SKX - Earnings call transcript Q1 2021

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Operator

Thank you for standing by. This is the conference operator. Welcome to Skechers’ First Quarter 2021 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. their that question themselves analysts only the to requests and one to Skechers opportunity follow-up one to ask Instructions] analysts to limit question have [Operator question. allow all like [Operator Instructions] Skechers. turn conference over to I to the now would ahead. Please go

Unidentified Company Representative

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

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

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

David Weinberg

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

a the appreciate pandemic the remain and Skechers of continues As resiliency and organization their during this difficult in safety efforts be COVID-XX period. to dedicated to ongoing entire global challenge, everyone we the

While coronavirus facing many countries are our regions wave. those thoughts another with restrictions are easing,

impact increase with and the X.X in Throughout case In the in billion. both growth over our first we international sales and increase quarter. X.X% we but first to than business strong closed while world demand a most our the the was to remained the total quarter delivering record a domestic and first billion was XXXX The the XX.X% sales year, footwear resulted the sales XX.X% of This to same XXXX, which of last continue growth business. of XXXX. sales for pandemic in first customers. of This meet our is X.XX of beginning double-digit As our the XX% achieved product was revenue focused high resulted in on pandemic. first done our consumers drove in for then quarter, record quarterly apparel XX.X% of the needs to were Skechers, which and international a parts sales our an more increase Driving the over also the quarter feels period. an businesses, reminiscent comfort it quarter, the to technology period due

categories prior many innovation with of COVID-XX one to the a involves customer true we the and a job, to in across more comfort, and are walking, the to a consumers sell-throughs casual quality the and Our markets, delivering more exceeded pandemic, resonated onset types at on deliver expectations Consumers style, and new value of growth. mindset. double-digit same is and returning normalcy, now. and were Skechers that mission able comfort lifestyle

with seen choice was across sales a at divisions. technology natural core. worldwide product success a any many offerings, appreciate We testament our our are The are that by the consumers comfort the record for to which demographic fact

by wholesale quarter China, first Our pandemic by in XX% quarterly year, growth and XXXX. the the international an business which driven sales increase prior was impacted XXX% severely the grew last was XX.X% of in from year. The for

X.X% to grew offset Subsidiary However, partially from improved XXXX. from and but growth in was by subsidiary even International as wholesale compared decreased distributor businesses. XXXX, China XXXX, XX.X%. X.X% our sales decreases

were quarter first Spain temporary and strong, Kingdom, was XXXX entire decrease including Germany, in hours open, in and to where and reduced the Italy, for Where were United sales quarter. Canada. The the India, closed businesses were closures operating and in especially due markets

the in men's wholesale sales sports, our the drivers slower performance. in see from quarter, business business Taiwan, quarter, and in will our the Russia, compared challenges, business we quarter, improvements and from came and which some in to remainder second product decreased with believe shipments XXXX, wholesale logistical and caused negatively largest of year, our believe the were domestic year. Ukraine. accounts. the Key categories domestic the kids, to to improved multiple in growth by continue distributor X.X%, than distributor Our impacted first down period replenishment in the yet was Sales X% work, of several in to specifically quarter less but markets same business first We the X.X% last sales experienced Turkey, We gains compared XXXX. in our women's

in strength and business XX% to increased X% In and increased January quarter. direct-to-consumer during Skechers XXXX that by and domestic selling of over the fact company-owned over reduced Additionally, comfort despite XXXX, sell per XX.X% XX% the price available and the lost international February, products average March. of operating were days XX.X% approximately the the we hours technologies. our X.X%, new reflecting and stores, during pair appeal

domestic e-commerce direct-to-consumer to XX.X%, compared by and stores, increased Our improvement sales compared by brick-and-mortar of grew the which our quarter from XX% XX.X%. This domestic which first XXX%, grew XXXX. to and our XXXX came channel,

average unit which product of direct-to-consumer per price to the domestic current rose speaks Our our XX.X%, strength selling offering.

domestic in believe March, sales well, to shopping marketing While we and more improved we people e-commerce which stores, exceptionally perform we became increased ramped in with pleased retail as expected especially we efforts. our business continue the to were our traffic our comfortable up and

update the of optimizes domestic point which direct-to-consumer We of our capabilities. our have sale and will channels omni-channel further our now system, improve continue completed to

now rolling platform same focused on this We worldwide. out are

growth site remains channel this with as the significantly e-commerce across the Ireland in revamp e-commerce to meaningful a across plan Europe, Our of opportunity a increased beginning We summer. globe. our our site and new sales reach expand UK

guidelines our partially largely The and X.X% most the increased e-commerce of ongoing and to XXXX. company-owned Our temporary XXXX, international by offset and over business stay X.X% India, in the many across strength first notably Thailand, to sites sales due attributable United our markets, store of was the over growth Kingdom. at quarter Korea, home closures in direct-to-consumer

markets England month, extended reopening week, reinstated seeing are this we While including other some last their or have lockdowns. countries

In of international unpredictability on and stores. normal to in coronavirus sales the international we impact XX largest remain of many in traffic we are Given its which about in the X and location, opened company-owned quarter, the our store stores, cautious markets, including many our Skechers India. return first

in during included open Antwerp. XX we including in not we first Romo, professional month. and the up lead opened countries, Brooke this To in of stores that quarter, store ramped our efforts locations in Tony home X Burke as commentator date to have Coach, to additional Long stores closed quarter opted across NFL the Jon support first We An in drive first Howie renew NFL new We regions second quarter. the to analyst stores bringing former China most and as count Skechers our expect leases were marketing and Fit in XX first to Max opened as to quarterback end one quarter-end with our This Fit, quarter, Superbowl, in the Skechers commercial message. close expiring sports the and and India. located Arch well the during in Gruden X,XXX. Arch we featured and additional the commercials our comfort at opened third-party The during total Cushioning net for XXX the our commercials Skechers quarter, apparel at store

for was initiatives as Our well the years. leading new awarded the platforms kids. they year efforts Plus we quarter, industry digital men, the and publications, of to key campaign to first for In This on were challenging as women, ability XXXX wanted. television, company by due XX consumers support Footwear time to ran the our during deliver ninth and comfort to our year the in

now We quarter our in business, this are pleased recently pandemic represents with and especially a total beginning, solid impacting think most which first sales. ongoing of given performance our international difficulties the related was XX% our the

drive demand flow sales strong on to and markets challenges, of comfort where technology seeing delivering continue focused face recovery to our many where possible. of are inventory the open remain managing we are While fulfill and we signs and our

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

John Vandemore

in despite pandemic, The as Thank consumer operating world. especially posed re-instituted store the restrictions you, by lockdowns. well worldwide, good influence markets Skechers quarter, continuing markets closures expected trends challenges brand began many The with David performed and as tepid including continuing exceptionally this ongoing pandemic across to afternoon everyone. and quarter the the many

engagement to own began that expectations the over for and reflecting That even a exceeded Skechers brand. results domestically of internal we year. in the we our However, seeing mid-quarter, seen consumer demand led high that not signs in have optimism March

are remain as our from world the to of recover we we results nature government cautious of responses power globally, the optimistic of begins given are COVID-XX our that pandemic. first to brand indicative the the quarter Although

XX.X%. XX% first totaling note where is increase new X.XX XX.X%, increase of the of first nature increased the first will quarter XXX.X the the Now, first impressive year, or let's the sales last both to with compare record quarter currency of quarter, quarter beneficial XX.X% XXXX. turn and with On million and XXXX and you Sales a compared XX.X% basis, an XXXX over where of increased to performance quarter a billion, evaluating we feel prior our added our to sales the year, to from unusual constant the the business. occasionally due of quarter of the measure XXXX. or compared wholesale million in in we International an that achieved will XXX.X XXXX, results

quarter the grew XXX% the by which in most XXX% impressive contained an grew led China, impacts ventures year results, outbreak. joint of Our severe against prior which COVID-XX the

by quarter the compared closures declined XXXX, sales Subsidiary performance. Latin first in in quarter primarily of X.X%, As to by as XX.X%, of a strong continuing America. and grew driven result Europe slightly e-commerce the China

current compared to our X.X%, subsidiary despite XXXX, an impressive grew sales However, restrictions. operational as the year

As second half of in business a first expected, decreasing distributor saw face continued compared marked pandemic improvement XXXX. but the headwinds the to X.X%, as our quarter, to

seeing across profit was expenses timing expect Although top in costs. versus Compared in on XX.X to The versus a year observed majority was lower partially believe higher increasing X%, of segment, XXX.X primarily General to from underlying diluted earnings and for a or of XX.X ago, the in XXX% to diluted see XX.X partners, in we in an represents well to of operating as Net digital slightly as of increase we increase reflect benefit wholesale increased challenges. by based average related selling favorable by with the the quarter. and This flat, domestic reflecting of our second XX%, was of the a but the combination X.X% XX.X% than we important increase domestic the as ultimately recover million. in basis price XX.X% prior recovery Gross points than XXX.X were in was and increased of or last million prior per in and domestically, operations our half or compared a million, in in demand year, the diluted spending, shares expenses net XXX.X the business remain a driven the sell-through sales primarily Direct-to-consumer increases wholesale compares This markets was and and a X% we our percentage back of XXXX, positive despite margin will internationally. year. international reflect share as notable XX.X%, the from results share the domestic XXX of this offset the XX.X% ongoing earnings the line portion million dollar by of to to customers, significant that as particularly driven overall mix increased trends XXX.X million. reopening to XXX% expect pandemic well Earnings the XXX decreased by importantly also due operating sales. our million trend unfavorable up sales now XX.X%. XXX.X channel. sales more income an e-commerce closures of segments, on a Domestic March, million growth million increase by volume optimistic administrative quarter of occur due Selling e-commerce or million, a and expenses by wholesale prior all to X.X continued. million, performance with quarter. Total XXXX, XX% X.X%, or we compared expense million more Gross in full $X.XX businesses. outstanding. million XXX.X primarily slightly result to labor versus diluted of our X.X% increase or or was increase that which first of internationally. XX.X sales store is XXX.X per strong more distribution in of both increased less the The year, this X.X% increase Operating returned $X.XX primarily reflective slight pandemic margin million, The was traffic leverage XX.X XX.X shares of expenses are quarter quarter to sales to was year. retail to certain creation sales shipments continue in domestic outstanding. we international on business which store quarter. the a of prior the result to we has which warehouse online slowly a million, year This prior year and million which

distribution government stores, to our to expansion debt, owned and March including XX.X current in for in and retail new in higher related increase to higher same were closures XXXX, inventories mix Capital at XXX.X increase domestic at of Our California, XXX.X XXXX. our for XX, we support center, quarter in XX.X related and cash, effective Europe. our largely tax direct-to-consumer due March cash XX, of million XX, of related million China at XXX.X year. last rate new March was to turning an long-term venture XX.X% The XX, million increase portions both now predominantly equivalents, X.X% the was billion, income related of period investments, million an the XX, to offices to expenditures accounts and center XXXX. of million, XXX.X first Trade was XX.X million balance And the joint was million and March million, of versus jurisdictions. XX.X% million China. quarter was our in unfavorable ended investments which Total sheet, The tax X.X the quarter with XX.X from in March in corporate increase which technology compared earnings were growth inventory investments the to Southern or X.XX XXXX. XX.X% XXXX. to increase X.XX XX.X attributable distribution million million an an our is X.X from to receivable Total from or from quarter-end in billion

as Our growing of capital investments direct-to-consumer our remain the our priorities, internationally. focused relationships on and well supporting growth strategic as our presence business, brand, expanding

remainder the of be expect XXX million. we million capital XXXX, total between For to and expenditures XXX

guidance. to turning Now,

remain saying in any in by change preface conditions point dynamic me where we time. at situation materially let First, that can a

best assessing of the influence the XXXX. As these for the is of into pandemic on our estimate is our following our factors impact expected business results Incorporated guidance the a result, to of ongoing difficult.

may continue anticipated, the are guidance. perspective this today than and results from situation our materially deteriorates and second providing our indicators. full-year That a differ upon However, XXXX if we results being based closures longer quarter said, expected for current backlogs, trends, and other

quarter the to X.XX share We earnings $X.XX expect be of be XXXX and $X.XX. range second and per sales net the in to X.X billion between in between range and diluted of billion

earnings between net to the $X.XX For the range fiscal sales $X. share between in be diluted billion and to expect and billion X.X year be of of per XXXX, X.X and range in we

also will up rate to David slightly, full-year call for will year anticipate compared and for the XXXX XX%. that that I'll We for the And the be gross approximately tax be now, margins to flat remarks. closing effective our or turn over

David Weinberg

BOPIS of in sites plan for across sales related the and business initiative strong infrastructure drove distribution centers we in campaigns the process new UK, support the marketing issues. BOPACK in enhancing further years, are achieved roll continue you, pandemic markets March the coming through To Japan. and for the in record XXXX. are is technology the Thank which in was traffic new business driver. John. over our XX% the April. achievement we we strong X.X due billion, despite biggest footwear with sales, improvements domestic our of and in in demand comfort where quarterly States to strong multiple additional United increasing We came But We out in our total now in approximately ongoing platforms; with Peru, ecommerce open. The our International, our sales and saw our to

X.X full implementation mid-year. by foot new remains for distribution square track our center China addition, million In on

are Gold LEED that to our on bring will XXXX. center, continuing Day, X.X Southern the work square of California Given feet distribution like expansion certified facility which I'd today's to to Earth North American we in our note in million

X our we completing Phase our buildings, new are existing also corporate on office solar LEED of are of office construction the We panels. and including addition buildings increasing efficiencies Gold certified in

delivers open. the and consumers cautious markets the continue ongoing comfort, in improved brands together given and April for quality experienced we of our with remain strong the temporary we we innovation Although is demand many in closures as March are [familiarity], traffic in where that want which countries, are product seeing all style. Skechers value, The

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

Operator

comes the Please of your with line first with Sole Instructions] Thank you. [Operator from Our Jay question. question UBS. proceed

Jay Sole

so Great, thank much. you

question my business So is contribution XX.X%? give versus into you trended and us about was to from what January stores about March? how of first more you maybe a know, the domestic online comp, and give us the bit color the February little from a Can sense

David Weinberg

say, the to the Traffic and depressed but domestically both a in probably grew you would the of current restricted I in tremendously through saw outperform the early were significantly. domestic our continued the about significant the back went wholesale of demonstrably somewhat mid-February, online and Yeah, keep we still know, the of for part that e-commerce both January, offering, have store quarter note channels, business. patterns base them more both evidencing What the March north relaxed, close to also obviously the like half for relaxation part quarter, March marketing we Obviously, in partner. strong Jay there. closed saw very though; sell-throughs of to demand last really we demand would with we February, markets in brand that – saw and is is our we out I hold doors of said, guidelines as internationally, significantly. in take began our and

itself demand evidencing both segments. pretty was brush in it So, the brand broad for

Jay Sole

Got it.

about know, it when you John for significant, a you mentioned second If about do tell recovery? Can that you type you business, Okay. the you international see was expect quarter-over-quarter the improvement, last that half know, you pretty the year, that the improvement got ask you you. distributor in think XQ of business, how I us marked full versus Thank a same quarter of timing you of think I I gets getting to business? just there the to could in

John Vandemore

it looking see think at a probably bit saw can on you you're in what it Yeah, QX, you’re I – a if that to depends XXXX, better. expect to you similar relative improvement

point last to our you to it see where start is water which were a to look still you you'll declines high reference the you're to severe. As to know, at relative you get at challenge, we back because of see last QX effects business some XXXX, yes, of look what and we pretty kind going improvement significant to. year, to QX started year, of for well, experience going the started XXXX, if aiming laugh overall, to the through which we're as But

Jay Sole

if Okay, got more one I me maybe for it. And could.

a in helpful? talk nature stimulus of you be the slightly? if you forecast, retail Is of and gains, see super gross You whatnot, are maybe segment with margin International about the big margin some some is one-time can it puts ASP, or your only sort the some the increase was unusual know of know, like guidance the It margin. know, environment the and year gross of gross that going just about, of because lot that'd takes that there's and maybe can into just a sounds flat really talk ASP you you that gross in segment you mix, for to the up margin why

John Vandemore

the Yeah, well. expect don't is ASP I the we to selling subside. I that mean, brand mean, experience,

Our that referenced in comfort David well. exceedingly technologies are comments performing his

about, pressure. downward we do ecommerce dollars the influence, some more you particular, are is there materializing of less in quarter play input generating the in as pressures know, has into plus expect mix back rest comes we're a overall. little the know, that though, this half Keep gets talked a mind because retail year, of largely slight we benefit cost it the in as pronounced, that You back business

in a product it's stores, well importantly doors. it's again, success And product the that but people because of partner wanting the of true a quality reflection definitely of through today. technology see most story at the and day, good that the we and is selling of a our reflection So, we're the ASP see we I the point how end that that our offering in it's out

David Weinberg

we enforced fact mixed that it's Jay Yeah, issue. the a

distributors when the And about a back, impact frame. and and same can same the with end low We obviously, with. to gross margin you they're keep dollars, come As you often margins margin. is with they ASPs, margin on higher higher know, our talk which have not gross ASPs goal begin up

with lower stay hold So, we margins anticipate the businesses in higher. that margin in the increase there, will even and will the ASPs

much we’ll this. be with So, as we a more through efficient go company

Operator

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

Kimberly Greenberger

business the I understanding. a will pieces just just Okay, Really wanted to great. the as make good hearing mix got It the correctly for I've I that the business come question. quarter, back. expect sure you ASP up aggregate Jay’s ASP the of to on I just of Fantastic. change about nice strong Am you various following on that? sounds ask to guys. And like ASP, continue, want

David Weinberg

absolutely. Yeah,

Kimberly Greenberger

in trying so, And one in way supply that issues may if the there let's any, are ASP just inventory at demand feel say think about you I'm moment of other, the ASP if imbalances unwind that good influencing if or any there helping later could out and expect the or year? would sort you're to to supply like position, be a be that you there is

John Vandemore

shape. Well, we think are great inventories in our

not the with. This deliver committed begin in would We it's prices something at cart to demand, creating was as to. the do. we we far As

that I a is shoes now think higher is, what own. stronger markdown our and its been priced putting technology coming items and base for shows we've comfort it as this into multiple in less cadence developing

own prices all imbalances markdowns, mix. the raised we we to retail. we probably the world, changed or in well, our So, up. open for just were it; will we have around they moved our that higher as wholesale part as continue There along, assume anything was of have our take some less but We ASPs partners benefit as never

countries We part closed as operating. the significantly were delivered core handled things time. of actually to our able We countries we weren't down think well as on late. had to anyone. It's that from We I move most were competency. imbalances, that

I as through as this, we anticipate, well we logistically, to. came delivered So, everybody the we to sort of and think, wealth spread could

Kimberly Greenberger

color. Thank Great much. so Fantastic. you

Operator

comes Stifel. question next Please of Duffy from Our proceed question. with your line the Jim with

Jim Duffy

Thank you. Hi, guys. Terrific quarter.

David Weinberg

you. Thank

Jim Duffy

the for thanks guidance. And

of yourself to capitalize With XQ, John, good be just the year the halfway you've there quarter than more to the the the in of implies like position and guide inventory, expense materialize year, demand on margin? incremental that the earnings revenue looking and is to full-year XQ, to so looks you'll significant is second some guide left improving a full-year on flag in the just at assumptions and midpoint half forth. the at guide, or second this conservative

John Vandemore

we like Well, you know, based run. many guidance we derive of scenarios different our on a number

It here. for on retail is You you the happens a market. really depends pretty relative has what impact to know, example, mix know, the big International reality

for had urge latitude feel that exposure which there's And FX there. tax year. the remainder I know, So, broadly, of year, I rate you we which we saw this this some note, higher the something some quarter. downside, have we durable because the is you you would incorporate, are that's seeing we to to a just to know,

This quarter, we $X.XX lost on, an know, about probably charge. FX you

as felt better So, give And that you can given we'll But to obviously incorporating get market, we working then as is we range can that. dynamics hard a this the of a at of than rely on. way prudent be all the once. we're to

mix Given unknowns significant prudent on path like it influences the a there, felt and for us.

Jim Duffy

forth? and a operating to like margin to clearly Max out immediately than air in I probably an of it consider, the e-commerce at X% that Alright. that traffic, I'm higher drove like glad as some like seems the wanted rate, margin for it’s and so number, advertising that. you variables you turn was ads I the could the just ask earnings operating was different quarter, started kind visible see your higher that of parsing campaigns the Cushioning highly therefore mentioned to penciling of number you tax the a notable and the on tax but business strengths and rate

John Vandemore

an mean, I impact. had absolutely Yeah, it

I little think quantifying it challenging. specifically is a

on It hit, And Our consumers. we on same are stores, advertising it relax the we had well, well-timed. know restrictions about was as as but saw markets in an you commentary, of We it stimulus was the seeing e-comm, I saw comfort level. that for ASP which we third also, saw many in time it really tremendously traffic the technology was in saw extraordinarily impact. our products, focused you doors. performing, across It the the you that hit in there's no partner exceptionally round, guess doubt board. you were was it And And it saw know effective. the our ones are then it noted

a it success combination was us. for and a great So great

David Weinberg

should point created. demand opened. as it out; the world worked We great there markets a around And was

is the Just we we advertising, it in our why our from up. feel dramatically perform opened pushed just which lockdown, direction, that in have well so countries

Jim Duffy

of for can speak about just one last of year? plans on advertising, advertising across And the for the timing quarters you Great. the me, remaining

John Vandemore

realm don't know, a We anticipate Yeah. basis. of you anything relative out the normal, of on

a towards Jim times you on interest mix impact at, like Nothing revenue up thing a look And in on, is sit China there. to other EPS that one outlandish have] follow of guide, minority you [you basis. you know encourage on too. know years tilts market that, percent would there highlight as a didn't a different the to of where I generally anticipated we So, just the

of other to carry from So, consider to thing EPS. that's an you down perspective operating one earnings kind down as

minority like taken consideration. know, impact heavily that some gets market You tilted more towards that a is interest into there

Operator

Omar Evercore ISI. proceed question. line comes Our next of with with from your question Saad the Please

Omar Saad

quarter add one, was Number questions. important I'll put have mean, I a wasn't really global congratulations well, exceptional follow-up talk of in pretty tough closures. the specifically, up Two hearing still you there, companies my or Europe about China. how numbers. on quarter? lot you it Can impressive a then Thanks. as And it's obviously, market drag quick from I you at much Thanks. other that an really you guys. all it's of for Europe, We've lot know, guys. a been

David Weinberg

as and thought very were last down in We was Yeah, from performance up said slightly prepared countries open. our from year those it strong that we in XXXX. a remarks, was that

I you we if had to waves very dichotomy that open, those and in no came those through, that the were obviously open, matter we countries, sold a they it's look think that they're we through second where say the of open, times true those closures, So, closed, I think, were like the felt we June, in a openings July, UK, more And first the and second especially Germany May, and short people going in well. the product on Europe, that. in lot last they how of places predominantly and performed of because into well were

our So because a out to they wanted performed it accepted so fully come of with lot. stocked, stock especially disclosure, They well.

number So our closed. stores of Europe, which that was the outsized in that helped were to wholesale business

The on year. longer So, and half it's into our wholesale because also reopen our may some filled about – did business. takes in minor also, up dramatically kind guidance, that the the that's things of we we take places impact have it closed one of the we in back were so to of when account

they wherever sooner have depending our to is it. and that on So, because stand certainly we upside the has is we inventory who open, performance good the everybody

Omar Saad

that like incredible that, you and mean, know, you become how of much, can sounds big color. of back And on prior know know, you there's I you Can you you of it which how guys? seeing you're puts seems for lot you seems various this, a Thank [Shenzhen are versus the it's in boycotts there. of That's lot helpful demand you. China the the the some And in a characterization it It around It the any levels from Got a customers there. sources numbers then coming is tell? market impact issue]? the China, kind brand? like like of fair think on pent-up pre-COVID new trend. Thanks. up where Western quickly demand I quarter, of runway know, brands like We China, other where XX% Is or are into that then getting really you. a

David Weinberg

middle Well, as by. billion have and can coming to customers, afford does the footwear new we're more China time people and and always on goes and a the class dependent more or a half

the hate say to in – go think we much potential world as this we anywhere to as So, there's unlimited, but we well, as China.

we're of seen As going We do would that. we them the ask anything aware anything yet, we than anything conference, online. whether for And to the as marketplace don't or own want rather posted conference anything to those do far obviously political, boycott read – And call with boycott, it. as obviously, we although statements plans is or have like a as concerned. our great to political it's haven't a everybody PR to as China is that us. do far

as away try to as as we our clean keep business. and own So, can we just watch far

John Vandemore

add the of heavier on definitely And a business the exceptionally Part have reaped in performance is natural and that the benefit performed well. e-commerce also trend China would to result position you online, in success as Omar, e-commerce the has seen but obviously marketplace. we've of that. I you even know, pandemic influence of there the

Operator

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

Gabriella Carbone

taking quarter. congratulations thanks a question on for my great Hi, and

some So, bigger out? XQ, domestic that that pull channel? the opportunity fact in know, out major see the view you if you of on plans mentioned do retailer, picture, that large that know, to issues a wholesale given the touch the you do how you how playing and You you especially competitor, can logistic and in

John Vandemore

very last we're feel know, you performance I domestic good. saying, of in two like by earned would The first we wholesale. start-off we've quarters Yeah. our XXXX

very We underlying this good quarter. We are seeing ran timing change. a into issue

but think that by of our we the product. balance very largely strength year, are about earned of the We the optimistic

with winning the if support to wholesale support You competitors Because that's products. pull price, believe of work Because, everybody. you those for know, on know, comfort our we very brand. know, our technology ready you the opportunity especially all David a we market we them mentioned, welcome with to of worked we to we they customers. them, out to stand choose. so the Many serve of closely

remain there. we So, because out optimistic. of We're mixed proud bag especially it's of results a accomplished, what still we've

you we to better as traffic chance. started as you Although happy channel know, see know, that, retail of to emerge. markets the very businesses customer perform customers you see, our And majority know, were very well

Gabriella Carbone

a thanks you that. if of seeing trends just how just the Great, dig kind for evolved you follow-up of And little move pandemic? bit quick as, phase wondering product you're into into more a and can the recovery

David Weinberg

into footwear, and style. range product product across and certainly I very are and product we And we're comfort, broad into well. styling, fits looks, but that think Well a – it's of technology comfort which the

So, we we we that in. everywhere. constantly compete it creating have are And new categories can

So, is far company even that people through go it, through times. more I as think into now, as as delivering orders difficult dependable are we're we And comfort. a

we're let very place. a and wholesale And good the seeing which turning we sit the And created sell-throughs a We quickly, both. in if could the come go the to product our The we're prices a product, try But the we on I and there's we hold the the demand. also actually a through high level we think back inventory, product. it market and So, high up this for means as brought quite significantly enough. have certainly demand demand a to ship we more, notice would should early us. styling, for in sit inventory,

Gabriella Carbone

you Thank Perfect. so much.

Operator

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

Laurent Vasilescu

that decreasing release, delay the or that domestic of Good to parse afternoon. points due shipments. wholesale was in XQ XQ quick XQ, taking out XQ a of X.X%, clarification, my shipment Thanks think it and to talks from for about of press can the questions. you to size Two shipment? possibly business timing John, I

John Vandemore

quarter was, I I challenges we somebody had we know, from variety ask, a face logistical that had knew be you would shift to David was It It first to didn't you know, it You a know would of Laurent. referenced. second quarter.

we Our by we situation. but net get we a QX. not you similar would those, have if overcoming team net, of to timing quantification, a the was would the know, job, just half full want a of know this don't most to did great expect definitely than way, and results that into, what to, been XXXX, I you you carry have saw, know, into up last seen better slightly

Laurent Vasilescu

your great forward? That's of think you expired on program we right anticipate balance sheet, And approximately do $X.X the balance amount how share should John, to of your liquidity buyback the buyback program? hear. have going billion another about liquidity in February, we on sheet

John Vandemore

confident repay first it we past that priority or the drew of environment, say, probably becoming, you least you at excess have and more still be We're would an more at Yeah, be could the that cash, a on event. at beginning been know, our pandemic. know, moment, any the I we're facility it's what uncertain to the could liquidity would I think significant

want evaluation. we'll our that, by making, you time. of look business there, the make Those over from we can, the there's back regularly we'll priority with and we feel let know, discussed number know, the know, more for about say, of put don't see investments making ROI You is very in we're would it, But know, one investments deploying you into lot the cash know, that. After you are an cash then I to we're the we if the them obviously, where virtue into to things. of a and board opportunity opportunities. get opportunities they'll highest there, the other we guessing on business. good I how at perceive those And you

Operator

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

Susan Anderson

Thanks question. evening. for Good taking my

since April? talk December on curious, until little I the then the bit have traffic improvement pandemic. Nice Maybe just was continue into Sorry, the year-over-year through you don't strength we the that there. I And you could up on I'm front. from have on quarter a really about mute now follow-up data? guess if managing job and just seen a

John Vandemore

better some XXXX we compared you if the to you perceptions. at got you what similar February got know know, pretty better traffic, as we would XXXX. say, tough to saw things And Yeah, quarter once. but are got of got mentioned the everything with worldwide, the mean, you I was I definitely mean a then little saw term of closures we what – We better what January it’s go saw intent consumer, in better and bit market fourth I our

we the give point close throughout. some, mid – for then you know, and sustained far know a you on, from UK comparison again comparable in even So, you markets and from back over store like saw sales, stayed have the the is online, know, you because, our view know, us, you the come the you unexpectedly improved know know, slightly as, know, quarter we that, those mid-quarter did you XXX markets, and international many thus

you traffic All trend know, certainly But level. we to you you think can the more most brand, for own stores, of encouraging continue Skechers coming online, to to we're they're be consumer a us the foster, is the doing very seeing continuing our see, manifest know sell-through, I good our is know say, aspect levels. in to what we're it in at at which we it's a again, partners,

Susan Anderson

are the you any there particularly guess, I front. can around are good. any just color Great. year? I then wholesale front, half the about on how That domestic back you just guess, And is the the thoughts sounds on wholesalers this on, thinking provide seeing

John Vandemore

is, Skechers. say for if don't true good that. beyond we're demand I seeing know holds I that think all we can

that XXXX. You as the working good fall, and we think very the higher AURs. as some Most logistical we've continue circumstances. I really difficult in we're mentioned, I done relative most is winter a every job despite and are think our market. And just back in good again this impacting through holding the as mean, encouraging. product over back-to-school delivering you We've evidenced we is with, performance, There strong up that's know, their you said thing getting expect what And as that's I we hear, of pricing. seeing very and the David speak, it's issues of a for, know, good sell least to to at account for it ready know, we're encouraging. had quarter the shipments of half orders

not And depend their that's You good know, you to, higher to know, navigating to a see, we've Skechers through those. a know, job us I think on I think we're to consumers. of receptivity done immune to, led but you very deliver wanting to

David Weinberg

us on year, backlogs there nothing do look some conditions as very know indicate back our to we retail, change a know, that large change. customers through Like we lot of will backlogs with it are half market are as leery this will And half still premier that don't to goes be to comparable certainly also you the on indicate and through, last degree, go our participating that like the but the of and and what how and a knowing for then. that themselves add a how basis, there's not and back dependency the be will what a know should we we dramatically do from will player to will now more

Operator

Williams proceed Our with question. next your of question comes with from Sam Please Poser Trading. the line

Sam Poser

Max idea size right and Arch the mix of, product Cushioning like Fit questions. my know, of mix overall the within outside you Thanks some or within, the us now? for Can the penetration give within product you taking of

David Weinberg

on. don't even know I into relate so to products mean, it add how many to I to it goes that.

products put selling best Arch whether have way Fit – that we our I technology in think and and Max all and big technology the as company comfort comfort ourselves or Hyperburst]. it's [or see a is, to Cushioning, them

almost We all have in shoes. something our to offer

within And and in exists very multiple fits to fair comfort brand that the it's whole. a biggest an the categories, of say, technology fits It's It's broad the all not carries that multiple based and piece So, as the that in that with it's what the is styles shoe it's game. our item line. shoe.

Sam Poser

your the I can and of your is in – is And so as some e-commerce you One, the kicked that what the more. time of about know I impact came believe call of how same the the you're full-year? in. far, the you and but stimulus got because, big mentioned right at advertising checks what thinking the kicked was in you these how think business us And you give once two, know, idea two it, Thanks. you at business do days

the give stimulus how you now? overall of believe the view can some U.S. in is right impacting us you So, business

David Weinberg

Sam. And bit been geographically. through. three some point know, marketing the the factors effect that we know, more understand because out, once. the In had products drove is in most had areas, the as a others, of effect, we also little tough while. really relaxed awareness. probably really that Obviously, powerful big a open that it effect major out, was you pull many for stimulus the to market the you it in is you we was but the What sensitive it pick the nature believe was a restrictions was, on had at Yeah, question, markets I then saw hit

on depends there. So, really geography the

definitely But, So, you our our What stimulus in the the I definitely a checks mid-teens so, business, know, detail, tease owned know, trend just e-commerce tried the would internationally take know, it e-commerce question, if at then trajectory as you know, the it's probably And about wasn't we've to out, number at we in business. it's say it to an positive pronounced. e-commerce the in of into domestically overall. overall, consideration look this in you same very overall you totality time. is, is know that markets, you difficult came quarter, number China, of on which,

Operator

with Cowen with proceed of Our question. your next line Company. question comes from John and Please Kernan the

John Kernan

pandemic this the and through for thanks taking business seeing congrats Excellent, the question growth into guys, Yeah. and year. managing on my you're

David Weinberg

John. Thanks,

John Kernan

– to is for demand off from give perspective? us top-line e-commerce you some Just domestically, clearly triple-digit a can least us the The there. business number, where can total brand this up on you is another color at digitally tell

of own the you the of business, business within platform? terms can the economics DTC scale your In much more how digital

John Vandemore

actually looking we're against basis product the next more last of quarter, again, continue think suspect digital-only I is buying the we We was it online. it, because against going challenged, at the Honestly, XX% if job, close hard business. be a quarter was eye-popping be will window that that side volume bit that to to it's this a still was of team but see clear, e-com And on mean transaction domestic top I numbers to year. of just buy continuing be online a pandemic-infused you're grow. only to will the number put because did not the just a to where Yeah, comparing on great a domestic opportunity will the to business, what comparing

They So, can direct-to-consumer we going. a absolutely device, our of this comparison will the at that, of POS continue the trade total business believe desktop in the in It call, why seamless last want kind device store difficult component that to overall, important between is in a going more but beneficial we're stepping quarter and just that's quarter technology that's but online investments long-term, begin a to grow. very business omni-channel online, a new those company it's the continue getting materially David to because that time to an capabilities not in made referenced our the in about maybe we before some to take transact help business, the we with be where the in the mobile in believe yet fine-tuning the opportunity that's mentioned very and we're well. and as platform, new the company-owned excited and I back, help to consumers see ability and And we've saw that an more from and to will penetrated be this a loyalty advantage launching say, I'd platform, re-launch forthcoming the all which then, which our marketing, presence. broadly, to of occur. in countries we're going I for say, as also digital maturation would better are organization, capabilities

new those to technologies excited will brand online so, globe, And and we and as our the consumer well. about markets the what in then that as mean for out offering our ability begin capabilities across we're roll platform super direct

John Kernan

to well, margin like five years a on where you given e-commerce of doing know Got very the I business, hasn't curious, product, and business higher, think the it. go in putting downside are you over DTC sounds just margins you're consumers responding gross been innovation your higher over been to is margin structural then, uptrend. moving time, moving do ASPs to profile the That's your the particularly can maybe uptrend gross over variance targeted margin think the business your better? helpful. on while you there It that the operating lot for where a a now. it's domestically been higher, you've really it's shift getting do gross And is moving margin Within been are it, ASP on has that double-digit and consistently goes, structural would last time, of a

John Vandemore

and that's by Yeah, design, right.

year this ever take strategy margins internationally, direct-to-consumer grow business is Our accretive it if to grow channels. to carries gross you in and I think last generally to which factors of into though continue I the the mean, the or so you different out positivism. that toward so margin see have trend play is we coming because level, continuing what mix underlying at a gross many

this input raw up, going pressures some year, pressure. some transportation have the about, which We talked material we've cost costs arising

that. think continues lower don't company, David business, mix long still think So, is for of see the that distributor with dilute like means profitable but lower a our us we to incrementally we're business it benefit that But a I I would margin, keeping still think businesses more on point will I plan. to XXX would benefit, hold goal. if quarter, over But making margin thing ultimately that definitely operating could about some of us, that influenced very some because you're grow up which at us. that improving that is in grows the bip mentioned, the the we is a it's as have, great year clip, mix want haul. for heavily think mix margin but a we gross to that every going is But pricing simply by of higher the every back part that's also money only dynamics. some I us say, jumps The overall,

Operator

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

Brian McNamara

congrats for on taking results, the guys, and questions. Hi thanks the strong

from terms you material the pretty we so, or in So, two in disclosures. seen have guys changes of last week

these and the statement just clear first changes? changes last drove I this With you is momentum I'm guidance full structure, curious recall in released the noteworthy can business, proxy With what offering. that the in year you had week, the compensation

John Vandemore

to only opportunities but guys we It's we've technology, it's number you of ones business. probably how our just a the we look the our one not It's the across level you but brand, back better, always natural still improvement, We're them] at a remains marketing house. just run know made infrastructure, that make evolution, the the we then [at first tremendous grow see, advance priority, throughout the continuing product business throughout globe. the for markets continue investments to information to

of that's our the So, I tremendous being us of the years, are natural evolution think say, on in the it, in to and there strides of a want areas that made be in better you but because is many some also some visibility going I'll see that's position pitch the which think ones just we in in even couple we've to take business, aligning business with wouldn't enough credit least, are but out We in think away chest sensitivity. to last a you if attention respects, – the lot those particular, this about appreciated. in we ESG business bay not practices in improvement, are with I manage just aligned two, we able and of don't to only on I mentioned, but the the we're I in don't kind on Day, [just that others, doing market those a and more way LEED run with We're that we California, lot, think beating] even get that great adding one stuff improvements I distribution certified for the that the centers, to often Earth think we're environmental with the get largest don't level at because country, the at talk there, but, same here. not have David that of

and the step just one in Number of really into X and that. So, I'd world business continuing maybe say grow north the to more provider the footwear improving in even

Brian McNamara

the And guess, India, did how quick on the that I to pandemic India of perform last is in just markets quarter year. was and one hold? from relative, more impacted it your one recovery the Great, then, Obviously, expectations, thanks. how one taking

David Weinberg

met quite but it Yeah, well shutdown, Mumbai. target performed pre-pandemic through our to on Delhi expectations. levels, and this the They end the new certainly especially quarter. of It were for

country until While we it far hasn't closed concerned. that it's down is the business and as it whole obviously there, continue have done business particular will as to do impact

John Vandemore

But best to it doesn't in to for our obviously that's short-term just were was post-pandemic. we make derailed. but as excited color, to any a our way Yeah, market brand, try them long-term, about phase we're diminish prospects their has and this to our first wish it. the for in international just dealing been visit it And excited our particular, heading country the hit with potentially India plans, the of for optimism in think we tremendous in coronavirus We pandemic. still

Operator

concludes Thank and participation. today's this today's your question-and-answer does session. you This call. for conclude Ladies also gentlemen,

disconnect have time, day. and this may a wonderful at your lines You

Skechers U.S.A. (SKX) 23 Apr 212021 Q1 Earnings call transcript