SKX - Earnings call transcript Q3 2021

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Operator

Greetings and welcome to Skechers Third Quarter 2021 Earnings Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to the Skechers team. ahead. go Please

Unidentified Company Representative

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

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

David Weinberg

third call. all Thank hope you are for our joining loved you, ones for doing today well. I quarter conference colleagues and us your

challenge focused a personal in safety business our we our remains pandemic around lives, the are world. of and As teams on the the

believe entire comfortable we appreciative Without organization. of the the what we our design, the wouldn’t results deliver, and available best; and resiliency and have are market do We footwear innovative what Skechers achieved do we of them most today. strong is

we Before important it to sales, quarter share globally. impact third business is continues details the that to our record pandemic of our note

period. ability they States were limited times United a product the supply amount manufacture the world, around of closures chain experienced the the where Vietnam Transit of the delayed including at Pacific even we renewed global measures. Further, have from extended what and United especially the factories eased doubled lockdown and in markets, disruptions, Asia particularly ports many COVID-XX others South restrictions, While and in region the our our ship the related Europe in States to pre-pandemic including congestion goods.

XXXX. into through global partnered believe continue the a of for is would period. team chain these special impact factories our will we with supply business of this to our phenomenon and issues as thank This work, them extend to overcome like their Our diligent a appreciation to note to as working who is us half first I that well

global positive are capacity seeing the Vietnam improved. in improving. at are some areas has a some conditions at and has signs we congestion reduced in Factory restarted, However, ports production albeit South that

We $X.XX period are supply a the strong fourth was optimistic given record disruptions our of billion chain quarter start given the and discussed. for new remarkable a achievement third to ongoing quarter. the Skechers global just revenue

average For achieved promotions months Quarterly and by offset driven in a period the freight XX.X% margin $X.X gross sales over by fewer we remained business, record nine partially direct-to-consumer our in costs. also of billion. primarily at strong prices increases higher selling

business for demand gain Worldwide comparable driven sales of same-store our achieved direct-to-consumer total increasing a We in business internationally. increase highest a XX% double-digit and Technology the a in XX%, increase international sales Comfort business business. global gains, in The our XX% sales our driven period. segments, of increased third a and achieved reportable of Skechers which domestically by our result footwear. XX% increases represented including increase domestic and our XX% the international for XX% XX% in XX% business, XX% the XX% domestic quarterly all continued sales by quarter increase our was our across the

XX% operating more unit normal of Importantly, stores where our product XX%, average Comfort traffic price less and higher volume our hours. of increase by per saw behavior. of our unit Technology normalized shopping gain promotional and a return and an XX% a improved in stance, selling direct-to-consumer to reflective with in the success domestic our business increase was we lifestyle The a driven brick-and-mortar

Our over domestic X% e-commerce channel in the year-over-year, same XXXX. increased XXX% period but

in came particularly Korea This direct-to-consumer quarter. impacted international in increases strong growth The Our the United product COVID increases and driven and in and increase from rebounding easing availability as business well limited double-digit and as in Canada, by by triple-digit our Kingdom India. Chile and was was the primarily Mexico, a demand business restrictions. domestic growth in e-commerce Peru of

new third this and one invest opened India, in more quarter and new Kingdom in platform the In in in United We each XX Germany Columbia continue planned our fourth company-owned to including and with in Peru, France. our the stores, infrastructure and Ireland quarter into we two launched XXXX. September for and sites the month, on markets e-commerce Skechers

in urban first plan opened To location in we've store quarter, fourth street in in in this stores, a closed an open a date quarter. the marking also opened Naples, building, XXXX in location stores Italy and renovated XX Los China, including center. we at the evolving our three one locations We We in across in stores in Angeles to one downtown historic additional world. around net a to and XX by New in net third An countries, the new Zealand. India, the end. XXX Skechers In quarter third-party including Skechers quarter there were X additional year in XX opened end, X total, Australia, X XX

grew growth sales XX% driven XX% primarily an wholesale business XX% year-over-year. business in Our China. in by distributor quarterly The a increase international our and was of increase

a well, more particularly performed selling in normal business our and partner distributor with base environment, largest the Middle Our reflecting Africa. East

related a chain primarily Canada. well to by quarter and due Our issues. in China, driven improvements to the markets declines increase well in in continuing as restrictions. offset in joint by This as in venture due Mexico Colombia primarily decrease for partially increased Subsidiary X%, XX% offset Europe, X% to a strong Israel. These Asia several due increased and was in sales as sales XX% business supply were COVID improvements growth as partially by India,

and quarter. with Skechers, came strong improved domestic October. XX% all from progress growth third wholesale tenets. our casual to men's seeing and style well flow for we as well been running increasingly men Sales success our Skechers and products currently WALK, a many women. product global more women's Central performance Comfort offerings, the over ports business style in in in is styles. our lightweight [ph] are in footwear. the in Technology The of quarter Comfort GO sport, Comfort, European resulting elevated with from our We our work, the primarily improvements in loyal goods fit Skechers XX the consumers last In to durability innovation, third and are cushioning to added months, options as as the quality as have as

focused recycled materials. at We expanding collection futures have also on efforts our an

through This a localized more. marketing edition Los consumers' limited key our outdoor, times, included opinion footwear Yamamoto to awareness in Our leaders ongoing and Tokyo, resulted Angeles, with of all approach is and collections key to and from approach influencers needs multiplatform price. digital, featuring We comfortable that goal our drove meet at available influencers London, reasonable markets. Kansai in campaigns global collection Skechers wearing television,

both Skechers are in strategically Given corporate our investing and distribution growth, global infrastructure. we

X.X factory global believe We and distribution gold. reflect certified of we And that more LEED UK center expansion became in our in production on narrowed the be bring and are about Vietnam transit new we California North will our our in Southern feet phase distribution John Manhattan third holiday we like call would corporate fully powerful the completed American our times quarter million for and and Beach optimistic constraints at are Our record expansions port restarted results. season. these of to centers square now, financial China With the expansion in our operational quarter turn the on of details Both to over South and XXXX. facility our a in headquarters will results in the down I first to India. the working brand. improving, We for third DC locations

John Vandemore

afternoon Thank everyone. you, good David, and

severe that makes and this the impressive quarter immense demonstrate us our we results as across significantly as What opportunities brand restricted Technology for expansion. our ongoing supply well this more Our chain growth that as product Comfort delivered globe. the the of is availability despite leader, strength global challenges even

XXX%. country. and issues transportation third the Vietnam comfort these Skechers shortages, product This than mile first. an objective of and customers better At a more quarter. believe lot in This is South than deliver remains inventory closures meaningful in is in a end that of limited combination shipping summer. over Skechers not includes the inventory delivering conditions disruptive about million year-over-year is Let availability at in to quarter fully the our great the inventory, normal delivered the in that certainly quarter. have of port balance others which The factors Vietnam though to expect portion even as The sales more increase dedicated this growth negatively of been we has incremental a There been topic have remarkable container products our me Skechers, results of impacted over congestion infused to widespread impacted the the production evident on third normalized, once XXX majority consumers quarter. factory a our been would Under delays. in-transit the discussion elaborate of last our of degree main we production to

XX% of we let's third from an increase billion, over $X.XX provide quarter growth. increase Both and of a basis, to selling and XXXX. year. XX% to a supported appropriate year-over-year a Now prior results, in new and XX% or markets XX% year XX% respectively. quarter by gross quarter On average the $XXX.X record price XXXX. increased XX% markets million third increased Sales of the sales or $XXX sales currency and comparisons totaling prior margins strong year-over-year from turn domestic where the achieved prior will in where quarter constant our both year, in third the improvements Direct-to-consumer and meaningful delivered growth million international

of of with XXXX, quarter domestically of XXXX. increased the the direct-to-consumer wholesale XX% to increase a XX% a compared compared grew and third third As XX% XX% quarter year-over-year result internationally. International sales increased and sales XX% increase the

improvement Middle X% Our the compared toward as East distributor recovery, This primarily well channel as result to prices remained to about Russia. third as selling of Canada. recovery still but sales particularly a average X%. Particularly increases year-over-year, and XX% continues The strong strides of levels. was quarter in increased XXXX and XXXX in grew good and higher the in business markets critical the make X% grew America year-over-year like India, Latin and below

traffic on the and in weakness to third increased Our Continuing also several of tempered wholesale sales led X% as by growth somewhat in as year-over-year markets adjacent well XX%. stores, quarter strong XX% joint venture driven in e-commerce slower as temporary retail pandemic XX% by patterns ventures growth China, Domestic weighed joint closures. demand, XXXX store compared grew grew in related year-over-year by Asia.

operating a $XXX.X trends continue We XX.X%, an rates Gross XXX XX% with very of million, improved basis, the compared selling basis of the of cost XX% in result decreased Selling majority year. as up steady the prior year, XX.X% from million. and XX positive expenses million On basis wholesale see year-over-year across average due quarter underlying by including but sales to average the year-over-year the XX% margin partially of higher was Total as healthy expenses business. million. percentage selling by reopened to a $XXX.X gross $XX.X margins and segments spending and quarter increased year-over-year to increased the quarter The by prices, domestic versus $XXX.X partners, million globally. our or $XX.X profit the a wholesale was to $XXX.X impact $XXX.X higher markets of or administrative prices. demand higher point and by million as General offset XX% increased million $XX.X unit prior the to primarily to a increase sell-through our points. creation or product or in million quarter in mix was year-over-year expenses to Gross for increase in XX.X%. all

$XX.X from XX%. X.X% costs, to margin Operating in million $X.XX expense operations XXX as or million, combination The to diluted $XXX.X were compares improved versus this year-over-year of decrease the However, points as a XXX retail increase labor, earnings diluted an to rent is earnings prior $XXX.X $XX.X basis X.X% year of expansions, million compared increased incentive warehouse the a net compensation million million expense million shares sales, year a million shares Net were one-time diluted the by This to million related share share well of of prior volume-driven as increase offset per $XX.X year. percentage diluted to prior share including $XXX year represented $XX.X on center grants. related with was restricted of per of factors, earnings Earnings distribution expenses. new points. and due openings $X.XX dollar or partially outstanding. store distribution basis or as on cancellation of last This and $XXX.X corporate outstanding. store

the XX.X% tax to And now effective year. in balance versus sheet. rate Our income turning quarter for XX.X% the was prior our

receivable $XXX $X.XX were the was a cash reminder, reflects XX% cash with second We cash, which of higher Total billion, at This extremely a credit XXXX. accounts quarter we or wholesale remained $XXX.X XX, and fully million $XXX from approximately XXXX. in our investments. repaid September Our outstanding XXXX, XX, inventory $X.XX million of September XX% Trade the quarter of ended September in facility and liquidity as million from $XX.X $XXX an predominantly the billion of or healthy. increase XX, result was sales. year. last million position of revolving million an from equivalents decrease quarter end But increase

our reflects a overall the critical at over XXXX million current increase stores customers September on However, as September including an compared inventory was reflecting markets and long-term was available to lower Capital States venture $XXX of our expenditure previously million were million in in last investments and XX $XXX to distribution repayment expansion quarter. our estate, related facility which $XX in in direct-to-consumer and retail million other real the of in to $XX.X credit revolving related now domestic $XX.X centers fully in related our of corporate million new million million and $XX.X owned new, noted, XXXX Europe inventory, in-transit this X% on-hand inventory approximately was balance deliver is operational significant million quarter United that like inventory both the XX, our the United of related Kingdom. to stores, to and retail and the by at China $XXX center, and and Total investments technologies XX%. to distribution debt lower portions our XX, joint by offices to

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

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

Now to turn I will guidance.

third and continue the we into chain of guidance. our will believe XXXX, constraints first previous of for updating experienced Given are we throughout year remainder supply which the the half quarter, the the we severe

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

freight net X.XX improved essentially in the earnings For billion We be offset sales $X.XX margins billion implied to $X.XX. costs to anticipate flat share will will the in compared and to year range gross last fourth the quarter the pricing. largely $X.X range as of of per diluted this

Our XXXX. effective and call XX% XX.X% will rate of compared for tax over XXXX as a for to in remarks. to closing now, I'll And David year be X.X% XX% and the turn between rate the in

David Weinberg

Thank you, John.

quarter the earnings $X.XX, of billion per third a XX%. Our increase for margins of record period achieved $X.XX was diluted highest revenues year-over-year of our a represented our and history second of and and quarter XX.X% gross in we share sales impressive

Our remain innovative our resonated in this continued of more in Europe, remains lockdown welcome consumers in Traffic operating sales the in demand increasing of managing new price Middle Asia our increases. looking when across have to our much Comfort and consumers and a both more earlier model e-commerce the by the month opportunities Comfort from a units sold in we product apparel at on parts average demonstrated world including year around restrictions. the globally, the reaching business. strong, Americas, is developing change to the focused the with and drive under distributor expanding from transitioned selling and We where stores world directly footwear. through Philippines expansion offering, third-party East, our

with consumers. teams to our shortages, points, touch a and of challenges resources, across container to Skechers supply goal are all port the tirelessly delivering factories, customers in-country Our Comfort address chain congestion transit, working and all footwear

of time product to and consumers marketing is communicating company. achievement will be We year a we be close sales from teams. will Skechers We perspective restrictions globally. XXth our Technology a uncertainties forward year Comfort that anniversary. XXXX, mark we'll on believe message keeping continue the record look We another a remarkable given to are and global the watch XXXX will a a our pandemic-related local where exceptional the that health also our and We Skechers, for believe

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

Operator

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

Jay Sole

it that thank will you will you you it there? margin, impact sense much. remarks your Can an can us that or little give the can will of that you fiscal 'XX and QX you so impact on give sense if us be much sales fiscal opening if think great, be on will just or Great, David of chain supply mentioned impact will impact be and impact how a start QX you 'XX. issues in QX just a an

David Weinberg

because certainly the the we The South But all to and originally Europe then, weeks represents in I stronger clean starting last would and at the in that items QX QX is. have are won't are and especially no getting available-for-sale we somewhat know than most know and better October year transit, had in picking Yes, John's a for think of are early things up States. we pace, U.S. comment the up in anticipated ago. QX. it parts facilities transit additional by part that parts in to $XXX to few America million we and get matter leading port ports what our going but better, somewhat are outside United is had things a the we been of

wholesale to talked will item either what be you in the in it commitments issue, long retail our that and things we've should impact our John quarter an made certainly all on supply or I overall online that sales there's issue our so already your in numbers, related. but impact, know know the basis And all margin the more on in on impacts for to are margins, timing necessary all know freight because second, I will if are, think and transit related. depending that I start sales about shouldn’t gross I sales. these baked an on is spoken chain first that stuff timeframes customers The additional a picture are and never they because the by and businesses. last, don’t alleviate but don't they very to personal that's it think the how gross

everybody and we're reception So is is very demand we that can selling. still need great all. seen what at turn There we of haven't it and in quickly wane because

Jay Sole

great, there the bit, then break Okay David that or break basis there's impact, follow-up can margin how impact kind think assuming in so for just [ph] many patching points was freight doesn’t some can much sales been, that you gross in in maybe you've from a little helpful? about one it million more, are I a gross of point, you SG&A XQ us it's is QX whether margin points for that out will sound is of ask was costs And sort if of like that? can out and gross margin was to a mentioned in margin, we us if issues impact, but hundred on and on there increased couple basis XQ, that XX what if you sort of that that

David Weinberg

worth had I margin thing you to originally of for third that are pleasantly In we any it's expenses more our are the more in tell The that take because QX simply it's we you anticipated like of even QX and than or all is in to tell. conservative don't there. that expenses is, hard you're it know up so quarter, operating issues it mean been October. simply leverage net significant could had down, would I have higher so are a I'd there. to guidance, issues I reflected would what when the be usually believe, only we've could our because surprised there's in and we

do that As freight see concerned, overall to it's the difficult is far so see as some, we picture. alleviating

a year, higher be now. right say, as the and opening in I John fair think, seems that dramatically changes last that think would little his be it's unless something gross year comments, quarter and our said to I margins equivalent last picture than to last to

Jay Sole

so Okay, got Thank you much. it.

Operator

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

Laurent Vasilescu

$XXX think about anticipating from $XXX And XQ million, but that's XQ? that dollars you me that million convert right think think about million, year-over-year. Good which John, Is from slippage it's I is it? and math, slippage on think afternoon. into the Thank was I right my that I $XXX Correct question. in-transit then way up you to way for the similar XQ? the mentioned XQ a if to think inventory into XXX% are to you I my up in taking

John Vandemore

just on let the that first increment, clear is The be Well, million represents numbers. $XXX me the so XXX%. a

So customers the number take we available of and would a have in if to that third quarter. for that's you cost the delivery that believe number, been portion absolutely

So you it's got to keep in product mind type of the we it's availability the chain market think on that I will results. on of our offer had vary the that between impact fair point wholesale third the quarter it the and direct-to-consumer, and constraints reason had but illustrative say supply to on we is

Laurent Vasilescu

Very of saw done about the to ask quarter very the you phenomenally still just helpful. outperformed to what I for I'd six you've I some be but years. some date China, course The over to growth then love over that think, rate helpful audience. the wanted you commentary, quarter, the the well hear international last And brands, maybe of would

John Vandemore

key an impact, but There we outperformed of some were of the this we're outperform point pandemic. against seen the it. the have, and the XX/XX had we're backdrop observe our were drive struggles other activity, XX% the brand probably mean, we out, put in incremental holiday think to to clearly on brand. the think growth in and of up I were other owing brands about restrictions our today to I very restrictions we're coming encouraging, Yes, can closures, quarter window mean are there most important Early optimistic continued the growth I of what continued western you've actually and by returns obviously thrilled but so the I China that we on that's to far out movement, in headwinds brands period. there think we selling because

To color, on is and to generally, limitations you, transpires. see COVID-related performance want of with add the or how would the we China the that the foot and thrilled we're situation area others traffic But there. movement heard and behavior. which in put the wait areas given tell because I you've overall, So from retail struggle consumer

Laurent Vasilescu

can more to And think [ph] you Kimberly's I to I month by at if that to last great squeeze one mentioned you in in, revenues $XX are billion That's hoping conference hear. question apparel a get be XXXX/XX. Can that maybe to you that geographies, sort is like like incremental organic, any out or really is of would us? number, getting for just with great China like color parse that John

John Vandemore

Yes, first reach We billion global we the formula by believe well there within historically. what the brand. say continue. and I'll to those absolutely opportunities pretty done to thing spoke expansion is, The this $XX XX/XX about of we've the is get is similar

rate kind You together wholesale of things. of international growth put a mid the teens in side

then we put expect it's direct-to-consumer both, higher of behind. a slightly least international think investment a digit rate, you we which together reasonable rate. wholesale put up to growth to a put because And growth You have marketplace the single the the at stores, e-commerce, domestic lot markets mid and

our more we've in focus Comfort precisely And the footwear that's historically, on the of and world. in what think company so back with product if especially future, done the almost look you Technology and being lineup that we the is

And so on that's precisely this piece think brand how XX/XX I not to on to That's opportunity the whether platform. it's $XX and you that how factors. get or be to together external is billion grow there markets dependent bit an going we a

Laurent Vasilescu

you hear, thank much John. great That's to very

John Vandemore

Thanks Laurent.

Operator

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

Kimberly Greenberger

channel it mix of will or for premium you a that an AFP increase demand offer Any product unpack produce? us, guys that could great. is John, is bit much. selling and that so price you in increase is consumers indicator the you that know average more or sort lines mixing are be XX% little you the like-for-like in of thank that seeing, if product could I you Great, obviously just color into to is shift wanted

John Vandemore

Sure I'd promotional say we've I a then it's particular, cetera. comfort to infused technology say a pricing the combination and at generally of premium our much et the elements the absolutely of the Cushioning, Max Fit, slightly like more into Kimberly, would it that strength restrained on shoes from In and brand add and product. the outset product the testament to some of higher obviously Arch company. is speaking, stance of

in Some work chop value probably that that it with more it's on our stringent inventories, margin of I not them continues consumers, our Skechers. discipline the for but simply would also and up eaten work environment to to the strong I part to strong partners equation driving current sell-through. steady coupled seeing to continues We're ensuring point stores. of to very also for more unique is ASPs but out would by for our wholesale obviously that's

so it's the wholesale in product the is only in able and I a very a year. that's mean, seen literally strength it then the to composite environment our coming our product is there with spoke and we way quite we've well the forward is it to fantastic, expect land continue it's couple stores, attractive about the next which are of that this to facing and that own of the picture once at we into because stable quarter what ASPs. challenge it moment I into being in our at lineup brand, partners in for demand hands the certainly have put and And continue of the already, we for think the to last what we quarters, expect is XXXX direct-to-consumer but product especially beyond, testament we've selling

Kimberly Greenberger

agree. Yes,

reasonable in-store. in question not there case and your you that path please So was met looks because down the It my me follow-up of that XX% demand to revenue being the stocked me eye-catching. like it that think correct minus the in-stock if and right I XX% which officially sort getting brings are that's that levels a replenished inventory hear the there number, quite because are the didn't on about like not there's both Is stores obviously U.S. sounds Europe but that, on in is actually perhaps table. to being left probably just

inventory what Just December maybe you've to are you of So of sort that cut levels? more can the restore even got it is possible the that half or -- is end that those of is sort make prospects a you there in-stock progress? Thanks. in of in front by

John Vandemore

me let David expectations about in come sort I'll of Sure, amounts the recovery. then and on speak for let

the I'd unfulfilled the that capacity available that's a thing at limitations end product sales in The due on again the in say available was and to product of order testimonial actually quarter. XX% would first our our is that to impact on those of reflects quarter. the markets of the inventory limitations number say both than I on-hand greater

and numbers modest terms I balance for the recovery, of our we our to the built-in In of guidance think year. the have expectations

of David we're encouraging Europe. seeing mentioned, very out As signs

we highest stores, I right obviously quickly think question big our the core itself, mark now have what think our own I is domestic between can domestically. and product remedy the congestion demand plus the that's how because port available customers mismatch

getting operating with again, a would really in So as as to of you lack can for the challenge the case. the no bringing, chain for we're product, normally it's I demand business brand, the certainly tell be technology our supply the for efficiently is there

David Weinberg

Yes, I progress make that States. United important already it's outside some responding note to to the we're think

is, the So will how up. this question clean quickly congestion

and is overall people of raw there procurement chain, when the also is Now, are there about of some the talk concerned. factories of downtime materials at impact supply

what improvement piece improve every the those performance docks opened significant pie. are are to transit, We piece the increases bring in think and containers trying amount amount the everybody because we've I those is, We've the open, show We've materials. Europe, actually of gotten retail biggest through this attention in a in of found our product. we're quicker. for and ports made needs everybody's see product, only raw factories increases at to already with and of

through improvement until think certainly and first quarter. you'll I sometime slight see a line not quarter, maybe So get I doubt the into stores our full replenishment of constant but we'd in

months couple it Although sell-throughs. would quicker, that United amount up we would show ports of in transit if do next big we significant piece and in have to in clean the the the pick a States, retail our a

Kimberly Greenberger

Very you much. thank so clear,

Operator

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

Gabriella Carbone

question. for my afternoon. good Hi, Thanks taking

So there spike country? was if the I certain this within in the you saw parts regions hat any was quarter, know across of differences U.S. curious a you

David Weinberg

a there behavior. in the say that continued difference did regions. channel dramatic difference in would We I not was note

in volumes traffic depressed mall seeing tourist still in You're offerings, based sensitive corridors.

had past outgrowing For we're as the as XXXX, the magnificently up us in e-commerce versus business it still to significantly. while

that product So big below. continue box stores impacted tourism, and by concepts. warehouse neighborhood outlet traffic by we're although channel, was our healthy those a issues availability to outperform Particularly certainly again, impacted

growth. overall year, is of everywhere if side a the I which described. wasn’t some you significant on encouraging the the I conversion of translating deviation really think just take certainly totality from that in that there think of things up terms profile of that regional into quarter picked But almost and performance, trend that I

Gabriella Carbone

bit into a about in quarter, is should quick if investment quarter? was you any fourth you be dig wondering and it, a and color followup, just freight and around further, side Got this SG&A the provide labor of can I marketing, thinking there we SG&A how can

David Weinberg

we is, because I marketing. the SG&A geared were back Yes, up noted, in I mean driver mean as the big marketing, big we drivers

is tough it's working think got well. out when spending is you've because I the core product creation really, demand availability your really and there restraint

just so, to quarter. standpoint, or we in not that's throttle And could the something wanted either from timing significantly

the get as plus result, under-levered but So, bit, healthy again a that on sponsoring demand. a side,

in that is the cost particularly keeping a division mechanisms The of of was other place ensure but labor stores our in have re-equipping from the was with driving the labor. stores personnel so major amount that retail and driver of everything reopened, key right the stores of did, to increase, some productivity put is absolutely and We retention bit and definitely costs pace.

profitability the because profile there then then strong. with increases have things. this year the last is associated the are costs around pandemic year of And side very there the mostly still some we variable So weren’t wholesale results. And overall do the incentives in of

aside, they our operational note China bringing the is distribution center. are center UK this well, and we distribution As

of point think cost I I main there's which lockdowns in but drivers running, about overall costs is the understandable. two related operations given the incremental marketing with and those a and associated markets up getting completely So labor last many small after to restart year you costs the are

Gabriella Carbone

you much. thank very Got it,

David Weinberg

Gabby. Thanks

Operator

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

Susan Anderson

taking for the Thanks evening. business. questions. A my quick follow-up on good European I Hi guess

mainly the just So due in curious chain? is was wholesale chain? by supply then margin, declines that there on the that down also And the growth supply to distributors was driven also

David Weinberg

of that last had supply chain say think main stem of is year-over-year culprit culprit. that from both but costs. the previously, outs differentials carve I'd some There the supply the I'd definitely of Yes, chain slight those, freight in existed I is were some certainly the say primary

Susan Anderson

Yes.

John Vandemore

there in are picked through have Europe In last could going what we see we October significant was portion a the open, up do pickup already more been because in quarter. the October ports from and

truly… So,

Susan Anderson

Okay. at guess I'm in saw seeing change just year is but what it you guys what helpful. what there curious if guys Great, Comfort fashion And then all shoes walking a is there I very any I it focus selling like versus on, you of in is this are or are last difference trend you better consumers more are sounds real mean, seeing which versus you Comfort point? buying. any

John Vandemore

features our selling and in styles. features now across broad of the we're more shoes lot and the spectrum a comfort a have We

more So a features selling quite through and selling we're comfort the seeing at price quickly. obviously higher and

sell well, throughout but well it's of walking I features think spectrum of So selling one across is our it cores a broad that is very think, I certainly portion a it. it multiple and we the

David Weinberg

talk You we to every it category particular know, Comfort instance to one I Technology, When understand. is really or important not think in not. about that's

can Technology in athletic, comfort it categories think one you So actually the get across advantaging is get in in key approach be of get that's can that seasonal brands different can dress, you boots. is think strategic and can we're Comfort I a and it lot taking sandals I you that

that So across comfort layer expands focus most that actually of categories. technology our of

we So categories in it at different the have core points into time. feeds strengths specific in

Susan Anderson

Okay, holiday. the Good great. detail. Thanks so luck this for much

David Weinberg

you. Thank

Operator

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

Unidentified Analyst

the Good Thank afternoon. Krista and taking margin. on questions. Thank for color also all our John. This for ASPs you for [ph] is you Giberon gross

of there. sort Just one follow-up

the see how from we of both hearing input ASPs including kind given look As about your XXXX rising the into inflation, you of half and costs DTC? we've development of your wholesale what first here for materials been

David Weinberg

last Well, that's of at really to couple pricing a especially obviously pricing you say guidance not quarters, we've XXXX continue the given perspective. to and but a what from I we're ready would perspective, I expect today volatility, we're the really looking what level on can yet, from provide think seen something over

take you've quality look at no I overall, we'll seen is reflective than right product to step think think I in there of now we'd mind pricing in strength the my the and the additional truly but forward. response our costs, that other is reason in of pricing any now

on things continue then from to we'll be marketplace. ASP So the perspective needed we an think in going input it's move trajectory depending and we an as how cost can adjust

in Some seeing durable a be think time to going we're That's we costs don’t of freight, the moment particularly input that's element. forever.

feature shift So businesses towards continue be direct-to-consumer range to well. which of overall we being build as products keep want the may to costs drive and goal over make to mix situations greater the sets sure by margins But our we to time them accretive activities. in are there's consider our that. would that where some international Other able margin in

Unidentified Analyst

sales on domestic share books should could be side the give you but Great, think how we could of transit so us anything point, helpful, thanks. much would thank that the performs you things, of the of little wholesale If you sense QX? or in just give any channel And terms at just about outlook then a how have visibility order I this for into realize you. is in that

John Vandemore

question And that's is can a how of It's we not the question much land. demand. key

book. handicapping order Our our expectations reflect fairly built to our actually a into significant guidance

a to be we book how can it. land right much question order It's going fantastic. of we when Our and really product now looks land can

so question good result we landed looking So from the be what but we David in to by and can far, a I we're flow a It's port to then as right And book terms though, then I delivered. what get of encouraged of get see. again remarks on the we great October tried goods as is prepared his incorporate and a think fantastic customers, to that's now now. what see so our would say we've in commented going center to the unknown. of order then just distribution right

Unidentified Analyst

you. Thank

Operator

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

Brian McNamara

for your part, your the exceed taking thank do a requires you Yes, imagine assumptions to I curious question. chain or you prior believe which in supply meet you of excluding on the position number are challenges I'm guidance?

John Vandemore

Yes, that's simple.

David Weinberg

so Yes, it, you MIT it of when that merchandise gave think transit, I it's portion meaningful that number, about we in would look felt I we would the a have mean do that say be guidance precise that been and think we the absolutely chain above positioned was reason only been supply landed And were credibly delivered. related. have can within or we to

Brian McNamara

South? secondly, assume the production then to is And headwind exposure quarter, particularly but I the okay. it, your larger in quantify Got the could in transportation Vietnam you

David Weinberg

I as that there's XX%, which just in more that is where that commentary, noted again depending good, closures factory of now South majority not us our point that we by availability actually the than and and was given time. in than our we production and fact the we affected certainly was tended made ebb being produced to any again issues significant than Yes, limited. XX% relatively it's would about quarter. for at though echo the Vietnamese they the product the it more commentary restricting issues in mean actually talked so the in the I are was other what's impacted by before, less just flow on much just less and be But alone in issue of

Brian McNamara

guys. luck of best Great,

David Weinberg

Brian. Thanks,

Operator

end conference. we've Ladies and Q&A session our concludes today's reached of this gentlemen and the

you we your may thank participation. time You this disconnect and your lines for at

Skechers U.S.A. (SKX) 29 Oct 212021 Q3 Earnings call transcript