainly second pretty to side most China, starting been for things it relative terms, And in to and easier in of of of gets percentage is I numbers year. and the numbers, to in that growth, up comments, certain markets, And so that similar not are components recovered. to there's on a going operations. fully a than you're I is large yet better hurting,

and growth the also sister of in definitely quarter, much more up, a XX% results, some commerce. then You this better but have XX/XX, couldn't on China XX/XX, favorable year, more sporadic normalized but extended know, nearly for we pretty other events if put kind few you obviously, profile, revenue where year we weren't had get quarter. now, rate on it's much you it the right think the both tilted e progresses, as selling the period And and event towards that gets an a in

think long-term. is, of add we the to and you positive know, to in think distribution that market, going very leverageable do. definitely operations normalizing China, overall, help our we're So, again, some costs And, capability we on us the plus there's stabilize to because the excited do having more own give more to

Susan Anderson

to that Great. elsewhere. kind [indiscernible] idea of expand

John Vandemore

didn't Susan I full kkSorry, your hear OH question.

Susan Anderson

elsewhere golf in is China store in the the opportunity expand even globe, throughout that to the potentially open On you their U.S.?

John Vandemore

Well, to It's for significant obviously what through we're building wouldn't it's when say to but growth put initiative may more special. China image very we I take it's category, a and it are looking the general. in one major that we us. about is showcase driver. a the the available expand it, not something a have becomes brand as It's We we few just but in

Susan Anderson

Got it.

quarter. so much, in luck first helpful. Good Thanks that's guys. you Okay,

John Vandemore

you. Thank

Operator

[Operator Please next line of ISI. with Evercore question. question proceed Saad with to your Omar Instructions] comes Our

Omar Saad

fulfillment know costs, gross mentioned one I'm to digital that the costs marketing understand, domestic higher where a accretive. you high point are point commerce you trying I my more for a you a taking Good its expenses some operating follow-up, is where fast. more love becoming address we level, question. you is the getting up kind line, noticed afternoon. might level I'd margin Thank numbers become Are profitable? shaping And for to internationals, or the big, profitable? really starting at profitability the I Obviously, get also and then thanks. that that, a are of kind e I the level of to scale at business? to growth really and how there to have in it's

John Vandemore

think for bit, very starting years. to been because we we're of levels Yes, last profitable. I until actually, some us been really artificially see growth a respects, In got couple had has the e-comm that that's the over it restrained

about So we're or, from what really, other cognizant now with through of from with I you their to watching hear continue as profitability we're scale, is expect got if something always but that you're an the talk But commerce certainly profitability. e and we P&L be with struggling it's struggle you And, case right today. that not delivering be you've perhaps something standpoint, something we brands the that pleased perspective. actually, to to get a very mean,

David Weinberg

to put which this our think a made the XX the the of take you out nicely growing to months. and inefficiencies, distribution we rate, pieces fulfillment quite I have going at next we've past, leverage lot we're some over will in this in And significant understand of world, place investments around creates that in

Omar Saad

It's some the little great around maybe and more going guys. to business bit could then initiatives it's and customer Great. can? offer a on loyalty if connect you Thanks. and e-commerce And marketing maybe details to level hear to the then program digital how their that you

John Vandemore

have to Well, want fun much want because, spoil to too launching if don't I we it.

David Weinberg

to I a we No of revamp a have capabilities, that augment terms in offering mobile consumer applications year. as launch of transactional it program, to re-launch accompanying to in obviously, website everything nuts from marketing well today earlier the would perspective. is say to aims as happened it's do, the pretty of loyalty significantly the technically, both soup level from, program And and And of capabilities. the what was it the our

you enabled, when basis mobile one new in enabled, So of aggregate, because use. they're to approach at more the to digitally together, step think easier informative, look got more really a forming, more to those back, consumer’s you've I really

program see to put LTV place any a encouraging, very we habits with from other regularly because to we incredibly abilities of particular, like are abilities loyalty to their in into be into program them, I with us. it's who want to to launch and our obviously market transact So augment to member retain but And recruit purchases both those augment we you higher going to most us want specifics because very that, don't get a means think consumer. than to consumers, effective it'll want

is the into can. the as many people program so, get as And we and to recurring goal buyers becoming

John Vandemore

John. Thanks,

see Looking forward out. it to roll

John Vandemore

soon. be will It

Operator

Our from next question. question of comes Markets. Berenberg your Brian proceed Capital with Please line McNamara the with

Brian McNamara

outside you idea doesn't have that really in the has just secondly, for natural taking perhaps more in relative e-commerce Can I of conversely, thanks your an being which the then one on for sequentially performs offset measures year then traditional optimistic terms China? you And most to with Thank of on markets your market how in a place. afternoon, Good improvement? that And are guess India of underperforming us what's my QX lockdown and two I have COVID internationally you. question. aside, China expectations? quick give restrictions ones, that market

John Vandemore

was impact in had India, but it, Yes, it on severely. speak, particular, of don't no the many for think so hit mean, is I us. tough is I that obviously India go a I to pandemic because pretty so nicely markets pretty of growing exception. unusual, mean, the it's it

we fourth some we're still remain, in we I reengage. very all e-comm past optimistic because that's to about that market for market the to it's very higher but was the early a starting mean, long began signs, getting even performance presence, The they're term. see building us. And I pandemic. is Now, quarter, really than actually expected. think There encouraging very

composite very stable, can't this that, as Southeast neglect long Asian Germany exceedingly a America you countries nearly rattle of There's think that terms it, India. international a the opportunity. penetrated XX% lot Obviously, if grew where excited we're Europe grew, north of the amount given tremendous started. I some has a markets just fact XX%, we're like do just of that Asia other for there's for opportunity us In quarter opportunity, the probably them, getting about off markets, much well. of Latin us, most China, all really did But, of we because we believe with that

continue more near introduced is, our we next, markets, as beyond at even, getting to in offerings. on introduce reality least three to term the any pretty more mean, unrestrained, grow and we our just that, we brand. I internationally, find opportunity limitation in begin So, to probably apparel a other the is categories And five years, to there's think in, for don't and and to footing market, particular, this

I'm sure So, myself, would David for I speak agree. and

excited not if about most, all, international of we're our markets. Now pretty

Operator

final Our your Company. Chartier Jim Please with question. question Hardt with Monness, of the comes proceed Crespi, & line from

Jim Chartier

question Hi on gross margin.

sales, margin the would have shift wholesale improvement away from Given distributor in the I expected mixed business. more gross international

in there's corner markets? your overseas I of the margins anything any that So was was wondering in if pressuring

John Vandemore

with shut your, would down. we mean think dealt thing I I you're still of and want to having is, drastic impact markets experiencing this I lot markets. I that mean, lost that the those is only effects the, of pretty are probably from one comes some lost in days seeing sales don't I nothing a mind. nothing, say, get to some you're No,

So, health extraordinary growth in given, they we pleased can overall, wouldn't the declined, I the the that, to underlying in out on, that anything strong. saw back wholesale some I mean, they've especially in you move, highlight if out see come We but we're you improvement. really, business as got to merchandise, distributor gave respects, is fairly really of the a that being, that you number with underlying that

So, a into than accretion gets question delivered, we to order. that get tall even more your plus that's gross pretty margin

what And to optimistic we So that is pleased saw. we're continue. with trajectory generally we're going that

Jim Chartier

Thanks great. luck. Okay, and best of

John Vandemore

Thanks, Jim.

Operator

as our today's And conference with question-and-answer call. that, this session, as concludes well

day. and have a wonderful participation for disconnect You this your now at may your Thank lines you time.

Skechers U.S.A. (SKX) 5 Feb 212020 Q4 Earnings call transcript