SKX - Earnings call transcript Q4 2021

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Operator

This is the conference operator. Welcome to the Skechers Fourth Quarter 2021 Earnings Conference Call.

As a reminder, all participants are in a listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn this conference over to Skechers. ahead. go Please

your begin You presentation. may

Unidentified Company Representative

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

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

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

David Weinberg

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

grateful and given sales we record the in on history second a company's global remain challenges proud achievement extremely XXth and flexibility, mark entire as safely. quarter all This fourth organization resiliency, well-being the new is continues operate to gross XX.X%. are year the we $X.XX business, that a focused teams the our achieved quarterly the remarkable and of our face impact sales margins Skechers we the worldwide As continued of pandemic above efficiency, and to billion, business. highest of in with our

to our strong These margins closer of in $XX results full of goal Skechers the billion achieved by billion sales For gross brings record or of XXXX. $X.XX XX X XX.X%. exceptional with us year,

the our saw While fourth navigate reached quarter, port through improvement previous the remained December continued improvements global the through congestion our distribution challenge January in around costs team centers The center. logistics more disruptions more distribution worked than diligently the supply as months. with chain them. and our and moving goods a eased for to containers We in in

international chain increase in innovation, our as efficiently for possible. in of domestic the of continue for and at to brand periods. exceptional of continually half sales sales. the and a a quarter. within with quality represented for to international through half of and remain the believe quarter XX% gain out other sales for ongoing to highest registering we the developments was monitor the growth the as optimistic the deliver the our fourth will our exercise, many first embrace these XX% for challenges XXXX, will result XX% our they International this all supply wholesale products. increase both activities are demand The the Skechers price. All for reasonable We of a products Consumers outdoors dining reportable our but latter Skechers our attribute We ebb segments in quarter sought gains we However, the and sales global year full achieved XX% and growth year. comfort, fourth the broad-based total style and the

Our channels, reflecting business coming our our year-over-year of XX% all in grew international fourth the increases the from with wholesale strength brand. global quarter,

our Several Our distributor led the growth. Turkey. nearly a triple-digit Russia, United Kingdom Subsidiary with was India, largest of the sales followed the driver East business increased largest growth markets. impressive of XXX% growth ability believe both The even for the to with from came Middle increase and our achieved country. and strong port Scandinavia, by by pressure eased. and deliver gains to Indonesia growth strongest from some double-digit X coming product as due demand We every sales this our and is goods XX%

world. in single-digit on for Philippines, model as to distributor temporary of due which innovative promotional transition by in sales third-party technology venture well high resulted in XX%. as in to New our products quarter given the China directly This XX% quarterly the joint particularly around China's of a chain in XXX Turkey, our of locations strong distributors restrictions Skechers stores store gains others. in our additional for which Mexico well in a less X,XXX in the supply business comparable and the across strong domestically. An growth among comfort driven and higher-priced XX% increase a number the there reflective our the a joint footwear. select delay in for some The tourism. demand notable, Skechers. achieved at in through XX% from was India, increase by Our direct-to-consumer addition Further, notable continued as provinces business Skechers domestic Zealand, opened direct-to-consumer features being and the countries Worldwide XX%, stance, closures the the Skechers' e-commerce, and selling XX% increased and a of as fourth due domestically COVID-XX periods price sales brick-and-mortar is inventory quarter quarter managed XX% a of our sales was gain increase internationally. in was in and XX% total, in partially average a decline direct-to-consumer of first E-commerce our same-store in In partially unit Asia business markets of offset were XX%, our international quarter Australia, XX by XX% including quarter. by stores our growth end, net increased including business increased was third-party per Bhutan, low during franchise China which COVID-XX, offset in improvements the challenged still quarter. in declines in domestic double-digit the inventory several achieved The stores, challenges venture by in to the XX/XX availability inventory. result decrease a XX% of and

international Netherlands period business due and direct-to-consumer increased sales several restrictions. and same the closure of e-commerce Latin in our local The domestic This our in across retail increase XXX%. despite to stores strong driven in the XXXX, to the America. Europe Austria by was business health compared was primarily temporary As

our shopper and invest we in Japan, quarter, to systems direct-to-consumer in and at and continue including in this the Skechers expect date, e-commerce America XXX to the as growth we sites slated each kids business fourth concept to to and of Skechers POS new which Sales eight to XXX with stores. first This and close and in came in from growth running locations, wants. stores the six quarter updates consumer and is the locations in company-owned quarter. upgrading follow. retailer, launch though store wherever in an company-owned We closed completing our primarily plan in further opened year, five Europe our our also in well. women's closed two and Kingdom, quarter. United are United stores United consumers to of end the whenever, stores, three X% the U.K., the are currently chain men's of capabilities for end Austria. several we've capable We Europe in the performed to with majority India, improved year-end. quarter our To that brings in the and in by the XX States. the the of in locations continued however quarter, Italy, another Peru believe Chile. additional of our the wholesale year-end. third-party mall-based count markets platforms rollout the in in Colombia States one particularly The given the and including The for opened of Italy, positive, and quarter. one in continue in company-owned X,XXX by in new North impact open our We supply the More by global domestic to In XX planned the categories the fourth walking States categories, wholesale the domestic challenges We January, and at Germany are France, we XX XXXX, investments demand fourth an omnichannel India, addressing in These progress process of the United

to up, American market. to of in the in largest a are flow of able us with December earlier are partners deliveries shipments current our allowing improve through our to continuing our the goods distribution picking center, quarter, for better We to from meet pace the in demand wholesale maintain Skechers our and North

doing is at needs price, a One footwear of main just reasonable comfortable consumers' that. priorities meet and with to we're our

consumers their more materials ever-widening needs We trust. they more for have with the comfort brand fits, shoppers offering and with appeal an incorporate demand Skechers fresh The footwear to to expansion our styles that of allow a consumer product meet to seen globally, base Skechers universal with collaborations react for comfort and to of recycled our consistent and technology. positively

multi-channel that through well magazines, product efforts media. to and Skechers' As always, offerings we across awareness the touch all in-store, social marketing points, united as our as outdoor online drove message radio, various and through television,

record into continue a the expect While momentum we to XXXX year, XXXX. was

in to also a January center, both strategically location relocated larger with than to are finalized and India, feet We we infrastructure. LEED investing our financial certified DC our expansion to Panama on our American and X.X We an space the to results. on will corporate John square In in more million build in feet from a I'd year. center, the continues over And allowing opened center, for space, XXXX. like our headquarters The for later intent approximately California distribution bring feet distribution to gold relocated to to in more Japan XXX,XXX which now new in square call this square we turn additional us our details doubling recently our our to be and purchased in XXX,XXX facility North distribution Southern grow corporate slightly XXXX. distribution the

John Vandemore

into brand what as of proved year quarter. margins delivered and Despite prices these afternoon yet restrictions, This in good which continued at and in closures, and business operating and supply in recovery of COVID-related above a many year. of quarter David translated more another selling partners. you, beginning challenges, sales everyone. disruptions, momentum our we the Skechers yielded many Thank as wholesale exceptional the operating with XXXX expected product among to our average chain fourth higher strong another our challenging direct-to-consumer year, be well record and the

to We our direct-to-consumer with continued and business. make business relationships internationally our the also in the consumers strategies, core year our increasing investments depth in throughout of our growing

an Before spoke chain into this supply about about let to spend me the quarter's moment disruptions quarter. performance, last update provide on getting specifics a we

quickly wholesale most the extended our of wholesale congestion, to mitigate and many The in we inventory, First, million our $XXX.X be include delays, freight times, possible. factories, accounts sold over product the which port evident direct-to-consumer shelves This and the incremental could that onto challenges we our work and supports partners impact orders elevated in an these we of inventory XXX%. diligently these throughout manufacturing transit own worked obstacles. distribution effect rates note year-over-year those increase inventory get as as quarter. our was persisted balances, quarter, business, not to Alongside of to accounts, and in of a which in-transit disruptions,

As to continue. the an optimistic David rate containers see are and started delivery mentioned, we of this recently in will improvement

to our we of persist XXXX. We have and remain brand the confident confidence encouraged fund Nonetheless, in XXXX. strength we business but these new are and fully expect million, level in achieving our into in $XXX monitoring sales business the repurchase health three-year expect up of goal program the which events flow. embraced some a by of free of billion challenges our trajectory share to Board the long-term daily, of cash to well $XX of This to through authorize

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

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

was to heavily strong fourth The impacted primarily United XXXX year, XX%. improvement Kingdom, many quarter including remains pre-pandemic This last Russia. below make India. the levels. result XX% year-over-year Middle Our slightly critical markets grew the like pandemic recovery, as good particularly a the year-over-year. of in the and to toward compared XXX% and continues and recovery by increased grew strides distributor Spain of in markets business East sales Subsidiary but channel the

Our ventures year-over-year, in led XX% by X% a China. growth grew joint

weighed rates patterns as attractive impact $XXX.X Total operating by of offset million operating expenses $XX.X quarter our the increased points an selling in inherently or These gross a growth this which As very XX or were year-over-year, partially sales Selling with compared million adjacent basis higher distributor selling of the million venture percentage XXXX, $XX.X $XXX.X prior we was margins. to X% sales of expense margin retail creation average strong by General to continue stores basis as China higher XX% Continuing lower traffic is for to Asia. partners, by Gross versus was prices. Domestic grew to in fourth a joint to year-over-year XX% and XX% wholesale and business, wholesale several demand by in of increased e-commerce expenses growth quarter in globally. by strong million. underlying as higher $XXX.X the a including quarter XX.X%, and increase. somewhat business to additional reflecting the spending year-over-year demand, average among also freight XX.X%. administrative sell-through reflects quarter year-over-year by in sales domestic weakness in trends pandemic-related mix the in The see decrease well store prices. driven year, markets margin very million, positive to points our XXX tempered temporary $XXX XX% quarter expenses and closures. in due million on from the or slower XX% increased but the higher improved

XXX.X of However, this year operations or as XX%. basis points. $XX.X million matters of of prior a XXX million factors, increase transfer sales, income from $XX.X basis combination outstanding. of as property, from share per versus including certain The dollar points improvement in million benefit Earnings of an recorded Net prior quarter, higher an a earnings retail costs. the labor, resulting due diluted amortized with in diluted X.X% the was of in which legal million were XXX store of earnings represented shares will increase intellectual percentage incentive of improved distribution-related and year. We tax an were $XXX.X be million multiple intra-entity future. or $XXX.X margin an settlements $XX.X Operating compensation, compared the X.X% to to $X.XX on million,

$X.XX. prior $XX.X per this Excluding diluted million share of per to diluted shares settlement earnings benefit adjusted or of year compares net of outstanding. multiple share million and the effects nonrecurring were matters, $X.XX earnings tax on XXX.X legal the diluted This

benefit was a a reflects property full the XX.X% the the fourth quarter. income which was transfer the which effective intellectual the company's from rate effective tax the negative quarter XXX%, negative transfer. year, property rate The includes a XX.X% intellectual for Our tax fourth impact of in for

have effective XX.X% Excluding sheet. rate now this benefit, balance And our for would our been tax full the year. turning to

decrease cash Our cash $XXX.X extremely XX, in XXXX. billion investments. the and a cash, quarter This liquidity equivalents healthy. or reflects position remained from XX% $X.XX We with million ended of and December

facility in we which million our $XXX credit retains fully outstanding a revolving of at to unsecured or XX, Also, $XXX Trade last a to from for of $XXX.X sales. the quarter $X from our $XXX.X billion, was XXXX. we senior XXXX, increase reminder, liquidity inventory $XXX.X million of total end As an of million, million million, that up in expanded facility December provides second credit the accounts of repaid accordion December, feature which was wholesale increase were quarter billion. receivable result XXXX, $X.XX XX, December an XX% year. Total higher of $XXX predominantly million

the million investments distribution offices, United our center, to Kingdom retail related in and related technologies venture-owned to $X.X Japan. Total direct-to-consumer expansion $XX previously as increase December of balance million corporate long-term current this XX, $XX.X in our new for to in in the at fourth mainly and our of to distribution quarter Capital $XXX.X stores December to million inventory, were XX, investments XXXX. $XXX portions, reflects million domestic was which to However, China, related and chain million $XX including in-transit million expenditures of noted, our at $XXX.X million, centers related XXXX, attributable debt, joint the and both million $XX.X compared supply disruptions. an

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

million, For be in expenditures both infrastructure, the omnichannel XXXX, and internationally $XXX we reflecting total continuing capital U.S. between retail and $XXX and offices. investments to corporate expect distribution capabilities million our in

will I guidance. turn Now to

its effects, but severity year. XXXX, expectation of projections predicated such disruptions, fiscal the in the and upon after are begin the over course supply ease our pandemic continue the For to will that as chain will

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

of to range range $X.XX the in sales will down first quarter, $X.XX. $X.XXX gross earnings freight year to net last We margins offset will in the of be diluted For pricing. $X.XXX and expect share anticipate per we the be to as billion to slightly billion compared improved that costs

to closing effective expected rate the remarks. for for between over Our tax now XX% is to And year and David I'll XX%. turn be the call

David Weinberg

and style, Thank you, quarter the sales respectively. for with and and and given resonating comfort, the the drove supply XX% chain year sales John. ongoing $X.XX constraints Achieving for tremendous $X.XX fourth for a of accomplishment, around COVID-related fourth billion and for the XX.X% challenges. billion world full an especially at record is gross innovation, The XX.X%, consumers quality of year, quarter of of margins Skechers and in XX% with increase the the

COVID its to hopeful the normalize of here in the improvements saw and reached the American XXXX, well peak and center current countries has variant are world again. begin goods North of through many Towards that our can distribution in as we as the close moving

delivering Spain, strategic to continued comfort announced disruptions this XXth recently address anniversary footwear situation more quickly the be expect and business, least in chain innovative roster marketing monitoring growth challenges, introducing sites We'll e-commerce personality, growing the shortly. Kloots ambassadors, out supply to possible. looking our with half goal and the product, our and through we're are more campaigns the marks the to at implementing year. many underway. Skechers We teams tirelessly with Portugal our technology chain continue of and multi-platform customers the and the the Italy consumers around working developing of as Amanda of plans forward world, television and including first XXXX rolling Skechers including to comfort logistics do as supply Our globally

efficiency new opportunity driving are and the of further We for technology the message are operations the will metaverse, is at Innovation, the that be brand marketing plans to comfort creativity and finalizing the supported our efforts, Skechers our an comfort, product and determination enter to forefront by and creating deliver Skechers in entirely home company. product.

health continue billion and and $XX and the of future ensuring as will determined driven the sales. on and XXXX safety on to to look the road we together, Skechers is focus record the another team Our in make organization, as we year

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

Operator

time, a [Operator the line BNP Our we'll question of conducting be Instructions] session. Exane. first this Vasilescu question-and-answer comes with from At Paribas Laurent

your with question. proceed may You

Laurent Vasilescu

the ask afternoon think repo. this How well quarter. you for do and for mid-singles love about Mid Thank about algo congrats finish of strong year XXXX. last wholesale to on mid-teens you announced as Good kind we to a talked very much. as -- about for the domestic that algo high-teens David, to John, the international for wholesale. I'd XXXX? and DTC

John Vandemore

look in continuing intact. at Laurent. the between those to think chain growth understanding COVID over course overall remains guideposts relative continue impact and fully that say I we shift though supply formula said, for XXXX will I the being issues sales to may generally drive and an we have would XXXX $XX with billion segments that Thanks by of the to That year. the consistency report

Laurent Vasilescu

on That's here great about it's we know ask, China hard And X-year slowdown it's important. may? quick I margins think X% out I if a gross And have to think XQ. then I hear. follow-up XXXX? a just real I do any on I stack, growth but this question to is for didn't think a if may the quarter, up call China show then How say, versus I

John Vandemore

noted incredibly impacts The to country, well, with do performed from David continued were China considered. in there extremely but COVID how all we're comments. pleased things as channel Well, e-commerce our in the prepared

we a It's the operating impact. to being the by That continues closures what said, echoing and I through long-term we're growth I all across we for that brand It team And be to continues globe. COVID can seeing to going a forecast restrictions. good think So has in prospects business. China. quarter environment an received the well get a it's elsewhere showed will that's similar that say, this into shows the cause don't about of brand I do there But job executing. well. perform forward. to want consumers. to our the very And optimistic country-specific the continue

looking will continue investments behind year that We in distribution to next beginning second center. invest our forward to

China. very the COVID globe. we fully We do there of for like overall, optimistic So, incredibly some we remain brand. behind We're the about about 'XX, we what it expect other the what will across over But see every course market yield. impacts optimistic remain

Laurent Vasilescu

we say, about a think then is first bit like like just last And That's – we bridge, wholesale much domestic first the to bps? And down then The how margin? margins. it's in is parse margins the Overall quarter John, think how much quarter? if maybe you out was like, Just do that it gross down, gross on be yes, of the down would freight could I'd XXX. for -- finer how for margin XXX do the XX bps, great of hear. the little on freight points gross terms if quarter to question, gross love it's bps. how

John Vandemore

see in and a margin say, would look bit in significant to freight mix continuing an over as early back aside. And That talk that I little One setting and impact There in driver. COVID-related our to coming mix and point but note margin as pressures order just I category, I was of it of improve strongly gross to the certainly domestically. that is pressure year, about we on mean I gross a would a margin, attractive overall going the domestic thing, operating our to continue business begins the When quarter, as Yes. costs very back half year. contributor as margin I'll the to were at the hope other there line, next noted, kind of the it business. when did. single of you we distributor inherently year-over-year, costs other there is of think bit you're kind was but some lower mix most transportation-related significant freight the this that, little largest then in with

So in gross the calculus mix impact there well. overall was some as of margin

Laurent Vasilescu

Thank of luck. and you John for the best all very Great. much, color

John Vandemore

Thanks, Laurent.

Operator

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

your You may proceed with question.

Alex Straton

Great. Thank you.

ones. I is I couple on Kimberly XX% that of taking you about Straton quick a you you This price? -- you Just if guys growth, talk saw just AUR Alex quickly you're Greenberger. said Alex on think for Could where correctly. heard

David Weinberg

high in partially our all was have That have Yes. that everybody direct-to-consumer. in demand for features have that's words, product. and And In our the we higher other because of higher hit defined come price.

So the that's the XX% increase for -- issue. that's mix a

time anticipate together and concerned, we what as go we new line as put we is we in see evaluate raw that's far what a price we as forward. Every As something materials. to

best it -- be going couple most for, what's and done. materials So, we've guess raw in for our we've next we've part, the to of the spoken put quarters to as taken

we're confident of that to right pretty on or feel even possibly domestic the maintain at we increase some wholesale. track So, the margins

Alex Straton

-- one that's super helpful. quick Great. quick One And follow-up. then

$XX add I think to there was a million back OpEx.

You but that was us covered briefly may call, have this remind just could you the exactly? on what

John Vandemore

multiple had the in settlement that associated of some matters resolved been that legal Yes, the that quarter. was with were outstanding costs

Alex Straton

Thanks Great. much. so

Operator

Our of from next line Sole Jay UBS. question the with comes

may with question. You your proceed

Jay Sole

domestic mention I wholesale David, in much. wholesale, was XXXX heard a the business gain growth in you think so I you Thank domestic opportunities. a really strong Great. lot share of

order this business -- that shapes and does business do in how book, you. that Thank look comparisons up pretty think tough QX? you your -- and are given and As in QX forward you the how year,

David Weinberg

very, strongly. We're starting the year very

the year. up chain we anticipated held higher wholesale we getting cleaning into January, were As in, it prepared But which when when remarks our we supply product originally than comments started lot of very us shipments to in it December. my to in and our that about led very, had a up well went

all that bodes going So forward. well for

continues it early February. now into So,

lot still the we've we extremely and We are and up have size growth from are it our turning given are a over product and well picking and ports, high we up holding demand seen the of year. last backlogs the

Jay Sole

Got it.

that you Okay. really question two-year has like seems like XXXX? you It or controlling rate question down the And bit. little then and SG&A. the basis were what just do easier SG&A. a sort growth slowed next takes? are Company growth major basis, And on the think year, a maybe continues an a just rate to into how your current Do on in growth about on is, in dollar of SG&A maybe been puts feel SG&A

John Vandemore

Jay, it activity distribution so said, in to don't be G&A you've I unusual because fantastic similar a we up year. think in deploy to ingest obviously, seen there's said adhere to from there, going the and distribution topline center something next new that growth That keep we full operations perspective to US too it from eager what started capped at in us is, a continuously to capabilities our below UK. new G&A. distribution least next to, We're we're going center we Yes. think footprint volume-driven we've at generally year. aside light some did And up year this will rate growth or to that. addition the China, dollar and our being a about We keep items, for strive much aim

to there can think beginning here. do to that kind you think that have expect the discipline just and mentioned item. in can to will on show ebb continue of unusual elements exceptional items we're quarters of aside hold that we you those that. But it other some that then Alex, an one mask, are I And sometimes as as there So unfold I flow and events some the like when we we'll

Jay Sole

Thank so you much.

Operator

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

You with proceed may question. your

Omar Saad

Thanks for question. taking my

of I and the Another sold they of are any And terms follow-up. those what's talking where understand enough need the fact as number. in to follow-ups. And in with sales a full in to where great we're well, get in-transit risk to? of that to after got help coming about they Can being couple quarter. you've quickly us associated go level here be A there kind then able have the inventory know you But needed or I to at not you price? get inventories, miss globally China is of

John Vandemore

frankly how mean on Again, an in-transit all been of much is transacted. as not seeing, fair give the indicator zero to that but through demand It's our incredibly attractive in sold, it's the And was backlog. would prior their sell David number. we also trapped to still We we're been a because have have quite ship assume customers of to of tough when evident noted, and have to it's the probably as ability, product, in-transit the potential much million water. to ASP. I years would strong not that determine $XXX either increment on Yes. it how ability an that very

as the seeing markets. would drastic was more because say globe impact, and supply pronounced other In chain an overall, the haven't issues as as just elsewhere the as the in many MIT weren't I Europe we're probably numbers than So with China, they had across it China. impacts domestically in

David Weinberg

add some to light. Just

As for I said very strong a just January before, wholesale. had we domestic

quarter through the point, of have in larger So, saw than we in John's taken December, certainly. growth the January the is would portion was that in a growth December. been transit in to significantly And significant

significant. come of of up January in those of and February the the half shipped them little anticipated longer. They're month. strong you in and with Europe even goods, So it significantly becomes out, back well. up true a have took because start as The to as well. quarter holds a basically if part very same first We've They or quite could than picked the larger the

can when and that's So as today. for it a you the and good this, you as in quarter -- obviously significant amount, put shows exists brand the the that strength of take any it demand

Omar Saad

I could absolutely. a And Yes, make then follow-up. quick if

negative. track in different loyalty the to dynamic versus either to ones the e-comm the across who's e-comm? Is e-comm You stores that across and the in you're seeing capturing the have interplay your at globally? to and are America stores customer mentioned you to e-comm it back channel least sure coming program is them stores, channel, between turning use coming or customers stores able back you're the that in channel the been make in a customers of track strong kind very with North And

John Vandemore

definitely of the last know can have. loyalty Well, pressure way of over the couple largely quarter e-commerce honestly about quite omnichannel would availability. to how was across we I The the past the this absolutely the members channel. the lot made result but domestic capability That's was think an inventory towards attributable that's driving much a track we've on of investment quarter, is years -- I and in there solution. crossover we don't a

as that saw XXX%. of constricted, to internationally I As has inventory That important in mean, on well little outside it's evidence China. over a said, stack two-year mind the factor. fantastic basis, was results a been in a keep of certainly that being We e-commerce

achieved to going was continue business. we're So invest business good a -- feel We what in going we really to we're grow availability expect that to forward. inventory continue continue it that to about but challenge,

Omar Saad

color. good That’s helpful Thanks guys. luck.

John Vandemore

Thanks Omar.

Operator

next of line Kernan comes the from Our Cowen. John with question

proceed with question. may You your

Krista Zuber

This John. our for Thank Zuber on for is taking you Krista questions.

two questions here. Just

First, on I to past, double-digit in sales operating XX%. margin within you the you're a Could you've target. think how that? operating of the thinking XX% XXXX the margin, billion about talked kind in frame $XX about

like you on five out I get follow-up. the have thoughts Just within then years? to one how your that next see And playing

John Vandemore

to We the It's potential. not think way best intended focused the continuing certainly on on $XX its to point business think I is mean see grow it to as I billion a Yes, that. to about we're way us. the think be consistent midterm number. I the we that been in would a It's to is of saying the that pretty We've kind in mid-teen end low target, for road margin natural business of just in say. maximum the

there Now, whether would to we ability the to limit but stress billion point. And grow brand. point or not be invest a is our want we hit not just precisely It's not to than I the for brand. this determined, to that continue other to when or no get stopping way on occurs $XX is $XX billion

Krista Zuber

Terrific. you. to it And margin. relates your gross then Thank as just retail

gains You're going in XXXX. outsized some lapping terrific to be

you expectation XXXX. frame you Just Thank that if very wondering much. on into could item line your

John Vandemore

Yes.

pop retail, we because give middle of vis-à-vis into think about didn't here first we a back I into to quarter. have retail the see strong quarter activity really

overall natural logistics create it some And be there don't year. downward expect guide accretion I'd on pressure. on margin, that So, be think be the going mix total company next guidance. gave will in margin we gross for will in other considered a gross first some of there, we that it slightly and we're on significant. gross in to all I That's to supply at of say are We expect chain-related that down is segment level couple some of do effects is which quarters. From seeing the to margin probably flat

Krista Zuber

you. Thank

John Vandemore

Sure.

Operator

question comes the Nikic of with Securities. Wedbush next Our from line Tom

You may question. proceed your with

Tom Nikic

Hey, good afternoon for taking Thanks my guys. question.

pretty I talk you've about the like So, to guidance. seems It strong want guide. got a QX

think for low type year, it's growth remainder rate. particular kind low then QX the the growth driving XX% XX% like revenue of Is that versus in rate teens a And the rest disparity growth anything in growth. the modest I double rate that's for the something to something of a like more digit, implied year? of there of more implies

John Vandemore

is Yes, by year's One stretch last mind the imagination. Tom, keep was two in outstanding any QX of things.

you rate means in value we year. aim of bit And quarters, just other so we'll that achieve that the little looks less is And growth the to still be what lapping that but a see significant other QX retail the our drove this dollar remember, stimulus was business. in particularly that significant But amount combination going out significant restrictions, a factors of lot of and demand last outsized notable. year, of that pretty COVID lapping, a quarter, in than

get I'd the situation in chain environment, thing COVID you other is, this supply the certainly the operating more restrictions. from any given point, further opaque say gets The challenges,

challenges. So being, about now expect from If given bode think, more have we've the reemerge of we're years. there the bigger reasonably an fewer I how that us we recently issues issues seen would better we like also persisted in are if perspective. out issues variant, then what for quarters, Omicron most conservative operational view would couple Obviously, for those a

those we think so trying against and And the is we to goes but two certainly, we're the a a about triangulate of learn on. half will as as put more back together potentialities expectation year, what time decent result,

Tom Nikic

new authorization? how EPS guide, is John. any there And should And about pace buyback the on guidance? the we the buyback Thanks of Understood. the think incorporated in given

John Vandemore

aggressive just warrants We'll into plan authorization. situation point into and is like the we you at probably received baked feel put we'll as we along. We go where place our programmatic in attempt effect. be updates put it the then and more no guidance to give And repurchase time. Yes. There this in a

Tom Nikic

Thanks right. Thanks John. David. of All year. Best this luck

John Vandemore

Thanks Tom.

Operator

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

You may proceed question. with your

Brian McNamara

results. strong the on question. taking for the thank Congrats And you

one your line your for XX%, So guidance, just guidance it looks EPS the on another implies unfortunately. implied like top midpoint at X%. full At your year,

should what's we And think that embedded curious I'm how Is So there there? progression year? in driving conservatism about some delta? operating this margin

John Vandemore

I concern pressure we chain certainly that's supply biggest voice near-term to costs. see. say given some there's I around that we've already mean Yes. would the

absolutely intermodal have single seeing costs, a the from freight factor. we're we mind, have congestion rates attempted come that. high rates, be forward we'll then in That's the in And biggest That's to port cost our of fees, in to which position during array from pertinently staying everything freight perspective. where are So, consider year. also rates, the renegotiate keeping we

We the mentioned, very at of look whether abate doing more course over or begin and previously as that then of some again, the we David changes pressures evaluate the cost profile down of or bottom to those managing year, not seeing labor means like on to folks. are we delivering other to We a situation price line. need the good will pressures believe job that. And we're

Brian McNamara

one much last Could this seems some India. just relative QX for to the the year. year after what that India And the you a your It lost color And pandemic the you. finished Thanks. market more year? year provide on Thank expectations how XXXX? really of with like back half quarter accelerated are was on pretty

David Weinberg

the were relatively chain to saw issues growth. depending will far pace and they and they half back anticipate grow flat We supply the and even pick own in accelerate XXXX maybe as to some do as continue their did on really COVID. up It

John Vandemore

Sure.

market on the year you to to about he flat purchased in in what and making then a pick some XXXX, lost has there But team process up few meant our accomplishment. we in distribution for able we think sizable and see because they that own for QX the half David and in they that were investments make Just brand. tremendous the fantastic we're year. a David of the that corporate In market long-term our center identifying if out speed. as building space of we're that means the full We to because clarify, they market mentioned fourth what back quarter, comment, there, promise. stunning believe that’s up that said having opportunity did the

Brian McNamara

Great. Thanks a lot. Best luck. of

John Vandemore

Thanks Brian.

Operator

comes the Our [Operator question Duffy Jim Stifel. next from with of Instructions] line

question. your with proceed may You

Peter McGoldrick

our taking is questions. on Thanks this for McGoldrick Peter Hi, Jim. for

growth. the First, ask I just about to wanted inventory

see throughout there in moment progresses is where caught time a we moderation, inventory you So up or prior year? as increase $XXX think Should be realigned significantly million a transit, up How to with your or from in the it sales we expect forward in the should the of year. growth?

John Vandemore

a Well, good question. that's

geniuses. be I we'd think that, if we knew the to answer

David Weinberg

hope We always Yes. going be That's aligned or target. will aligned. to we're our be

necessarily the that got in see you look is in hindsight, forward what to to the for you growth looking brand. think I demand not

before So, chain I to and think to the there demand where influx slow a the could a hasn't quarter can big supply down. in things up be of seen goods that tend then pick or there's point issues

near-term. well. spread scenarios demand in feel home couple it of coming are risk as we our it's out a than in there's We and We for with does around there very think the can now, the no there. inventory world that So, make more

Peter McGoldrick

indication in margin. is pricing It about sounds And you. XXXX transportation a the a promotional then year, norms there to historical any the in did to mirror, offset for embedded cost. I rearview finally, benefit gross the what's Thank partial with outlook. like Okay. wanted benefit to of And the and How cadence? is promotion, the towards ask that reversion

John Vandemore

if mean, haven't reversion any We on seen will, promotions. to of you kind the

keep obviously some level that, same diminishes. expectation promotion some we're normalized have that, our the more say that do that seeing now, to of return I'd We environment. Although is will mean Right hope of place back year had is the half the put in of in last the the ASP resilience strong very what direct-to-consumer now, a we seeing year channel. and in we're right relative But environment increases abreast And strong carefully. do we don't we That's those something of we'll we a the continuingly competitive to fading. watch It's But marketplace obviously dynamic, promotions. regularly. moment, see at bit which nearly is expectation back that 'XX of what of but have return, not saw pretty kind will of in a little the you of half in some the deep. and 'XX, year,

Peter McGoldrick

Thank you, guys. Okay.

John Vandemore

Thank you.

Operator

of comes B. from with Susan Anderson last the Our line Riley. question

question. your with proceed may You

Susan Anderson

between I are quarter did guys US? markets also, the Hi good guys ASPs? mention question. say were for And my you your growth international then you did in and what units the what expectations this year taking the Thanks wondering, evening. for versus for was

John Vandemore

even strong or there's probably the of I we that for normalized don't we 'XX. from those. algorithm QX year growth of kind no say, know of full either our see I'd touched on departure

Although the to again, globe. caution impacts tend COVID of I the would just not across be uniform

the what But we mark. So will we how businesses that, for billion will gets in rest we that $XX than seen be business of consistent think probably as as the absent think QX I'd wholesale a domestic with changes. guide growth of be to to point certainly the have trajectories anticipate. pretty out, the our bit longer-term I stronger kind little normally

Susan Anderson

Great. this luck Good year.

John Vandemore

Thanks.

Operator

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

You may your participation. your for disconnect the your of you Enjoy lines Thank rest at time. day. this

Skechers U.S.A. (SKX) 3 Feb 222021 Q4 Earnings call transcript