SKX - Earnings call transcript Q2 2021

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Operator

Greetings. Welcome to the Skechers Second Quarter 2021 Earnings Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] Please note this conference is being recorded. I would now turn the conference over to Skechers. ahead. go Please

Unidentified Company Representative

forward-looking beliefs, results for I everyone Certain future on conference events addressing the Skechers contained and dynamic respect by in include having currently response forward-looking of and or Such of COVID-XX the any Thank of forward-looking company the now extent change uncertainty joining time, could read the these results today. the plans could without statements cash a limitation, impact will from of pandemic. including the statement. this on that differ may COVID-XX or objectives, the a actual significant circumstances business, call estimates herein, expectations At at you without this us plans, the on Safe statements impact and financial operations. said what risks flow pandemic statements is involve result, such results statements had the specifically nature and with materially to pandemic. or there statements. company’s contemplated conditions, company’s duration uncertainties, COVID-XX The is limitation, constitute call that the of pandemic time as and the has means those significant is to about Harbor

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

David Weinberg

billion. we COVID record second a call. billion, $X XX healthy Thank past expectations XXXX. hope marks financial you are for our appreciate safe. of joining to our organization exceeded staying Skechers’ Skechers achieved new a sales loved be ongoing a the billion second the $X.XX increase a quarter challenge. you, challenges global ones COVID-related our record for over of as the today first pandemic the time I quarter that as hope over sales the conference those together with are of $X.X months facing colleagues over XXX% and have continues increase XXXX, This and quarterly first exceeded us your and over and the quarter six results yields resiliency quarterly XX% months, We

share the XX.X%, XX.X%. quarterly of margin strong achieve record diluted and per gross also We record exceptionally margins of earnings $X.XX, operating of

sold, global closures our embracing of the the promotional India, casual with in and important in despite business, but lines, seasonal, also domestic less note the result we have other We a global all we to continued Skechers This in these the challenge athletic the period, results increases had. reflective for businesses Without also significantly a technology other is were on more hours. comprised pandemic, remains our quarter The impact in restrictions, business, consumers International notably comfort focus to during and is our the supply XXX% to continue reportable and total prices reduced addition many of challenge revenues across operating second quarter. came exceptional segments that It of our sales growth XX% selling to both footwear average our units lockdown temporary and to XXXX. teams chain. record around increased over results of our of and increases COVID sales result store markets XX% the second our achieved most international world. Our pandemic wouldn’t countries clearly and the the in appreciate XXX% dedication factors ongoing them activity compared apparel quarter, higher some and in of offering.

well business increase of year and Wholesale increase had from as XXXX. grew driven quarter in the XXXX, XXX% last XXXX. by was sales from an from as International same the quarterly an The second which a XX% XX% with and of increase over and over period over Europe, XX% XX% growth primarily Our XXXX, XX% XXXX, China

increased Our XXXX to and businesses as joint venture compared XX% to the quarter compared XX% XXXX. for

Canada, all China, Europe South Israel both America. sales growth and France, Canada, The hours XX% XXXX many parts from reduced XXXX over XXXX. periods. addition and and achieved UK, Japan, and and improved XXX% over Mexico Italy from in and also to temporary and XXXX notable operating Despite Germany, increased In Subsidiary of regions, comparable including Spain, both closures periods. India,

among Our and distributor achieve XXXX. down XXXX, growth include to year, it Africa, Australia, over compared others. Russia, XXX% X% also Several XXXX. Algeria, was business improved but markets These Taiwan, though from only Scandinavia not Ukraine, last South

were UAE, the Eastern and sales our to up store internationally. XXXX it store continuing and due primarily to significant our closures XXX% in XXXX to so Our reduced and guidelines. we believe temporary compared Worldwide Middle direct-to-consumer company-owned including and Africa and despite Skechers international and India, domestically over in of Japan increased handles is XXXX hours Europe, of health the business XXX% parts many improvements XXXX, over XX% Canada, largest East across Chile, and over business improve. comp XXX% much of stores distributor, which local XX%

including increased domestically store increase internationally worldwide XX% a As stores closures. ongoing compared XX% decrease an to XXXX, the reflecting X% sales of comp and

average direct-to-consumer of XX% and to our compared our price Our promotional unit technology of selling indicative stance comfort products. the XXXX, less success rose per

Given are sales of believe restrictions will the where impact we and stores. the we return will markets, But remain Coronavirus many unpredictability its ease. open normal a continued and about international improvements and that cautious see we fully on traffic many to in

store to over retail XXXX. our which XXXX. was prior our a to growth difficult the in store decrease was Driving sales partially or The compared Our compared domestic to offset the XX%, face nearly a direct-to-consumer sales improvement XX% XX% second e-commerce domestic year. channel of of this increase increased in comparisons retail and XXX% XXXX domestic quarter by XXX%

it over However, important is note up were to XXXX. domestic XXX% that e-commerce sales

over and increased over increases as the Germany, and of store quarter number Spain, international base UK, company-owned business. The a XX% XXXX. business XXX% Mexico growth others. to direct-to-consumer second compared achieved in of XXXX our was e-commerce the including and XXXX and retail XXXX, XXXX both A the international Our growth result of larger over markets

United recently We in growth be e-commerce on will remains the continues the States, in capitalizing this Our a which to opportunity meaningful and loyalty launched new we business. coming a grow channel program weeks.

XXXX. Skechers opened expansion eight year leases and and second including planned forward our looking Antwerp, closed in the the Barcelona, presence We quarter Berlin key company-owned worldwide XX In this of Lima. expired. in e-commerce the into quarter also We’re second we locations stores locations as to

to and third stores third another opened An another total, quarter party XX at X,XXX date the first have across three quarter Skechers have quarter by the the additional for plants open second Republic. around world. In to in We XX countries, year’s Skechers expected the including of XX to the end in end there net month our Dominican with stores end. three the stores opened in XX were

in XXXX. stores highest XXX expected improved compared XX% to same same casual our compared the footwear. in the to open the gains in second Sales sandal and period category fan kids, year Another by in seasonal XXX quarter from the end. our to business the with Wholesale coming are party in quarter and achieve period Nearly sport, XXX% XXXX, Domestic product growth every significantly, to third

average for much DNA and our new technology reflecting comfort increased, Innovations history. footwear price of prepare our of part product developing and selling technologies. our the significant of Additionally, appeal has the been a

features Going last RUN that material every back Skechers to to performance comfort deliver occupational GO cushioning to our made footwear, the and in generation to pair. for lines, and WALK Skechers first lightweight GO our

women lifestyle Our philosophy were of especially we a we core more their want and price products vast as to innovations right quality comfort comfort is drive year, and collection enhancing approach the strategic revenues. helped resulted these our a marketing, Skechers, resonating times at into the print Throughout Japan, and quarter, communicating to innovation work the looking platform distribution business sales In our UK Peru, and centers the many and our support further created awareness television, online and quarter, To in kids. are infrastructure we in location outdoor, multi the and India. difficult believe embracing and relaxed style, consumers, approach comfort, for men, included for with people markets. our are global second This are during and in product in record wear. in coming weekend of in our the of new incorporate with

half a square foot this We distribution operational. have month one our and which China of million fully as completed new center, is

American on LEED We of our million facility the will our in North to which X.X California distribution to are XXXX. Gold-certified bring feet continuing expansion in square work Southern center,

growth, footwear innovative global with Skechers Given we that apparel confident comfort collection consumers. resonated our are of and

shopping the began were markets I’d quarter and exceeded John local to that out, where given to restrictions We globally. expectations. dining results brand of the the open returning our of the to or well, the exceptional our close the And health the sales eased, call And for guidelines, to they still we size more over now, in second performed work circumstances. traveling, turn like As largely in were power detail. believe markets and

John Vandemore

Thank They internal some remarkable the good technology, obstacles international portfolio, focused by restrictions, chain clearly illustrate primarily quarter exceeded the product the posed you, brand, these the and Skechers results lingering David. strategy. even And operating results our our our and in for second execution closures And comfort including period. targets pandemic, strength deliver challenges, were store afternoon markets. everyone, continued of and despite growth of we resonant supply global

lockdowns, $X.XX we in Sales performance. a the the comparisons because period to largely focus both results businesses and constant heavily totaling prior a an a Since year year, the second XXXX. the will and to we record basis, million Now, pandemic and from provide On XXXX million impact grew over where year. our is will or by with the both the XXX% I meaningful prior year-over-year XXXX. achieved believe assess year second numerous commentary quarter quarter XXXX, and it more XXX% International the growing $XXX.X sales increased increased $XXX of XX% new XX% the of from and our to currency Wholesale is against prior XX%. let’s compared to of comparisons billion, to quarter of my turn over increase second sales our increase on the which or XX% quarter international domestic influenced a prior

several ventures of the which grew weakness being which China, on by still pandemic. are demand, in led by markets, XX% partially by e-commerce the offset joint robust grew Our year-over-year, impacted XX% strength adjacent

year-over-year, sales second second increases, in The of grew result the XXX% to XXXX to the quarter increased XX%. grew compared XX%. Subsidiary improvement XXXX, and as particularly Europe. the impressive primarily was quarter As China by XXXX volume versus and of of compared

the quarter XXX% business with Our second declined X% by XXXX. grew but year-over-year, of as distributor compared

the by the as more to pleased year-over-year expected from pandemic. this which are We business, slowly continues in growth recover

year-over-year remain in However, store due growth growth this characteristics. domestic international markets, in to both in the its XXX% sales supported increased albeit at and a attractive, retains we closures business that long-term rate Direct-to-consumer lower by optimistic period.

grew by XX% XXXX, XX% sales as and increase As increase internationally. of nearly compared wholesale a quarter increased XXXX, increased direct-to-consumer XXX% result quarter XX%. domestically second year-over-year, of a of and the second to the sales compared Domestic the with XX%

domestic As year the profit $XXX.X $XXX.X wholesale to see indicated earnings the or for up across an selling XXX% mix, we underlying compared prices of segments. margin points higher rates proportion a operating a including XX% was prices. on margin gross basis the very trends strong lower of prior average last expenses with XXX% by higher healthy a average quarter increased versus channel XXXX. Total e-commerce points Gross sales, quarter in positive Gross quarter’s In or Selling sell-through the million basis increase year. prior sales. increased $XXX.X to of $XXX.X of increase XX our in both margins the XX.X% Compared was all million million instances, compared was call, as to including over partners, result and year-over-year continue prior to XXX or the million versus and as in wholesale of to period. quarter million the selling to million. improved by and proportion offset expenses the gross partially XXXX, year by $XXX.X domestic $XX.X majority

the However, as of quarter $XXX.X operations XX% as Operating prior of and almost the globally. markets from diluted decrease margin dollar a year-over-year as XX%. reflective of increase second due administrative as Net year-over-year primarily XXXX, incentive for as or an a with of as increase XXX a year million year of demand operations businesses of to from XX shares driven year-over-year This $XX.X $XXX.X costs, outstanding. spending reopened distribution sales, increased basis of point or $XXX outstanding. diluted quarter loss of loss all $X.XX XXX increased was and expenses compared creation to points were well basis share XXXX diluted million, General to $XXX.X of on as $XXX.X The million globally. a expenses decreased a reduction. share million in in million were an $XXX.X per labor percentage on prior compared $XX to earnings percentage XX.X% in per was this represented and increased million Earnings XXXX $X.XX primarily compared year-over-year basis X.X% XX second of The quarter percentage dollar increase points. but to increase $XXX.X by million, net and sales warehouse compares diluted our versus points. was earnings million million by the shares volume higher or

XXXX of As XX% the $XX.X to from second share. compared million per improved or $X.XX quarter net earnings diluted

our an second of the effective turning to extremely XX.X% and income liquidity prior income XXXX. tax effective XX.X% in tax now balance $X.X for rate quarter rate tax position versus And the and of year healthy. Our quarter was million in an remains our sheet; cash benefit the

in venture-owned million $XXX.X facility XXXX, our $XX to the reflecting million operational domestic in joint Capital in quarter. the which to States. related repayment $X.X million $XX.X XX, million XXXX, distribution revolving of our the higher increase our both million $XXX.X Total to million our was offices This million repaid related credit cash compared or with China, of June inventory including related and related now $X.XX inventories XXXX, end equivalents during which second at from outstanding decrease billion, the revolving fully we and the California. sales. technologies to billion million growth wholesale June or from were for During quarter, investments new, a expenditures in and portions our still ended June the center predominantly XX.X% fully Southern credit cash, expansion attributable investments. $X.XX reflects support of at were June in X.X% a facility, to the Trade million United retail XXXX. increase $XXX Asia. million is corporate second million of result $XXX.X XX, of from $XX.X long-term our center quarter and debt quarter stores. $XXX.X in accounts distribution in direct-to-consumer higher quarter of increase $X XX, and XX, was June XXXX. investments receivable $XX.X new The an of in Total $XXX.X to current million, of to was XX, primarily at

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

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

recently optimism resurgent will I be performance outstanding that Now, will this guidance, the to as turn cautious well as given quarter, virus limited. impacts our

expect share. results sales We above range and year in per guidance our quarter both full and previous earnings third

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

sales range of to that anticipate per we billion gross be expect closing as up XXXX. XXXX, the and We for be fiscal the as $X.XX compared to $X.XX. of compared billion XX% now, back over will will to XXXX. year of the range rate the XXXX diluted share be and For now earnings back I’ll in to and $X.XX and rate XX.X% the a net to the in of be margins over in of half And turn for David X.X% approximately our effective that And remarks. the in tax call half $X.XX year

David Weinberg

John. you, Thank

with quarter $X.X margins new and of of second records, revenues than diluted earnings XX.X% exceeded performance Our per three gross more quarterly share billion, of expectations $X.XX.

with well. of foot in Our and in conversions innovative comfort resonated the consumers perform business to period world e-commerce our our continued opened stores, product retail during around traffic the improved many

message next we responses year. technology situation half product to developing to company. half in our believe year, our driving fresh We back our remain and fluid first product. strength given COVID Skechers sales the the new inventory consumers. That delivering the momentum continue focused in year of flow, the various by the the performance We and our of Although, on managing brand a remain and of in with government will our is globally, into communicating and innovative comfort our

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

Operator

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

Jay Sole

Can business? versus XX% maybe little XXXX the you year seeing, bit strong saw talk in be maybe what you channel; business, then just Great, off helpful. Is of, different just Thank in and really it’s because obviously, what to family sense channel, across on that it the an ask want growth channel levels you. sort price those by so online secondly, saw of much. sell-through was are that more good maybe if [indiscernible], can of the clubs, the on comps, really about whether I us of a right the us if result. last you up some give exceptional based really restocking give market or share thank you And stores you just Wholesale elaborate parts Domestic about you gains? a inventory would

John Vandemore

think the in. Family in we’re that actually clubs, the product the we’re channel, it’s have higher all channels above, that’s of performing that resonates I better all we a priced.

So, to we they move sale were the into although when it’s degree in had higher relatively keep and to price them and a a than went done able higher people difficult on point, we quarter. price so to points. had often, replenishment They very lot of a lower probably replenishing the well we we’ve weren’t planned

higher points, are of all the for that on So, availability it they’ve the the sale then our price getting out there replaced if and performance margin more take you against time. brands and competitive being product, not

all it got we’ve So, cylinders. on

So product resonates.

kept have we’ve traditional points, relatively delivered on points, and we’ve our price price We higher time.

Operator

Thank you.

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

AlexStraton

seeing, throughout how basis? it you. Just would could grew market-by-market increases? is on that I Or the more on Thank more XX% the in even about Straton you said just have remarks. talk Is there question price the prepared is ASP invoices think you’re helpful? strategy? a this see a through quick Greenberger. I Alex Hi, Or be on ASP year? you Could direct-to-consumer increases the on year-over-year you Kimberly strategy think strategic your for pricing you

John Vandemore

driver consumers. with more we’re that the to across result, value sell-through did And sell-through in with you’re David and approach exceedingly think we ASPs. as is their as our see I a our seen, fair And see wholesale of promotional our you’ll value where that, our and that’s to I at And benefited deliver level. Alex, that’s resonating product top the the technology, partners. that ASP, is to that advantage for take of seeing And product, is clearly ASP getting input board. favorable, we’ve to continue mentioned, the right value product, well. we a watch think for product, and that part is delivering our something infused as see that I charge that environment appropriate, the performing obviously, able now we But the from technology consumer we believe It’s we that, certainly delivering and We occasionally. think marketplace. that in is for and what On we’re I’d receive comfort is more us, costs, then, for great of adjust say in that. Yes, tremendous and addition predominant

David Weinberg

the in we’ve to taking in company not price price increased marketplace. and I raising only price, in done note and technical features I to the received marketplace wasn’t and higher footwear, Yes, higher board, more and it the is across are it’s a important seen mean, a we’re increase that as our like product the a think it’s it as price just make of now the what with we performance that great worth more existing. comfort prices

AlexStraton

so Great, much. thanks

Operator

Thank you.

Our comes question. Please with Gabby proceed next question with Deutsche your Carbone Bank. from

Gabby Carbone

a on great congratulations quarter. Hi,

So nice kind really domestic Jays on like on results follow-up question there. of a wholesale,

around, that opportunity normalized certain some space, what basis channel as more if out the here? dig on your could a take thoughts pull think you could wondering of of from shelf as grow, to into retailers, you Just maybe competitors, your

John Vandemore

to Jay, Yes, we partners. mean, again, see our that we above we’re tell I that I we’re is David’s data mean, categories of above forever, earlier, to product space I I value. think, with an we’ve gain as, tremendously we’ve can’t, to positioned well. own response to higher achievable absolutely long-term, effective comment as key say there And probably for least we I space trend. I’d an in like sell-through shelf opportunity wholesale seeing and our wholesale domestic in domestic of absolutely our partners, with driving wholesale, to there’s our product, in add shelf at it’s grow because this is on clip, before, XXX% think available, I becomes good retailers the but prices short-term believe think, said, would well. is independent a that you believe for really we as reason And for technologies why – domestic wholesale at as consumers growing, certainly market exceedingly grow well XX% above the long-term opportunity grow market, marketplace But us, and in or no the but then can to

Gabby Carbone

and some was a what quick there drivers the Got it of expect basis really of what could just and like we follow-up, on kind half? it Like believe should impressive here maybe back are of about should about? the XXX your the up think pressures gross kind performance, from segment; what performance points hold and, in XXXX, be margin in kind biggest retail

John Vandemore

the as pricing drivers year. mentioned, the in to That half was is I that pricing. back driver. think the was continue Well, we of modality significant it our the intention have most And

environment. said, a promotional Now, as I also was factor contributing the

see remain are landscape. eager steady. this you’ll But it’s that’s certainly see. competitive a indications most also We’re And certainly, to environment what I think

the influenced direct-to-consumer we’ve our to to back at expect we what year to the margin is That’s half don’t need seen what of continue. a to wind very the I heavily guide to to that we by big be in other So, than channel. backs, been certainly of get say, and we specific guidance want into, are relative gave cognizant others segments going the do.

Gabby Carbone

much. you Thank great. Okay, so

David Weinberg

Thanks, Gabby.

Operator

you. Thank

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

Jim Duffy

you Thanks. doing guys Hi, Hi, Hope John. well? David. are

John Vandemore

Jim. Hi,

Jim Duffy

holiday an just comment saw just and maybe indeed. things vis-à-vis watch with distribution Yes, to on stores talk you’re there, relative that? working update you wanted XXX China what I productivity during center, Can for XXXX business seeing that’s about new throughput on to the or respect you to trends. get and in you what the through period, for retail how

John Vandemore

Well, We has long-term market center, we ramifications adding other period, the we capabilities distribution good first from eager in in of anything off again, with propelled is exceedingly come running improve. that years for normal. part that a is by opportunity China but but large see brands of China’s first of point seeing to at remain well, I it’s It few it’s yet had at certainly well, a the for thing it’s also in with negative has good the the continue incredibly China, trends brand. behind expect now. travel characteristic a continue the propellant that And our In Obviously, channel, and an going all to to the to kind optimistic but challenges think about with e-commerce the saw, market the say up performed norm, XXXX. better see at the marketplace, was really moment, Overall, us, of which is think grow did COVID it and again, didn’t sign. to healthy any getting we’ve very in brand to to restrictions than been start be better, in in wouldn’t I I recovered, getting The we stores, to said, face, the growth we there’s market. been physical but some exceptionally then the the pleased for gone, mean, over owned That I that we’re we the given trends is e-commerce part we think fully job that. last being challenges marketplace. which which continuing it. is we’re see is very did of the our plenty of and company the distribution footprint the And

Jim Duffy

the Great, seen marketplace? the in brands, reference been China other any the some of has environment John, that backlash you there for you’ve detectable promotional change in

John Vandemore

very And and importantly, we’d X/XX what do quarter. felt we and to more holiday for promotionality? or our through XXX periods the some most above was I beyond it good our noteworthy come Not wouldn’t about the for selling balance see say in brand, intense environment [ph], bit I both and the a normally mean, those of around periods. extraordinary expect little the brand, around you XX/XX of

Jim Duffy

much, very you guys. Thank

John Vandemore

Thanks, Jim.

Operator

Thank you.

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

Omar Saad

Thanks for I I wanted ask stores relative taking mean, the about levels. stores to coming Great e-com dynamic. racing question. versus clearly, back my even quarter. are to XXXX

were was down I XXXX. stores the you think domestically, XXs. in But said up e-com

of support in really When in to is suffers? the it’s to traffic that traffic other start mean, markets China when the something kind do seen grow think decline e-com something? in that e-commerce back seeing stores you’re So back. the as comes come can, of And the equation, again? well? and but you for you’ve importance will that is stores Is reopened side on clear the I the as e-com Thanks. store

John Vandemore

think Yes, I year, only too you’d last blunt. the And Omar you further be a the It’s no stack I time, to all of two-year to look at growth mean, kind quarter was basis on e-commerce that’s XXX%. I bad had. a mean, need anomaly not than town. this in look rate to this think I an business is number. we completely of

China propelled that, we’ve the e-commerce decent technology rollout solutions place business. very very obviously, globally, is the of the other we e-commerce. the international where or talked international saw next over difficult operated a about quarter and on of going into It in is just then two, be an platform continuing a in being we as grand was by directly. landscape that this to we with the year the And new completed several will particular growth expectation e-commerce comparison, Our see dynamics before bit side, even in given a anomaly grow the domestic

the is to in to context, solution take e-commerce your would nothing at stack be the And I level. continue a for consumer to So, just to XXX% be optimistic add long-term to rate growth about opportunity very we disappointed. our it

Omar Saad

please? John. And context, the in necessarily technologies comfort about comfort to to shoes, sticky. And dress, sneak peeks go gives helpful that about then are people don’t or a really that technology, we returns, it’s on trend, life a talking pipeline and talking other That’s go comfortable when you back confidence products lot, follow-up the work, you comfort guys it. maybe what any key quick too shoes Thanks. and that Got less back

David Weinberg

fit go there on especially common And to the know around world. first let I thought advance process, is and certainly stay with comfort we’re wear think to everybody’s going it, home, in sell surveys. people of in more we comfortable the in an are we it it’s through a love time, But them when not and go that that item. We the always that we not the our in more the pipeline. have around growing are And technology working can only what’s styles. seems It’s world. technology from everybody selling a is Well, they no lifestyle. are they all present, it this here significant to that amount people items They in But multiple try work. technology bringing the

And we it. going develop continue we’ll that’s hit on absolutely So, think for both we to fronts. it to continue on

John Vandemore

Comfort of David’s trend against well And I a uncomfortable being it’s Omar, shoes certainly just definitely I into think the benefit I our hurt. consumer. part mean, and in can’t general of of would would as about nothing Skechers have I dress, that you comment; healthy. the not, they’re or you being add also I most having a think pair I It’s own. dress, pair And when with I and on good about bring also also comfortable there’s is the and of your Skechers a feet us from shoes mark standing shoes comfortable And to would focusing health echo tantamount your health. on needs aren’t being. to line. argue comfort, being health perspective

not limited across just athletic, casual and technology portfolio. core product it’s infuse So we the to our that

Omar Saad

Thank you.

Operator

you. Thank

Our next with proceed Paribas. BNP your Exane Please from Laurent question. Vasilescu question with comes

Laurent Vasilescu

afternoon. Hi, John. Hi, David. Good

John Vandemore

Hi, Laurent.

Laurent Vasilescu

regards conservatism a up second growth to with on quarter Is overall think we top-line stack. third two-year stack quarter your then XX% guidance, the that the with John quarter the shift that from focused your due factors U.S. guide the the XQ should it was universe regards got to we top-line? fourth or double-digits to to factors from growth you for any I’ve [ph] other should low I other wholesale to XX% question consider consider implied and XQ

John Vandemore

marketplace think sit I think is hit one don’t mean, we point amount time, in in forecast, we have at even there mean, the we uncertainty an we a think delivered, I the here much spite as the two on quarter would is of those the in you is today, what delivered this impact of I as remaining. Well, tremendous I is certainly pandemic just continuing, challenges. of from I several about remarkable

So, the and center unique there’s at into that few term year. coming and costs baking play unknowns balance we a the get still into, relative to also China we’re some probability distribution the near running. outcome in as of weighted There look we up are the

been we to online like footprint we’re more, attracting brightest. steps and UK, we that taking bring more we’re the And the retaining into picture about labor as as more distribution stores also As retailers ensure improve. best many back, and know, bring I’d the fully. talking we’ve in

impact, look minimum making we’re of today. of long-term. an if sell some And wasn’t leverage stores, on stores tourism fully where, high we business just as which our neighborhood properties time the wage we a yet we’re And I did think leg one recovered. full as capacity, than also but it we peak stores, of back, as our our absolutely in fully for that we we and at And part efficiency. that some it’s labor based you that have better we over working rates strength at as the traffic So perspective. mall concept much flow would our the And to still those XX% that tremendous in when markets were those can beneficial and of I about to, locations particularly adjustments characterize labor today wouldn’t believe back suffering it, Big-box come paying saw rates the look outlet The all stores aren’t we or are stores. before, each assistance at delivers prevailing has retail average in which in note, absorb. restrictions in then another from from limited

We’ve next a see but again we’ll can factors. that said, variety that clarity of lend. there’s want quarter also if guidance, it’s further to look we being all and So baked into at the back half

Laurent Vasilescu

is chain reminded And it called dynamics could us, West big obviously, of by but obviously – the your become supply very does when Coast, headlines, play a manage color would week then sourcing a second that? problematic? Vietnam. and shutdown, of XX-K helpful. shutdowns of in at overall a week remind that Can on lot XX% That’s question says for it majority at thinking manufacturing just the to on shutdown? your six year, Vietnam, helpful, your this look two China And shutdowns, that’s four like if in Or how revenues? like John. very manufacturers Is you there’s a Vietnam is Any be in

David Weinberg

I was pieces whole. you’re that one now, overall should closure for in Right meeting has about. as That’s a it out faster. smaller I our think Vietnam begin supply don’t with. a as be which to Vietnam And be weeks, the piece just what to it we’re seem of the of here shipping, to Vietnam, be happening and point – we become handle, And sales, the to our could issue certainly at general. it of many becomes know throw numbers the And we’re talking certainly catastrophic, doing anyone, in part point chain as well bringing of South is business and today we you seems could the we everyplace what overall out but piece two

Vietnam depend the to availability will as delivered and important the of and shipments containers at chain, So, us whole, not and and South supply the getting on it it Vietnam as is port. overall is

Laurent Vasilescu

was just John, could squeeze this goes big businesses? one Very you where guys into in And us on helpful. Europe, If up give of subsidiary it you to how XX% your could do more think wholesale XHXX? I stack. David, any context

John Vandemore

of bigger meaningful two-year in by triple-digit. for our it’s really every And on And say I was one double-digit us about contributor. market every grew I is stack think in – the single a by almost noteworthy basis it’s growth sum what’s Look, regions. It it’s Europe a it. market,

it, I line. to than don’t probably want put significant other specific contributors one So, of subsidiary size it’s in the say, to on obviously our a

Laurent Vasilescu

of best luck. very much, and you thank Okay,

David Weinberg

Thank you.

Operator

you. Thank

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

Brian McNamara

results strong the on congratulations guidance. and Hey

full-year QX flow your some. So, through expected then better supplies QX of guidance than and a a better your

simply was to surprise I’m first Is biggest curious, last expectations? a has full-year relative over function it conservatism surprise Or your strength you what it a the of the XX your guide So, days? been the given in while? prior has

John Vandemore

channel of durability in we in by in some the late I saw think surprised direct-to-consumer positively the the were of particular. we trends QX

closed the in that the actions Europe But some Again held keeping into confidence to of into that’s over the the that were then unexpected durable coming be something and would we’ve been comfortable dry I case some optimistic results the a now of work in of held. COVID and pricing comeback and overall, or of taken, that more not. some still navigate quarter the online we through. and that than durable And again, We’re than have promotions year balance throughout that is more increasingly say the are little we’ve the that we’ve bit last And from floods had we I likely markets the other we cautiously increasing think quarter. believed seen we’re situation. now we optimistic powder consequences had experience events that bit the

Brian McNamara

Any there? Any on India been of and concern. a that’s obviously, update kind big area an of COVID update

David Weinberg

So up. far, to they open are starting

We have still traffic hasn’t more open, stores returned.

anything India that think ways they less densely progress if still they I to every month, to can call somewhat populated a continue in around. have in you areas But go. make especially

open. progress. making we’re So, are They

continue for the there close stage business to and progress. doing down past to make time are We being,

Brian McNamara

thanks Great, much. very

David Weinberg

Brian. Thanks,

Operator

you. Thank

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

Susan Anderson

to enough your to the wholesale had your kind there’s Or around demand Hi, levels inventory. in like satisfy good quarter. stocking some Did of channel curious, evening, comfort nice the like feel particularly the still within inventory there? do feel I’m you job the you you just quarter? on do

David Weinberg

then pandemic having was and It’s I on. through that’s is, the think difficult very slowing going this down known had could sold gotten truth transition consumer we explosive certainly very, more purchasing have a from it we program be a here.

well think their I So, somewhat how I held well. promotional and cadence up. very managed we well said, how were we it held Like it up, surprised

But with XXXX, have chain waned. done did in than issues, bring were more. to supply pipeline, hasn’t So, able we that more certainly the fill even some we in demand could stores we and

So, QX. we up will pick in that

the of that’s So much as work to as pace, still we’re I a lot But up the a than could move get inventory happen. in lot today. one of is we conservative to there’s can can. I’m still to pick And we done, we be trying if things and sure the fast and it we chain and supply are get out. up items we’re significantly it it sell get faster, could here sure along we if faster further not picks of how

we it’s that to whole bring us do is what and price. in when needs, I to we think a we be reactive and it can’t inventory can it sell taught very continues

this quarter. quarter. the I those So think were two big continue And positive surprises for the to they

Susan Anderson

to just this similar on quarter? Okay, expect the to great. we half That the then half, saw for in And sounds second follow-up we should for again, marketing what second increased marketing good. the

John Vandemore

marketing be it think we’ve steady, percentage relatively place to done, expect to a able extremely little we’ve more, what on far kind a to seen David put has so of sales the should mentioned maybe bit satisfy driving not been be we’ve effective this top-line. in traditionally you the demand. have or on I depending basis to the of year, whether as intuitive, What we in

So, a dexterity what opportunity – at the we should of the come I it be we sales. consistent we at timing with normally, to you can for disposal, kind to expect But asking think what feel the of that traditionally observed. some drive year our differences rate relatively end

Susan Anderson

the hospitality pickup workers one particularly get add just business? business. back I as work shoe and can And big great. a come back have the more. that’s that just some I’m work if of leisure curious on in seen Okay, of to you And type significantly,

David Weinberg

grow. very Yes, ever well for that came It’s said continued to I like business done something and core quickly. don’t away. It’s very business back I has went us. that a think

it we and with So, we continue will continue. it will expect

John Vandemore

pandemic. an extremely throughout for even strong been us It’s for time, division real during Yes. the but

Susan Anderson

Yes.

Good Thanks great. luck the rest of much. so year. Okay,

David Weinberg

Thank you.

Operator

you. Thank

from comes with John question Cowen. proceed with next your Please Our question. Kernan

John Kernan

afternoon results, the and great good guys. congrats on Hey,

David Weinberg

John. Thanks,

John Kernan

back up the half. Why go about gross margin? being talked to we in don’t it You

I as scenario of getting a time. gross go you’ll for price. you over margin a a Retail north it feels be be can seems XX% the think time is you’re mix over Where you shift benefit think year. there’s do like like can

gross margin line Just how margin, as should curious, about we relates your the overall? think operating it to long-term margin

John Vandemore

to Yes, of by mean, be than is going a that portion heavily less mix. I influenced

for side to that bps gross So, of range to to the and something you mix more Again, not it margin XX have margin it that said, accrete and wholesale, bps which XX which take. direct-to-consumer is to domestic will annually. I performance rates kind rate the you got and a create to impact, normal to margins, we’ll is algorithm may we long-term profit we call though, up of been consistent, being cognizant, want keep be mix continue in has on our gross things outgrow the pretty absolutely accretive picture. got dollars, normalized we’ll continue think growth given businesses That and domestic toward international

out whole there seen the to some is raw tariffs, still side We’re input encouraged that pressures that maintain marketplace. got in industry with are by on we vigilance have what shipping, of And pricing. we’ve things, in few the exclusions We material expired. cognizant dealing there cost are that

the but continued direct-to-consumer. mix So something also to think long-term we business. certainly adjusting is that’s and our part international, And for the to of towards environment, benefit is has growth again, for profile that significant legs it

John Kernan

fourth and curious Does I lot year the indicate back the the did North holiday it. revenue guidance school another of more U.S., a like, look on there indicate in guess, off back there’s deceleration particularly viewing and – just Got for earlier half guidance that some the opportunity deceleration the just were questions you’re does XXXX. uncertainty, quarter like implied how seems to America, I’m XXXX. of one for on for versus still a

on comments to to and how back school be great. up any So holiday shaping you see

John Vandemore

think behave. return I or a full and for districts school on a reasonable optimistic their upon I have recurrence in keep to pre-pandemic, similar school. I not probably school, juncture. we plan mean, – to back dependent you how I back at of a saw this school but We whether what think not schools think, mind to we’re is to happens cautiously to back throttle

we we’ve product time mentioned, going that world supply with dealing starting right chain, also to in criticality, the got look to early XXXX I’d those in this also sure in a of the be as environment. have of you to is challenges relative so you the mindful be recovery We’re But we’ve out see light the pandemic the at point to quarters. making are

guidance So, very forces again XXX change, XXXX, But dynamic year improvement EPS, at confidence, the instances, in for of a you through the tax we and we’re should healthy rate. rate a fairly you’ve points you’re marketplace. XX% habit the in to overall. extremely couple looking remain good. in basis said, us that we’re and differentials, also those That got rolled being when we seeing quarters we’re because what if optimistic And are look we’ve the previously on on in certainly some also, the we mind, last that’s about all reflects into pretty And just balance discussed. of keep think some higher of maneuverability, mind keep back things healthy the the years, in is for tax some also planning

at adjust particular to you in QX points for into I think if of that, guide, that number. XX another relative percentage so the And look growth adds you that

in keep that So, please mind. do

John Kernan

you. Thank Excellent.

David Weinberg

John. Thanks,

Operator

Thank you.

Our your final Poser proceed question Sam comes Williams question. from with Trading. Please from

Sam Poser

anticipate on. are shift is got inventory relative more guys QX, questions. it seeing that? – think have just are to with late for the would sell shape And my good you a taking Vietnam you three. of there that you while go something because that in you do availability – other places? in spring through? that go would do given that or more, on forward, move pretty product inventory, you Could you to Is effect a you could shifting When your trucks? to given you it’s continue and of Did that continues an have like looks while I’ve and way be could orders Thank you you if you slow have And problem when – might effect there would see others?

John Vandemore

seeing mean, is a I don’t there. demand we at the in that think for shift analysis partner more, sold in I the any strong There’s our this is fantastic had what it have and we’re if and gave because very could we shift that no the there’s more I product. sell-through ASPs strong is evidence wholesale level.

David Weinberg

are Yes, and things are when slows think and you down. moving people more employ shift, you stocking it

Sam Poser

here problems U.S. they transportation I the you have it product, no, in – mean, they No, just And because ground had – moving. everything smooth open also to for before dollars your available specifically. have orders they out

David Weinberg

I that far retail don’t and down. know sales our own but way as is positions and business Yes, wholesale it’s, board, as stock across our our concerned, still to is the even business

demand we a plenty shift there’s yet. go, that haven’t place whole So doesn’t of the that preclude filled just to means

think I [ph]. philosophy that was

Sam Poser

And then, two other questions.

then you of lastly, give having you to as –give some me sort on of color diligence and that? you by your can mentioned kind in just of about more investment You can mean said, that. a you identify increase what you you spend, marketplace, said the in diligence saw And sort with us the return what marketing

John Vandemore

out going On many I’m year balance trajectory, quarter, restarting say, power markets the for lockdown anything level, period in are the the the the give primary as have, not which – clearly detailed implied that we’ve reflects lockdown at post sales other the the just think pandemic marketing spend, marketing to coming of I you period. of marketing both mean, than of the and I I would what kind just a to

you I’d certainly I So, you’re also bit we if QX, point are lighter in out, efficiency marketing. And seeing is that’s little marketing. there. good driven that our the on in back look a And by – think trajectory

that is second catch what to question So, sure up. some a entirely of of little I’m your not bit Sam. relates a

So you can that’d helpful. clarify maybe a be bit,

Sam Poser

and make, about, how think lot have what more there’s go really in to a it you of doesn’t – of of very was inventory ASPs, the I marketplace I diligence make what you mentioned and you that about doing clean high was would an marketplace back wondered was that it on promotions one I you not Well, the that the just that context to meant, and of that? these And sure think it to go I guess, promotional. would holding

John Vandemore

I think there’s a they that it it we see, that, and control get that requirement no now I people think sounds retailers well, promotional think most sells understand well, I and margin. the cadence ASPs, higher higher for

forward. I common type sense just of So, doing business think just everybody’s going

we and them can’t is begun not This not it have they promote. haven’t head worth now. We’re anybody’s – to tell

David Weinberg

wholesale ASPs, sell-through we our we monitor rates of inventory and But partner. and key – we monitor monitor all do levels,

inventory are it market help performing. sell very watched and So, and carefully. we we ASPs how can retail that see And we see levels. on we’re an watch rates also the that performing plan we the to where have to us of them watching overall watch it our business how then product through carefully. benefit for And is We environment,

Sam Poser

thing, direct-to-consumer, today on quarter-to-date? one update do any – any can color you an July’s you any give us have same-store sales And last on

John Vandemore

you the generally have would general we’ve seen of the and adjust trends and been things I with consistent that. days healthy of for timings remains when weekends holidays and what consistent. seen we’ve of like pattern kind say what and But

Sam Poser

success. right. Thank All you on continued much very

John Vandemore

Sam. Thanks,

Operator

reached have gentlemen, the This today’s and end Thank session. conference. concludes Ladies you. of we the question-and-answer

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

Skechers U.S.A. (SKX) 23 Jul 212021 Q2 Earnings call transcript