Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the Skechers First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

As a reminder, this conference is being recorded.

I would now like to turn this conference over to Skechers. you. Thank

begin. may You

Ashley Keith

name for Keith conference joining My team. call the Thank you us is everyone. from Ashley FP&A today. Hello, on Skechers

statements or limitation, and now herein, expectations plans, involve of will read risks or Safe uncertainties. constitute or statement. I future forward-looking company results that the objectives, estimates including, may addressing statements Certain without the the events beliefs, Harbor contained statements

business national, and risks, unknown conditions, Such and forward-looking supply specifically and but apply the and limited of local, to, known chain as general economic, fluctuations, with to impact statements the retail including, global, currency Russia's market company. not including and delays foreign and Ukraine industry in they involve inflation, disruptions war and the

actual quarterly significant the affect the Commission, future any filings forward-looking the that assurance with results, implied or statements review U.S. expressed occur. no on Exchange financial results annual be our for are with Securities can X-K of filed cash current all including XX-Q, required and that reports factors operations. Users all of Form reports achievements business, flows report reports Form by SEC of company's other on most the statements recent or federal forward-looking description on will of to performance securities encouraged other There a as by the laws company's risk may the and XX-K, conditions, and Form

Vandemore. call like the and Operating to over would Financial David With turn Chief David? Skechers' I John to Weinberg; that, Officer, Officer, Chief

David Weinberg

quarter today joining conference for first call. us you Thank XXXX our on

marketing record attributable brand our distribution the the capabilities. billion of we history, These strength of impactful products, results For for and and were in achieved to the our $X.XX. time a demand technology by quarter first of sales supported $X earnings comfort and our quarterly first

the consumers our worldwide walking, reasonable playing true a style, on ensure to footwear they need home, at price design have quality, pickleball, their all a we lives gym, approach to running, our are for have and everyone. With staying Whether school to to product-first or we enjoy office, innovation, something or in principles; golfing business, focused the comfort, comfortably. whether

We mind ensure advertising. Skechers remains through memorable of top

a launched Martha Snoop Ashley with marketing Stewart, digital Howie campaigns among Tony and quarter, ad Skechers Amanda Brooke that advertising television Long; Uno commercials included others; with we Klootz targeted Super Burke, Romo Bowl Skechers for This and Dogg, Slip-ins with and out-of-home and for Park. national

well through improved our more ensuring channels direct-to-consumer also as operations shipments to and our partners. wholesale our at facilities, distribution as a of flow efficient We timely inventory further continuous

Our success distribution combines the world the centers, and many corporate individuals sales and offices, others. including across talents in our interfacing with business, consumers associates teams many of retail around so our those

determination organization been This of Skechers and global our support, the sales step the record partners wouldn't nonstop and without quarter's the at way. every possible have flexibility along

in quarter, sales of XX% as growth wholesale. by of achieved currency a year-over-year basis. incredible led constant first the XX.X% or XX% an For Skechers as well a increase on was increase direct-to-consumer This in achievement $X X.X% billion,

partners. sales increased inventory to of XX%, due issues XX% quarter. the sales declines many International congestion to total XX%, impacting our of related wholesale Domestic decreased representing of for business sales domestic our in our X%

impressive compared port XX%. this However, of which against quarter evident we alleviation the also faced was due the an when to last of a is strong domestic to wholesale to congestion. very year sales first This the difficult a Coast particularly comparison increase quarter quarter's West XXXX

COVID a and of element period traveling of APAC again our long were of and By the growth eating total of grew most remains restrictions. representing growth X% XX% in robust included Americas other the XX%, a growth region, consumers masked which markets. started declines shopping, Wholesale EMEA each for flat as in the sales as quarter. critical after in Sales strategy, domestic wholesale latter our China, out

was driven EMEA driven increased Spain, wholesale unit volume growth. led X% in China. wholesale double selling in sales growth digit wholesale India grew nearly double and decreased increases year-over-year markets, price single growth strong digit X.X% by by XX% by our and Overall, The unit XX% Germany, increased most APAC every increase average and X%. in and growth achieved Italy market per international business double wholesale in including XX% digit digit where

distributors our Australia, driven by The to in wholesale also the XX%. Indonesia growth region Taiwan. Sales improved and New Zealand, decreased in Americas business

sales XX%. grew However, excluding States, United the

along in a and segment. EMEA. and replenish in Americas, company-owned the marketing to our APAC increase in growth sales inventory Our conversion in in the traffic The result in XX% efforts was of and our increase XX.X% with ability improved our XX% resulted XX% increased stores direct-to-consumer

nearly e-commerce due every unit XX% total, decreased in even China, due Hong and selling XX% digit market channels. both return and from due South sales direct-to-consumer Chile, Korea, sales increased digit Kong, In a consumers to in direct-to-consumer Domestic volume direct-to-consumer and experience. the and direct-to-consumer to and to some. gains in XX% our increases mortar In brick Canada. came average grew triple Thailand increased International of brick and price X%. growth shopping to double digit grew The mortar double highest

China, India, first including with of the stores, quarter, and in in X,XXX ended were which the opened closed each party Skechers XX in in six in States, worldwide, we quarter, XX in XX. X,XXX and third the XX first and our XX Skechers Israel. of XX store and and United which company-owned Store quarter Germany were stores first each three We openings XXX in Thailand included Tajikistan. opened the In Vietnam, stores China, in

opened company-owned the In store one we quarter the in second States. United to-date, have

to our XXX stores year. sales on XXX and to the connect segment between efficiently the over remain open consumers. direct-to-consumer with to expect of our growing We balance worldwide loyal focused We drive

expect Spain roll this quarter, Plus more and program first loyalty program the our out Kingdom, and During to launched United the to Canada, Germany we Skechers in countries.

which existing Chile, of most our in internationally. process to international one our in launch sites of is with e-commerce also We're productive additional sites already plans the e-commerce platform updating

James edition first limited with quarter, which Goldcrown During we Furstenberg. popular our the collaborations included our von Diane and the launched collection first

our introduced the Women's launched to These and channel with buzz the in United Martha position drive Day and in also on limited the releases our first Stewart, more Canada. upscale International e-commerce We a States brand to collaboration which traffic audience, create media.

Skechers by markets, in is influencers roster collaborations relatable These creation designers. important of brands part impactful ensuring of with a are and and effective. top mind also of demand believe regional globally our We leveraging and and notable efforts both talent, stays

offering. in the and Park, exemplifies the T, and We recently Snoop last legendary of have and our Ashley week a movie Paris diverse announced team that Dogg breadth actor Emily Mr. A-Team star launched product the includes which

and the fastest won in our McGuffin other in for others. earlier Matt We Court Henderson while are also of Skechers the among and the pitcher pickleball Clayton course Heritage Fitzpatrick, to field, Kershaw the and as wearing and official on this we sport The our markets, connect and Skechers to Dodger connecting GOLF. Association spreading sport Catherine playing RBC shoes, the and and enthusiasm Professional with UK, Tour Singapore, who the to roster Viper pros elite Open, Pickleball is Canada, growing U.S. the on America. including footwear this sponsor thanks ambassadors, Parenteau Brooke Skechers on GO golfers month Tyson pickleball With

about and browsing traveling see, shopping their comfort or their in Our music aim to websites Skechers station, shows, listening the favorite they think when home, world. is the from have to of consumers watching are hear favorite TV stores, their

country millions on followers Uno on wearing traveling billboards posting the reaching our Paris Park about Ashley of on are their Influencers find into Slip-ins dozens You'll commercials streets the globally. Spain. translated products and languages. to Skechers Skechers of a roadshow are of

connect drive opportunities consumer to pursue brand for with to demand build innovative and products. continue consumers, We our awareness

center we logistics certified at we diligently LEED shipping phase Canada, We within quarters. Chile and Gold American distribution shipping over expect By planned own open both previous of have shipping Gold out centers expect particularly Panama. LEED inventory declined to to another our have worked distribution North improve new end our two begin costs facilities, certified offices. of And to the our also the of in corporate India, where and XXXX, our

released first Just last our week, Impact Report. we

our Our the environmental operate. footprint on minimizing in communities stewardship where we focused is

people acting responsibly of Skechers Skechers. As including our planet, thinking organization, is element is stakeholders, the love serve our about our our because and all we product, an to critical believe a who families it

I would to results. more to now, John over call details And our like on for turn financial the

John Vandemore

record were everyone. as strategy. long-term afternoon, delivered growing successfully driven in XX% Skechers segment, continued as of to top share Sales first globally, per quarter our year-over-year, a time performance, this the continue strength for another line in period. Thank expectations, well results $X.XX exceeded and our and for exceeding growth and These billion, China. earnings growth particularly our broad-based execute bottom to direct-to-consumer both financial you, X as return we surpassed good David, quarterly by

consumers our out a and amid landscape which comfortable, exceptionally significant dynamic quarter. market also retail in made product. assortment We even globe compelling levels, priced stylish, decreased the high quality results XX% seeking of that versus brand These and inventory are around demonstrate progress last and the moderating challenges, Skechers

would acquisition made Before we turning Scandinavian distributor. highlight of morning quarter planned to like our our regarding I to the results, first announcement this the

Let team me to formally Skechers. welcome the Sports Connection

the prospects earnings. to growing accretive close to This to region. and quarters excited the to slightly forward be transaction expected coming within of Nordic the brand looking are We and working Skechers in together closer about further is the

by review X% financial increased X.XX let's billion led internationally. growth Now sales Wholesale quarter year-over-year results. our first to XX%

the an digit were to in in wholesale declining year XX%. Domestic carried by Our return market last in China. to growth on nearly every first fourth through as double well as of expected quarter as quarter headwind momentum sales with quarter, encouraging the growth

to at the continue sell-through Skechers see partners. of brand our We good wholesale

growth to However, of last it's meaningfully in delivered a pace inventory orders. challenges alleviated XX% keep comparable broader our the recover. congestion port being customers impacting That congestion year's to and quarter robust is year-over-year, mind important as shipments the the ongoing of said,

grew compared of respectable sales XX%. this first to the as quarter more fact, than domestic XXXX, wholesale In quarter's actually by

activations. gains, a our capabilities brand sales XXX.X underlying indicative and remains And XX% by direct raise consumers Direct-to-consumer to experience Deepening of and both to for double the strategy. are marketing enable for to awareness broad year-over-year hone believe robust, strong inventory focal our compelling digit improved relationship we availability, growth consumers. XX% and technology nearly more driven domestically a Growth our we continue which million, demand internationally. was omni-channel our XX% market effectively, comfort consumer with point every growth frictionless and of posted to products, as our increased our

consumer the million the growth trends and sales. year-over-year headwinds flat essentially the our were quarter XXX.X in domestic regional Now and strong turning in masked to wholesale particularly at market Chile markets, In the first digit Mexico. sales most double Americas, continued across for where

Excluding Americas domestic wholesale, the grew year-over-year. XX%

digit to growth double most including quarter and markets, APAC, Thailand XX% In EMEA, triple segments Spain, sales this led momentum by year-over-year and million, sales through in In by and Italy, XXX.X both growth led segments growth driven digit from the increased year-over-year in in to Korea, increased continued most both Philippines. by Germany. double several million XXX.X across India countries, XX% also and by driven in last as digit countries, the quarter,

significantly by as results to our return strength Notably, retail sales driven where a better-than-expected experienced shopping. by in stores, enjoyed physical we also China, X% in-person grew consumers in

that optimistic about opportunity over market. cautiously market last remain we in to the been be our the appears Chinese the materializing long-term in volatile has growth the few While recovery and are near-term confident years,

sales wholesale XX.X% First adjustments quarter Operating And pricing as last we higher annualized. prior XX.X%, mix experienced segment the favorable were year made significant improvement a XXX compared of from basis unit basis percentage as channel to a of volumes. points to gross our XX.X%. year margins of expenses direct-to-consumer points increased in a XXX year-over-year

due XXX expansion General Selling points marketing our XX footprint. administrative of the expenses percentage higher increased sales of as year-over-year volume-related as to in to a primarily basis expenses globally of of points sales basis sales and expenses XX.X% increased and to higher to impacts brand digital. due year-over-year a and X.X%, percentage creation demand retail

Continuing incremental costs congestion-related approximately million inefficiencies globally. totaled XX of

magnitude. since the We on center logistics to costs decline expect of in tremendous year, and have to half at distribution made improving progress efficiency incremental we second last domestic our continue

year-over-year. impact the from diluted million, Earnings and the margin a increase Earnings XX.X% the fluctuations X.X% currency per to year, per prior share were in million a compared $X.XX increase. were operating was $X.XX for our foreign diluted XX.X% compared shares quarter included XXX.X positive outstanding, XX.X% from year. This operations on to a prior XXX.X share

for rate tax the to effective in XX% prior the first quarter Our was compared XX.X% year.

ended needs cash, to million flow, And of increase XX% versus with billion, quarter. only of quarter equivalents nearly or capital domestic we XXX.X our X.X was This million of XX, XXX.X investments, compared the increase a in working now moderated. March quarter. to operating declined an increase to X% XXXX. decrease XX% Notably, from an cash from year was and cash attributable inventory turning prior sheet, the largely balance the as XX.X the Inventory million fourth and prior

offices. X in primarily quarter end stores related million, at an the related XX.X expansion million higher of million of for of million direct-to-consumer to receivable new our was construction wholesale reflecting XX.X Accounts X.XX globally. the corporate XX Capital increase which XX.X infrastructure million to investments were globally, the sales our related million, of technologies, distribution to quarter expenditures were retail and and our

are expanding brand presence our our investments capital on strategic business focused our supporting priorities, growing Our globally. and direct-to-consumer

first repurchased cost the of million. our also we A quarter, at XXX,XXX shares approximately of stock approximately common $XX During Class a

deploy We our capital to continue our consistent stated philosophy. with

macroeconomic of turning guidance quarter, products annual landscape one And that and is guidance. trends embedded and numerous brand continuing. the uncertainties demand particularly robust exceeded about in China. in Now exceptional for demonstrated strong comfort year, momentum we our still factors, first assumptions This our The market are with and our remain around that the for XXXX core shape this the to technology an wholesale originally was dynamic consumer recovery a applicable. expectations faced

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

to to net earnings billion, diluted the expect billion For in X.X second sales $X.XX we $X.XX. range of X.XX quarter, per and in the the share of range

be effective between for the and XX%. expected tax is to rate Our year XX%

capabilities, expenditures to capacity total expect distribution markets as expanded be Chile. like additional million, key in and capital to continue XXX and million including invest stores, XXX our to omni-channel priorities, We in between we strategic China, India, incremental

strategy financial Moving your thank delivering July our And forward reasonable and products we high which a innovative, ahead, at to release we you you expect to remain We on focused stylish, for executing time XX. updating look and our on quarter comfortable Thursday, results, on today. price. quality we second

for With closing that, I will to now remarks. over turn the David call

David Weinberg

you, John. Thank

demand we decade fourth sales in annual with plans of position and our of we effectiveness brand, our the relevance positive market, to our to the our XX couldn't about reach in footwear more collections, products, of ability be in comfort the marketing As efforts, effectively. efficiently thanks the our and our begin and robust business our billion for by execute strategies our the XXXX, commitment strength technology to

the is last $X with challenges of one core the billion sales and comparison despite should of entire organization one in year growth of quarterly XX% to domestic of our businesses, wholesale, Achieving attaining. against proud significant strong be achievement a

including campaign We building ongoing most longstanding named Scandinavian employees engaging and the acquisition seeking our better stop meet the of never artists commitment just influential and creating marketing partners and of the needs we thank for a new TIME for Doja look one consumers. Cat distributor, forward more efficiencies who their with opportunities, magazine talented the to and to and successes incredible always, together future. As music in innovating, our collaboration of

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

Operator

Thank you.

Instructions]. will We conducting a [Operator question-and-answer now session.

comes Our from Please first go question UBS. ahead. with Jay Sole

Jay Sole

so you Thank Great. much.

maybe if channel? the a I If big talk start versus we what about second guidance. well sales, expecting to of about wholesale the be helpful. you if want Thank there, you're can for can channel that quarter in break obviously down EPS would DTC you. quarter So ahead you can ask QX, the Maybe consensus.

John Vandemore

an fronts. Jay. thanks, of exceptional It Well, on was really quarter a lot

which encouraged talking signal, second a amount, bit is They little are consumer that, the consumers that demand the about, QX It's we're impacted out the of held domestic we're the macroeconomic watching earlier, environment, for of direct-to-consumer out extraordinary But incredibly Absent what offering. really because what the incorporates been the seeing QX came the we're obviously, There since by on of that that all a shape We're but wholesale up domestic of most which little guidance the remains But it was also that product the actually that an most quarterly side, and into things. They us Our encouraging still a shipping QX. means there. wholesale quarter challenges incredibly the side. namely from in an want is important. is QX. is QX headwind we're amount these bit not And we've seeing direct-to-consumer facing. order, side want the the brand. means you're ended robust. to products the results, it

going bit to And in the term, in because to of particular, partly partly in up that to first so more what to austere, we little a long the be key quarter know was how be and the the that's success. be of because bookings But shaping together. headwinds just shift it the second came going timing quarter,

much And continuing. what when half on the And turn so foreshadows headwind we'll hopeful a typify that a can to year, story. first in remember, talked while second we soon, about at see we're the route start the bank this had is moment we that we as that very half,

for this and the the most then and things, half, very particular, similar over side said shaping in direct-to-consumer, If the China. on in of than really it's first better be on to you the what to at look part in expected we aggregate we up wholesale domestic

a quarters we'll see continue in overall. half first encouraging together, if face sign it's But think to that's so headwind aggregate QX. I the And very the you you'd

Jay Sole

pass just, up there. But and on. there's ask can Maybe The uncertainty to if of I'll out the I I you just John, then more, said, uncertain, are the obviously it on what one understand. the macro follow they dynamics like China are. that DTC business what you still China seeing mentioned seeing you're But you is are about recovery channel. wholesale in really positive what impact now? It shape are you sounds

closures baking how went like through just quarter follow you at it's terms not necessarily So on -- now? seeing well, the out And conservatism, as are as more up play I right QX trend seeing in you're China, your of lapping moment. some the guess in but store in we did China it March. How that obviously, to

John Vandemore

So to it's by almost direct-to-consumer -- our estate domestic our on precisely the growth hard international overall, encouraged between XX% not XX% be well growth. XX% and and balanced estate,

really our nothing to things continues out Arch the do product, there's and of to well. direct-to-consumer again, other side around take encouragement, of really fantastic the really than around the So brand Fit

continue Slip-in well. to Our products do

marketing comfort the that metrics direct-to-consumer in is our of doing that conclude not really in I it's driving features All a resonating great The And were board. hard traffic. our technology are think well. to way is across

So not encouraged really to that. hard be by incredibly

April, obviously, early that we going still don't we mentality bit take a you've say little what shaped the know But a headwind a forward, There's to elsewhere. future part. look view in a China's bit because holds. far a lot good. thus little always is which the positive of cautious continuing, trend in we're Now, I like as think is heard up of I would

we the that got intentional and fact of as ongoing you in incredibly China our shopping, But dealt effects some in Probably to which us with both of And little grew. a quarter, bit to with stores China is shop. out the they first did a stronger. COVID, And out a return noted, to of an as half headwind saw retail to also the effort think that's even get most what's is I things in the encouraging consumers well. fantastic. stores still total, that's, and

some we're that our to looks we're optimistic expect may -- because about on it was of fully better as again, we cautiously further. bit It not this point. we watch anything certainly early that quarter isn't little this what us to optimistic optimistic conservatism want I Net-net at that So market But though we seeing. warranted but really encouraging than a have been like see you think isn't be, in expected. things

Jay Sole

so you got it. Okay, Thank much.

Operator

from Gaby question Bank. comes ahead. Deutsche with Carbone Next go Please

Gaby Carbone

could on can are Hi. facing, a strong remainder Good XQ? in expansion trajectory wondering year, afternoon. biggest remind about some you tailwind gross help the quarter. experienced Was if us the what nice And you're the the of margin of considering us? Congrats you of the think for if

John Vandemore

costs, stick do guidance had is had expected better began we but pickup, to because to this earlier, quarter when to as every would long to margins ago, gross the it's freight you, be expect well. really We this said I from increased the logistics we continue year rates, biggest we suffer quarter. Well, particular others a to best the give in and as to

we more expect last of not quarter because to gross year. is expect But throughout as the not each see continue the modest a big magnitude, to are and much maybe at year we magnitude, to annualizing margins took of this We pricing place, improvements, that. a that better continuing of maybe implemented part we're

that is mix. of Some

is costs. to pickup Some caution, But a be of at expect the of burn and in those back half as landed current to little we just of have year. certainly In that that materialize the of are the compared some of expect should year, we lower the to logistics again out from that we and that rates. beneficial more the the back to seeing to we bit begin higher benefit to inventory rates half contract rates of be the But year, pricing. last

Gaby Carbone

one just question. And quick last then

experienced you in this of recouping like costs, we logistics year? year, you then back about the what And be the impact On that thinking XX that in incremental of the should last the how did quantify was million XQ? half

David Weinberg

not was we the this had number up But It about was issues to the actually significant as They're side. million. in domestic some million. in quarter last quarter, the total about less meaningfully the on XX quarter see -- we started creep Europe. was that XX so as mentioned we Yes, had

described point something now Now up a deal only incoming bring spent to an what that. orders. I good is be you're really amount We a actually think year is benefit worth noting. But as last of can abnormal what the you I of think seeing lot and with

And Our why believe generating the XX% stocked. they were stores, well they they we that on that's have product uptick need. They're volume.

it deal although saw our versus also money downtick relying position was to So so in out supply just retrospect, back levels. with painful, spent can our that to and up. the in up into seeing we clean it that things would very take a inventory point we own in well chain on significant others or inventory I

So gain at last year we end to the but the maybe more improved from level of were where little our the a and frankly probably grow. quite inventory bit we room much now, both intentions to year, with our believe right compared especially efficiency, is at to

benefits now the to spend So a get meaningful uptick, we a the as was us net-net, saw particularly to things, right the contributor that side point the see spend, to direct-to-consumer the are arguably of quarter. this because but think we growth where dollar dollar a tough the to of and we result, to on

Gaby Carbone

details. Great. for Thank all you the

Operator

Parabas. from Next Vasilescu with ahead. Please comes go Laurent BNP question

Laurent Vasilescu

domestic Good with afternoon, taking Jay's question. Good of John. my to to afternoon, regards I David. piggyback for question off Thanks wholesaling. wanted

positive full John Did still And that about that is to assume over XQ mentioned is You I XQ up think you How for year? halves. XX? know was that on we 'XX a do do quarter? about we XQ a the it the think we how this two two-year basis? stack think second tale

John Vandemore

five-year I Laurent. a Hello, ask have known two, you or there. question going should three were stack to

I -- say to I'd thing first clear. The want is be

lineup, is incredibly we congestion said, customers We product downstream see continuing continue What we That impacting what to Our domestic drove increase orders, a of sell reaction in seeing product XX% that wholesale same know is like because product resonant. good the through. our from encouraging. in direct-to-consumer. is seeing we're we're inventory

inventory regard we issues any think So the have. we with don't health there's to

orders there's for natural downstream the then think Also, And the continuing the a little build QX be of saw always most just shift challenging. as QX. of that we out been going I to impact. I year had the into to congestion bit of be noted, of book QX was a

And again, don't has opportunity up in But quarter, all think for we is of material more we changed. product get benefit going the that's picked we second challenging we customer it in little anything past had as So If that resonating that our probably in congestion, it's to think than as wholesale the I in honestly QX. base ultimately some that a the bit has expected. well. strongly direct-to-consumer so the

at be In terms we're of in into stack to that a QX specifics bit. on is by come QX on that. worst the side expect a beyond little move want indicators that shoots we seeing QX your two-year but back we'll question, good don't on of are I it. channel, green And to that we're least starting some that growth going see to probably get do and things And then

Laurent Vasilescu

we little the $X.XX maybe interest that doubles then -- you for And I And I've to usually but assume $X.XX about know a I of don't helpful. did full there guide follow-up we may. very an XQ? XQ. year-over-year. if just you talk is minority about by a double for Okay, it bit anomaly the are Scandinavia, think the for year question on then Should should Can or people I line, got that surprised think

David Weinberg

Yes.

of direct businesses, the most our on significantly talked about minority the China. a venture Asia long is, interest we've joint reflection in fairly as is particularly and So activities line region, including

though you that going to that give go specific will way say I'm margin So operating have business. that all not in the the it. with guidance I is past that will that down line line. concert to on recognize

consider can would a occasionally, that in well. So Asia, tax is then to influence us other And or particular. I businesses ramifications in as growing our for significant there Mexico, also it. that issues But fast be which contributor proxy a

that, minority in view you'll I it your countries. thinking those line the so with on about So sure in have perform And line. going a they're interest I'm educate will would where

Laurent Vasilescu

Okay, very helpful.

you I and over Just call rev of took 'XX said on in you the conversion lastly, Mexico magnitude EPS XXXX, accretion. the XQ think when the

I and can from model maybe as EPS but you kind us diluted revenue [indiscernible] some distributor just you've accretion the how Scandinavia? EPS accretive, comes think guardrails, shift, of revenues, just give much we

John Vandemore

as a got We're the expand. Connection at we Nordic region a acquiring bit the I'll to in from beyond for of that we'll in put specifics revenue we at a there. accounting accretion But Sports announced we in continue excited you well it's team hopefully, perspective. work incredibly guidance. date. that a that, think in of because important, Once footprint now business. pin the very need It's for that great in And on together. kind to how brand next accounted some it the a give because later and we and contribution I through market. only we're Europe, we ask to as us, right? We've can gets to on think get would purchase a little great more look the about team shows well ways for what we find we'll a means we But say, can do call, that just deal more provide both good The overall,

a things. make ours on I is consider. did of the side you is This Although think distributor note customer that a of to important

out we to we running growth we put a that what the the of additive, going and the of take be have distributor in kind not were were is to in all business. earning perspective So revenue in, from because

we color not So side closer past not more the or of revenue additive, and we'll close. on as all to the it's all get that give

Laurent Vasilescu

taking for Very much you questions. Thank very my helpful.

John Vandemore

course. Of

Operator

from comes ahead. question and John with Next Please go Company. Kernan Cowen

John Kernan

Congrats the Excellent. guys. on upside,

David Weinberg

John. Thanks,

John Kernan

second. about Maybe a for if first the talk just can we quarter

upside in pretty outlook. You surprised to had big just most? the the surprised upside, on I'm you curious, the you significant margin QX? your what line then most what the of on And profile business top

John Vandemore

very direct-to-consumer was on extra we see because had pricing of In we performing don't then I and strength other to side, the And indicators And a business market recover. you, our side spoke to had I encouraging. seeing encouraging. does way and the place. then It's was honesty, the it's we're is of on That's honest taking that the still direct-to-consumer things, the The learned the Well, is the to that just a outperformed. to that there's we China, to the that just of in particularly encouraging that going kicker quarter. change been the the that posture we with resonance to saw ton a that because we're credit accrete. to the a to because be And of mix exceptional. planned it. put magnitude margin market incredibly long surprise begin on of the got of the no was a know but perspective higher the well, I accustomed think bit be throughout -- side And we I growth to of think of because for, turn from really numbers all what adjustments on how an execution to that, in saw, conservative direction been relative think There's right weren't in also deserves good although which that's the that things in our more China, retail product. product a both about we response describe team business because

I people certainly we they probably and shop consumer to the get expectations, to engaged to that things part with opportunity there's the so of means shop, in get there out think was it, brands. outperform they the continue of are And to go the think to it want out, that direction. want best continue intentionality if to because And

the to feeling is how best us the gives indicator of market that generally. so And

John Kernan

remaining assume Maybe you get you year? of go or on so China do growth, there year? returned theme think a this China, that the through can is? nine well. we back should in we X.XX there you billion generated as How bit growth should what back for about rest think Is how in we of reasonable Got of The to you 'XX, getting headwinds obviously it. And faced the the it to think little about months? as the timeline FX

John Vandemore

more the to to bit of we're I would I'm be see Well, again I'll little acknowledge, -- we this a year continue going I'm tell until on going to you, conservative unfold. going so going level a very dynamic. back was half, challenge, say, getting probably half 'XX that a into a into thought second the saw a first we be year, of to we because bit stepping much

with Now interim to in coming that bit first a goal is 'XX. the half stronger, trying would is I get our say near just

significant like would close but QX. it, accomplishment started where be to a off getting we'd just given we exceed in course, Of

can that. seeing is, the that selling seasoning I bit for to in encouraging. and optimistic it But we other need the in here. had then again, grow. continue to this and fully What have core for we David what we're quarter. can fourth a excited June, outsize So XX only China some means because commentary past it of I'd then before think the ability push to brand the And of we're mind, to means commit prior those keep what The you in still that, windows, that is in just also year I very recovery and more would make our Double made by characteristics the we're XXX we echo market move little event But note China level.

of expect market as that somewhat year And weight in case so do those do the be we And to awkwardly the kind well. this typically. results that

John Kernan

rest seeing terms for margin shoots some in me, we for recovery year the in you do the green to the the happen rates the recovery get And expected freight the about we business think you're mix that QX? obviously think do one guidance? largest direct-to-consumer, through in sounds profile How the on of embedded on about margin? gross Last right. of How on we like just there. freight the as of it that's All

John Vandemore

Yes, favorability. system. a is rates work expect contract look to embed we're for while it takes to the the forward, its rates just that And year again, as seeing we for The problem we that again, that our the next now. favorable way into

half come haven't back those impact we year. on margins yet. we're really So the to benefits to a to of and going from that's significant still seen the in something in benefit That's gross

a of gross And quarter. meaningful significant most relative the have on contributor its margin it the again, the wasn't thought. of say, would was it to performance I the pickup, the mix outstanding business. terms improvement the on would I echo contribution would really where the ticked gross of to pickup, was In because But just direct-to-consumer margin up side that it we

apart side taken on down to pricing differential, that the point of though business. that margin get specifics biggest on being materializing the want of had an we earlier, the was gross definitely a basis pop. annualized basis into the don't the I the to of but breaking wholesale contributor So meaningful the Again, the benefit

John Kernan

Awesome. Thank you.

Operator

comes question with ahead. from Jim Please go Next Stifel. Duffy

Jim Duffy

Thank inventory about to you quarter in sightlines Really is jam of timing to specific last congestion on other means? wholesale you. inventory Is XX spread what barometer year. that downstream. resolution the first And that Guys, the at the then I in When issues release John, life dig you to what more Americas the sell market, of between wholesale understand with domestic continued more the shipping of performance from XX mentioned I brands? to as Can Good expect would to think compares you are that the and of see a the be DTC that? typically wholesale. gaping through log in channel? just afternoon. some terrific plus quarter. want minus of good DTC I

David Weinberg

and to inventory. timing relate with do recognize to be had back holding started and just questions the a little when difficult. take you revenue those started it And bit. And When can all about when I'll and timing was to the pandemic we'd very change Both timing. first delivered our distributors

we trying seeing part that as the as fact issues our than and well. everything the direct-to-consumer inventory said, them unfortunately, hear everything. year see. your conversely all not the selling to between the as board our at and trying very have, is inventory don't up, wholesale that discrepancy go necessarily to around across the resonating, direct-to-consumer question, quite what is do margins none they're good sell John discuss channel, and reason, whom lot And numbers, the And of first They're margins to When through And clean throughout taking the for some then you'll to [ph] and know now the intimately and they at sits. in you which of product the I And inventory, group hold town of we're them you the ship a well, re-merchandising they individually shows wholesale in is get recognize up indicate it we the overall less means we're board. we that inventory to year opened the them end distributions. rather moving of are last issues across sales any probably have their has consumer. the we that think I know as in the it that

replace understand. been inventory see them they to an scheme, get no we We've is they've you they can't it. they sell, those what which and through they're until overall sold So that matter things can how doing well

We wholesale room and through we be that selling piece. We is know just stuff to well in there's channel, know merchandise. newer So have we've merchandise, has new the timing. been our

always it very talking continue So depends And overall. when, the indicator, to doesn't well while have process its that's clean current the when know interesting believe, only you're wholesale direct-to-consumer, it We channels. because a do our us. about I how is along that happening they path, out that through will with

they selling that where will can are time to the those sizes, fill how new the and doing what's the buy for and and to second of They to through So fill go consumer we in quickly in matter the product. well can in fill brands channel get and open in quarter. discrepancy continue as It's held an a has you see that up.

different than for of them you a lot some retailers and are in it's I'm shape sure better others. everyone. So significantly follow of the

see there's means get the a that end moves happens to of as pendulum what what also So group, end this in back you John back always it into the QX quickly. means. one get which June and the wholesale fairly on it in optimistic the marketplace. possibility swings through be it through depend year, the half indications of flows and when it how certainly that to the it QX We the I'm on because indicated, will will you do see as me, Usually, we

clean. our So been clean our are as a in fairly are as warehouses They're channels clean, while. inventory they've

time, continue which we to delivery. sort to to order from time deliver market us on So cuts for of the

move the timing So course, we we of market-backed that's up to phenomenon. stand and do can. as it a ready But best

and to forward if with us. looking forward the up QX that we're onward channels for clean moving So some a of potential of

Jim Duffy

the One may, just of Thank X year, this billion. helpful objective. guide midpoint perspective. I if more, on you the The billion XX that, for David,

In You've markets terms, that markets incremental got billion revenue gap. if international America you can directional that and be how a $X you would call and out any contributors, disproportionate between see splitting kind would international you North expect of helpful?

David Weinberg

movement. which We them set be them then would all better in put to disproportionate, to proportion back

Jim Duffy

played. Well

David Weinberg

in XX%. direct-to-consumer glib, North just Not grew it The part be Jim. to of -- America

the sometimes growth So all to is that. want long engine We've than plans How it's going mixes even international crafted well better how our instance, know. I'd out? be direct-to-consumer. I out here actually don't it we this say, in come them. But and don't exactly said,

performing mix domestically, toward Net-net, feel to international when being well really the may good to get one-third, though, I'd be I may had as you if direct-to-consumer continue contributor. a all think have we why it there. of that of ballpark probably our say to it, again, the feel we so a guess, confident number. have about we about business there's markets because contribute, in goal. a order that it's expectations. outperform But That's I two-third as lot can not but contribute not kind And to have good that

our have eyes to markets continue once. growing many at on We

they even of notable, where just quarter we step double both present. we were and the mention saw back business, it's digits, would a a nearly grew time. few same I few as on that, in, we their we did every and so of segments mean a and and wholesale I the operate -- call, most from ones but terms growing market note would all But In the the sit direct-to-consumer

what like we're like So And position that strength. see. it's that goal in the relative guess, kind we a but of given broad-based to we we

Jim Duffy

that and good. more gap Thank guys. seems Very manageable. more Yes, you,

David Weinberg

Jim. Thanks,

Operator

Please question go James. ahead. with Next Raymond Rick Patel from comes

Rick Patel

strong and guidance. the I performance. revenue on afternoon, a question on Good updated congrats have the

you guidance? So million midpoint reflect the about now for delta that wholesale it highlighted that caution the as the year, factored think about earlier, better. shift of XXX you came looks element that's we quarter an like guidance, XXX in the Does or And about into first million. is of raised there

John Vandemore

It's those Rick. combination in a Thanks, of factors, all honesty.

bit shift, though, Some of things group, to range. weaker had anticipated I you a side is on of a little ran timing the a of as wholesale of it it's top little will all conservative. some bit QX side being a a us of and than note, the is we some that just

line, hit So try we to as trying as range, we foreign mechanics but we I and make wait us little the in see that understand we us the well. sure to going bit in capture we to where unfolding is that's our that think more just And of some we're think also exchange sure make a adjust marketplace. now

Rick Patel

restocking versus how happens channel able you wholesale the expected, that? wholesale tie than revenue And DTC? leaner? into how The you quicker you with And be that are side how for planning if or in earmarked would fall line question getting if more like season? tracking the inventory growth, if I'm the that's for see it curious on it to does at manage I'm becomes is the inventory

David Weinberg

much can Like don't It's moved inventories, our time do said, going we've we you But forward. up know to they delivery plan our as I that. only with I management so significantly changed that quicker.

than decreased inventory States because significantly as for in elsewhere. here the And U.S. here United it You're has the the it piece building our picking up more than in elsewhere the direct-to-consumer said, was and we're inventories John was world. higher it around everyone

inventory move world. the to capacity around everywhere the have We

groups. the in to the change, same different times to capacity As delivery for we to shoes have and use materials as we have move quicker, things make production, move things

direct-to-consumer factories that say the reason deliveries and quicker things on fill in we our is making that is use road. other, the that wholesale go have within down our some if material to to a So could do basis, as necessary, one, we here later wholesale we're business

we're of the So year-end order business. building develops to this inventory not take significant proportions market an that back. in something from It's

time back But there's QX. we That's it can can some much as deal as see we only and to John change as they they're longer, as have the much a As of they somewhat get we a take issues are, we'd start may into but of with faster that flows move why could long talking only the moving they for do as to them for customers, United into that by little what through July get a get those that know so States so When we here while up all beginning bring our maybe hold you to their you June in time. go certainly and so about, see even as was little you to alleviate the deliveries, back. the to things August order, we spoken see going, turn shortly. develops,

that mix for orders around the everything we the world, change. deliver is our QX world will we change will we're us around the slower They'll things time. match some and stuff at and best bang from pace, get for to and but now that coming So can a the all buck wholesale on making for into

could see start and take that the quarter the getting of the third quarter, into change. the second end it So

John Vandemore

listening, to Although you encourage we to strongly yours book any customers out would there now. orders

Rick Patel

Really and the very helpful. best. much all Thanks

David Weinberg

Rick. Thanks,

Operator

ahead. question Next Please with comes go Securities. Wedbush Tom Nikic from

Tom Nikic

else very the very, models you the we is than assume and Should reported now year-over-year our well. decline question. Thanks decline of of piece doing QX with to pie right the wholesale for my make about thinking that well taking QX? guys. understand in that's just that for kind isn't we're of that Hi, kind wholesale everything just want U.S. in because how embed in one sure worse U.S. XX% performing I I the

John Vandemore

I kind I say reiterate we is specific segment and don't the guidance. of worst give earlier, or it. we mentioned would think what of Yes, channel QX But

Some signal, an is But right? QX, I just I will and as of moving of alleviate way by serious right that's itself face that about, up would we looks think think talked a that probably I the the is orders like a thing. it optimistic good yes, some just when it's in they've shaking moving most orders note, virtue back, out is sign. timing holding the the into it second which That's are after of and then headwinds, David quarter now, kind of If up really people the noted, and that. timing of will been

worst to at be If But forecast. answer different the quarter look yes, basis, it's first half, for on bluntly, we question you ships just of when It's a a what drastically more it had it anything not expect originally it actually half second of the than your second to bit we the else. year. than

Tom Nikic

And case? that in believe got think half three U.S. in get ago, Okay, the to should said it. I growth wholesale. that can we second you you that still like months back Is the

John Vandemore

get still the We're That's to objective. there. pushing

be be timing that be of control going the we upon second as we the get for Some both capacity would them to be But back side focused something to well attractive direct-to-consumer is good the goods productive strong mentioned, important. Obviously, growth partners in retail it for be to to of some the getting those of going again, us. can't going to things very into of really rate on is. really David have growing hands wouldn't We good we're think intently. otherwise selling that's the take some of at very dependent that That's they our part have But our it half. with our that's product, when to is the wholesale as objective margins.

the be going And that. for for definitely endeavoring so that's we're to unknown But us.

Tom Nikic

kind of the getting Are of hey, where any that are along sort is here, starting inventory leaner of things wholesale work inventory, you getting through partners would from wholesale to is getting better than we've signals lines? -- you our we we're of like. signals Skechers any like, partners your from those the kind Are

David Weinberg

really demand good. to what not reiterate at good. the certain all. tell situation where our our which business. prepared said and remains we we is would our back a demand far The a as I Well, not be as sell It's again, about pricing impacting awkward direct-to-consumer, And in only it remains perspective can remarks, pointing through would was very own retailers attained

we know that So there now.

at hear though they think have issue. across congestion don't good retailer case-by-case it if I just the this we you'd point. to work to And continue attempting to every it is excited to look and there through ability out you ingest spectrum, really product to the have get to What we the wholesale they're can. go the were And near-term as accurate for is have. quickly a They is at as the it read.

of we uptick I or we'll what would though, sort that any really haven't the that's note you order. of want to on. they out in a give seen all also continue would sense an so that cancellation And at anything requests work

can a know we it the can they ingest product, So it's they just when want ship. when question it and of

Tom Nikic

Got of right. Thanks rest Best it. very you. for guys. of luck All much, the

David Weinberg

Thanks, Tom.

Operator

from ahead. with Straton Next comes Morgan Alex Stanley. go Please question

Alex Straton

the or good now you, I like consistently A it my future? John. kind that with over of was walk growing that domestic about think question on change Great. into the billion Thanks speak one that. wholesale, of just how you more taking to the and so and even Can $X for and And out Thanks. sustainability off through us drivers it's think quick business. than for just significantly higher historically of you you zooming just David much

David Weinberg

find The in growth higher out general, our demand. our in our marketplace for in and always advertising and I there building from to consumers the and our comes getting and demand consumers. we're technologies product it just

business, deliver time. offer service. Our complete. that is new just customers. a new And And And true. great we We the think obviously are shows growing. delivering. deliver the macroeconomic and pertains for say marketplace I constantly We on demographics also our to for deliver some competitors we're feel We everywhere our we what it that's categories. all our what's developing we of picture We're in and wholesale in what

inventory demand very still I we think And we have in are think is us. clean a are I profile. So good And a looking we position. our in and consumer for

the out liquidate are for a all own we anything puts Conversely, our in liquidate inventory issues against our in to of marketplace a and lot create looking product lot the channels, that's or out on that to channels lot inventories. offering. of to of and what not lot a pricing we're a doing competitors of time. competing try And product So are in liquidated close our

consumers. our we So creating demand. they handful before product a a taking not we're convert from more inventory There in. start stuff will we out There's close think there clear a of be demand this for out as can got that's to

own continue our sell stores. good to we and sell to in margins continue We

brand our that position be to the shelf the stuff received and and rather new So product customers an be space -- warranted to will out. space very taken by in and can when create and well we solid a and think keeping you than trying clean partners, we're everything the sell into promote be wholesale full where environment will they price the to everything clean

Alex Straton

broader if wondering think the I'm comments one helpful? previously one, through you still remain the super be your guys promotional said That's it there. had quick any environment competitive on just Maybe Thanks. would just first where would sits the same it's helpful. more thinking half. I

David Weinberg

pretty from perspective. It's stable been our

been sizably up They promotions. changed haven't really down we or have productive. our So

impact its discount you think we can't growth the I saw. on that

down as promotions, the up the think volumes reflecting significantly. but we ASPs noted, I were were

strategy to continues And continued effective. definitely did at it be than -- really the to consumer that's that doing had resonate at we very there's So fourth been the frankly the we it But level. of is this quarter nothing end quite different a quarter. substantially

Alex Straton

so much. luck. Thanks Good

Operator

concludes further questions today's time. at There are teleconference. this no This

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

Skechers U.S.A. (SKX) 28 Apr 232023 Q1 Earnings call transcript