SKX - Earnings call transcript Q1 2024

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Operator

Greetings, and welcome to Skechers First Quarter 2024 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. I would now like to turn this conference over to Skechers. Thank you.

begin. may You

Karen Lozano

or to years. I My Manager call everyone. I've Karen and future I'm exciting and without the events the but harbor awards, involve expectations unknown including, conferences specifically now Form Securities and Lozano. involve Skechers' of results David? United of and read can and on David other no on statements joining results all by Operating may constitute affect the general Good and Officer, disruptions store a will national occur. forward-looking forward-looking filed the world as name on factors that reports of other estimates statements retail Officer, to [indiscernible] including results reports for SEC or addressing XX-Q, Exchange quarterly Commission, business, other award you the and and and States the filings our be U.S. challenging impact the are by the Chief statement. Certain today. future including, of the General of including XX conditions, flows recent economic an local, the financial like company's over the significant contained laws statements for the or inflation, the expressed securities known performance statements uncertainties. in John of currency may cash Skechers that the risk and review current you as Skechers in I the Chief around foreign turn our will encouraged for risks conference conditions, report the Vandemore. afternoon, not Financial objectives, XX-K, risks, operations. With to global, required on company market Weinberg; chain company. There team with Form actual X-K statements most or herein, Such would to, is annual and fluctuations, company's that call in Thank to and description delays reports limitation, Gardena, that, been supply business limited federal achievements forward-looking and forward-looking the statements safe as Form and markets beliefs, assurance or implied California, apply of industry plans, all with any Users consumer retail

David Weinberg

quarter as Good sales $X.XX a with our new thank company. first year XX.X% for $X.XX. to billion, of XXXX adjusted and or joining the record increase marks for started and per afternoon, record year diluted quarterly call, a last us share an XXX million you which today our earnings of public conference We compared $XXX of

Additionally, impressive due growth were all the regions gross both for direct-to-consumer demand reportable we new of with by lines. our categories fresh The styles, and and offerings robust technologies to into Lifestyle in of and the our football strong was and wholesale segments, and global Snoop the our offering margins an our many and These driven and more XX.X%. include of achieved world. our innovations a proven results our basketball of expansion Dog operating of Skechers' well margin XX.X% brand partnership as in as across The divisions performance comfort collections. newer

our ultimate As product innovative and and we first lines. delivering the technology company, the comfort on focus comfort across style

for This styles washable fashion and our includes durable So and our and footwear kids, sports and machine payer that collections. street feels exceptional. every looks court outdoor styles

consumers and In to Skechers with Max lineup commercials have of quarter dedication new added we last and performance just as all the including top Cushioning the we consumers the that and Fitzpatrick, and ensure includes are apparel. our Henderson, supported our Harry Tony in global T. boots our entire together We first impactful competing with Slip-ins quarter, embracing be success. comfort a The designers on Kloots. Along highest of football, Skechers Bowl game marketing our product to the colleague for those by and and named with world, walking. in the also pickleball needs for is Germany, elevating Shape and for great Amanda and notable we launched report at with. the shoe their this points. each hands-free media, world marketing each the quality and achieve employ touch continued performs. This division, running elite retailers as continue TV our product employee which meet Skechers work, new basketball, on-air BOBS, and relationships host of thank and the attention is Skechers with Illustrated, basketball Brooke comfort Magazine, brand effort we and and and around team, actress athletes Skechers to the valuable of third-party fit of spots detail apparel the and at we at which Performance just wearing supply Julius have is Sports Ashley growth with Kane well Terance. Park these Matt initiatives, who the with partners initiatives of our with reaching Mr. For the many best And it associate, the a Skechers paid takes that others and XXX-degree cover, around meeting Court, the go consumers featured working our for of walk Super commercial while enthusiasm week, and SKX-XX to multiple chain campaigns year's this and UNO slippers. are kids, that and needs at To XXXX the Catherine their resonating our enthusiasts campaigns, approach, Romo it whom Parenteau Viper golf football and from Pickleball these

and X.X%. increased By sales XX%, International approximately domestic of representing X.X%. at Looking billion. increased total our XX%, sales quarter, Sales increased our EMEA and the XX% the increased quarter $X.XX XX.X% sales first region, by APAC first by results. XX% Americas to in

quarter. grew wholesale in both nicely Additionally, and the direct-to-consumer

growth increased the a reflecting inventory the distributors in international was return domestic certain and U.K. our to XX% and X.X%, and sales Germany X.X%. in position growth at improved of increase to wholesale geographies at across Our part particularly the due partners, Internationally, China, in at sales both strong

domestic, stores, X,XXX We increase are growth X We States. increased X sales. Direct-to-consumer, China, ASPs the XX%, With Korea. consumer stores company-owned including second XX Philippines period, We third-party XX China, and quarter, in opened for market and stores our our many demand and and brings For a indicator in nearly the is brand. we XX result a significant quarter an our in opened, every both as branded in ended customers in including appetite domestically. saw locations, Colombia to for worldwide, and continues third-party XX and in XX X in Australia, XX% of XX Turkey. growth China positive X,XXX improved with store in of the each stores important in the quarter around the in is United be with quarter to both and flow opened X,XXX. In in business our our in the of an return at date, by and our which XXX of of volume. stores segment X end Also to orders both the both India X SKECHERS in closed brick-and-mortar was strong the This and the world United we've by internationally Skechers the the quarter. in company-owned evidenced improvement an stores, the stores in including of which increase including count XX Indonesia X% to company-owned States. United States, e-commerce

to to the worldwide stores remainder company-owned XXX open XXXX. XXX over expect We of

DC in reduction To to reduction levels, in along to product the believe with sellers flow, and center grow this Panama, efficiently distribution our the business is sales ultimate December from manage continue seeking record comprised fresh and needs our invest capabilities, categories. well to meet healthy consumers our of move logistic the new to We of as expected XXXX. manage plan efficiently company-operated which XX% quarter Colombia, we efforts later our our we the to in second and as our year-over-year worldwide in inventory a Our XX, new operational are X.X% and proven be innovations quarter, a levels in resulted and largely technology. inventory inventory an including year in into new which comfort

more we our well to as continue and invest coming to turn growing John in our operations, I'd the accomplishments in forward our now the And We quarter, look the past strategically to our numerous for financial results. on years the as in ahead. like over year details product business over call marketing. With to

John Vandemore

expectations. and delivered Skechers another both everyone. and record David, performance, top quarter you, good line exceeding our financial Thank afternoon, strong of bottom

global diverse and direct-to-consumer and price growth ] These XX% towards clearly were to demand strength that of and today's consumer performance driven our growing and grew the to continued billion, innovative of our constant were by no a the products, with sales by of brand in stores a reasonable at this earnings currency our segment. XX% Excels delivering achieving in were $X.XX in $X.XX. resonates products Skechers as per products, our and billion, by but increases sales and were $XX luxury, recovery Europe driving XX% segment, e-commerce in the a by worldwide the of our direct-to-consumer and high-quality [ for longer our underscores our sales strength momentum a in States share $XXX.X basis, intersect earnings double-digit goal achieved were that cost. XX.X% with shouldn't portfolio of of $X.XX of consumer. comfort record come brick-and-mortar Our results We and growing XXXX. Consumers $X.XX, internationally a year-over-year. On combined a commitment at together, business, these us value per Skechers persistent million. headwinds, share evidenced United driven the economic billion Despite results domestically. our comfort These is year-over-year healthy wholesale quarter understand X% and which requirement particularly

results. prioritizing strategy to on billion, our year-over-year with omnichannel increased growth wholesale, Our presence powered and innovation about opportunities. all growth X.X% this marketing these we'll across $X.XX to worldwide. In commitment excited sales with to our and deliver direct-to-consumer remain our regions. supporting expand We continue effective to

year-over-year to year. the by growth, wholesale versus returned X.X% with within of flow experienced shipping orders increasing sales a a also customers particularly the As were balance impacting We and International wholesale of and increasing significant our congestion are encouraged in and evaded. as continue goods prior the their recovery wholesale we domestic expected, to move in expect the taking XX% segment, improvement in inventory internationally, Europe, as growth we seeing including windows. certain domestically the Notably, year. both sales through partners, earlier we

our sales strength nearly turning the Americas, sales. the growth quarter to $X.XX our X.X% the and of wholesale continued domestic our increased at Now business direct-to-consumer half regional of domestic In reflective the to accounted year-over-year in the billion, direct-to-consumer business, first In grew our segment. particular, X%. of for for improvements which

year, growth by double-digit segments growth XX% this robust the a in X-year step country. remarkable of sales in increase broad a EMEA, from year-over-year the to this in nearly represents $XXX.X both every XX% Although with increased reflects strength down prior a driven basis, sales. In on million

infrastructure are business. investments results producing and our our to experience, wholesale direct-to-consumer distribution with partnerships EMEA for our Our strong coupled enhance outstanding

XX% In XX% our Asia led We increased growth slightly new in athletic as growth impressive and also we and double-digit India, driven in our from growth saw categories, by and sales In with grew channels to products. ranging China, resolved distribution notable were $XXX.X direct-to-consumer across with sales both million, logistical by double-digit segments. our genders to center. markets. In up in and lifestyle most wholesale Pacific, year-over-year sales direct-to-consumer challenges seasonal performance

to basis basis percentage consumers a confident environment lower sought opportunities as the compared year XX basis our products. growth near points by higher-margin regulatory for globally, centers. Operating awareness including products and administrative term, points brand our of term. Gross higher long support X% technology-infused mix improvement a newly our points XX.X%, distribution for for percentage on year. freight Selling year-over-year primarily driven cost and compared by efficiencies the costs, XXX investments to to prior XXX consumer to uncertain be and XX.X% due and continue in from million, Earnings a as to U.S. categories. General a growth to product margin due marketing was of offset increased labor increased margin the primarily technology Comfort our focused year, to XX.X% to brand and costs XX.X%, expenses sales in XX.X%. sales increased to sales our is increase favorable the launched to segment our a driving realized prior operating partially distribution expenses the as quarter basis and percentage out in in versus building market costs While the increased and direct-to-consumer expenses XX% operations The points of as last compensation-related and XXX was Europe was $XXX.X we up were the in compared year. last

of and and positioned by a quarter reflecting average by tax quarter management compared billion, XX.X% receivable Americas We inventory ended and diluted of XXXX. decrease the an to the believe end and now new the to the effective with first store related per billion X.X% the distribution $XXX.X year, on in the XX% support $XX.X $X.XX year. efficiency. our million diluted was million, turning in X.X% year, are to a share openings inventory $XXX.X of per in the an or which corporate the million prior And rate from for healthy to versus XXX.X was million construction our related were XX%, prior quarter capital higher the for well the of improved compared billion, at Our $XXX.X year. were of $XX.X to million $XX.X in our year. XX% related Inventory primarily direct-to-consumer Accounts offices. balance we in to $X.XX $X.XX prior to new outstanding. And wholesale technologies, Capital shares to weighted million We million cash, levels sheet. Earnings share, investments increase $X.XX Notably, the lowered expansion compared were current million working quarter prior levels to and demand operating compared cash EMEA infrastructure, prior equivalents increase sales. our $X.X expenditures of and investments increase

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

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

consistent stated capital and our durable liquidity. deploy sheet philosophy, balance to with continue maintaining We our a while ample

guidance. to turning Now

earnings of year of net growth For $X.XXX XX%, XX% $X.XX, sales billion, and respectively, we billion and the the per expect to representing range the $X.XXX to in of full in range $X.XX annual share XXXX, the midpoint. at

second the quarter we billion is of critical position sales expect share in for in and investment to the due will on billion we to believe demand periods. net into our be product down of incorporating awareness Earnings year guidance. We year of quarter, creation and highest a share and consumer we successful full summer second why and is primarily this outperformance back-to-school basis growth as brand quarter's amplify range during of reasons our the portfolio $X.XXX per $X.XX. in per the $X.XXX one are for this the full our fully slightly timing driving to For spending, range $X.XX typically earnings which quarter the to the

we results, earnings XXXX elevate in capital well continue facility you distribution China, our positioned opening billion sales next. expanding XX% capabilities objective constructing for to expected $XXX to turn with XX%, tax remain year forward interest XX. With million and to will and markets, expenditures expect effective achieving in on for our including a line drive which and are in release foot sales. Capital be rate all look distribution million we our to expenditures remarks. likely our second I over to incremental to and grow $XXX priorities, including in your We which invest our this in is second anticipated square capacity additional thank between and for million minority and is will are that, our strategic you call be on quarter July now and to in X We stores the long-term the Thursday, growth. today adding center of as financial year $XX updating to expected key by Our time omnichannel closing confident between total David

David Weinberg

a on for per high Skechers of around on Thank believe delivered diluted priority expanded our innovative must-have delivering comfort, you, and records that growing is in all life. fundamental design and comfort a which and style, further be growth by shoppers a casual new to margins. shoppers with is at its from space expectations world. the are John. the footwear technical performance resonating and a tenants operating demand. and the walks continuing sales a with of presence results reasonable We adjusted in earnings started and quality We price, top quarterly athletic innovation globally is year above comfort setting share and We note with high strong

continues e-commerce to to our engage also and People exhibit physical While are looking stores. in strength. shop

to enhancing and developing our are high-performance delivering technical experience and We sport, Skechers committed hands-free an the offering in points Slip-ins at while shopping operating our of new increasingly broadening looks street comfort in efficient touch all footwear manner. divisions, casual Skechers

delivering delivering our We demand offering have extensive strong for again innovate our thank move supply their I'd our that to continue another with call. a and these toward sales involved we evolve give us billion annual team efforts Our to moment the quarter. and continued want will XXXX. Skechers by like as thank to partnerships another network best-in-class our we all global in year mark for distribution and take to successful of confidence goal product we chain and results XXXth assisting $XX entire as record-breaking in

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

John Vandemore

X, involved management XXXX. in to the to present want began continue be a day a company. Many including our company, that moment deeply our team. as employees public the earnings of call trading the June take to turning operator, before I commemorate XXXth Actually, this Skechers on to

our every of one each on calls only earnings since and person going been public. has one However,

we acknowledge our As Chief Officer. milestone call, we XXXth today's Operating to to of want Weinberg, commitment David moment and honor a celebrate earnings our of remarkable the take

years, and over For unwavering. XX his he integral Skechers has success to dedication has been been

growth of process, team, thank to sincerely Directors, the President Clay, to gratitude to many the Jennifer want worldwide, earnings as departments, to contributors and and to other Mr. of said, key heartfelt Relations on over call extend the public Investor a and Skechers' as contributed as will our of our like management our So Vice well senior dedicated legal Board Weinberg. I I the Communications; whom employees of operator. would finance, I success turn Corporate now journey behalf also David With all company. of that accounting, including to have

Operator

[Operator our UBS. question comes first of Instructions] the with Jay And from line Sole

Jay Sole

really My question raise QX, full just in positives there's the for is strong so many guidance year.

If expectations, What get really drove you X above QX your boiled really say? down, would what X and or results you to strong what things. in was the .

John Vandemore

Product. always. we Don't

David Weinberg

domestic board. the Yes, year. the we've We of there. on seeing we have all in just of came would when you're are, It's would product strength which success continued manifest originally while. we across results, didn't fully quarter. the argue data a product. I some the rebound think in out we wholesale the think international it the get the broadest, stronger a domestic what we strongest hoped in quarter that we the of the reflection results suggest it's seen I of And the would the yet than started of ways, success a the direct-to-consumer had how anticipated a lot In front. It's for and

Jay Sole

if follow John, up maybe, can And on that. I Okay.

to wholesale sense lot Just Can give of impact is the see on in the you have very what a getting Skechers. your look visibility about more And you you through focused that you the there's out on potentially strong of the of developing, wholesale you as how a brands the talk a of in QX industry what business extent and year us the after see rest obviously, quarter. lot and just order the channel. through a of book

John Vandemore

as the optimism remember, in year, began in what we we expressed Well, we bookings. our early if were you seeing

rebound wholesale domestic in in and the came in particular returns that see through. Europe the You

stronger think then. I gotten only since it's

the again, we're to that some signs product bringing well kind that really on say, we're continue David's echoing innovation see categories as to the front. as So of we original us, delivering comment on I back into the for market healthy wholesale the would entry of newer

We expect carry throughout to year. the that then

think, I that, right again, to so in the And broad strength speaks the now. brand

Operator

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

Laurent Vasilescu

single of and on tenth together. -- your calls high for should Rays you digits maybe year. we David, out called do many call case, parse assume the can wholesale double the grow last beat, think the the low Should if wholesale that's versus the I for to John, for think quarter, grows kind out ask now into we more how I year? that domestic Congrats international about that digits wanted you you

John Vandemore

embrace segment that grow wholesale the wholesale as in kind book who Technology as high Right some really well encouraging suite. we're to activity, signs seeing Again, partners our now, of also just that digits. seeing fully single our have we're to anticipating Comfort good will our We're product really sell-through we're mid- come seeing. success order with the

we're to that to to great and starting to grow, continue the they a brand for said the would X%. what suggest I come the year, half continue see coal, see we're we the will I about that to I something be but at window, are that the wholesale, And see things rebound with that suggest expect of of domestic receive current position mid- as the of we're booking the seen But for think so some likely in second which saw to single is in to power you all high the beginning quarter orders well. first the first And international between the business. in. we incredibly at in do would year. the quarter we side beyond going We've pleased some from in is it we'll digits. confident you then

Laurent Vasilescu

you Can on OpEx in embark embedded hear. about for you know the this to it's Good the and year's calls is Fantastic. And your margin CapEx term, operating year. maybe ERP complete opportunity do the you investments this think For going once John, a first longer for company? XX-K where your implementation the ERP. you're then audience. talk multiyear the that the ERP, to out I guide? for

John Vandemore

would Well, nothing we've our opportunity to year digits of mean, margin. last I say into regularly this the to that implementation this Operating the enthusiasm first to continue double working are that. intent making question double the system, for billion distribution the to ERP It's into the was as investments everything the things to grow well brand. digits. I extends has about. stores, low functionality. of get exceptional. opportunity the as to and bit that doing improve we're spoken a Obviously, our from taking incredibly the a double digits for to XX% in many first. diminished speak this lot $XX we get pleased of We're your in quarter other company to the operating that for one with still margin beyond.

because believe, of globe making the to continue of $XX as it part consider across we a we're investments would the suite a this I is way billion before, to again, business not point. point all ending drive So said we've

adjustments. We'd the so they're and in regular going talk just have about items them continue would it's all brand that guidance into to given an we've what and to forward the give as capital, OpEx from you. will in rather what you fully we've that. given this embed what we embedded don't grow We I we encapsulated will perspective, say, from beyond you a

Laurent Vasilescu

just That's final question. as then a great. And

MLB today's product. about press it's talked release, You In up you about players. about talked X signing

the late. ] great. can You've Skechers that shoes should be And assume anything basketball, [ baseball Global don't you enter about entered MLB comment would entered on we category. to wearing if you're I of you as going That Football, know

David Weinberg

going it's them will He's couple out. for trying wearing We're out brand of years great it's us the We for Obviously, further Joel to that we and out. is it's take traditional a He's relationship Yes. great the and next us, testing category. had in both think shoes. We've starting point the of continue. the with him. great what a part believe

as about I And have coming. but you that. that playoffs. he he's in any to like We involved or more nothing worrying today, tonight's that's the I'm them. now, seems now right we He this. shoes. right very through sure about he's he's comfortable But wearing will, more game But anything announce the obviously It's shortly is worried believe, in announcements than great work

Crandall, got been we've our who other sorry, Terance people great. great is greatness. to he have missing to, playing because great would from continues the talking results But football we're There's Julius in is playing business it we're grow. playoffs was

actually and forward Indians we have forward we move sponsoring cricket Mumbai as a signed as player We a the go as team.

though how well for So they're highest at they -- quality all think brand understanding we as very for categories, lot and made modest positive people's of we into the comfortable we're baseball, are, of even level. very, a course, with the moving comfort and a you mentioned, it's the compete intensity and shoes develop

we that's what positive brand. success think the just that's from we what today exists building comes for all So forward. styling. The continue now, for bring our the right to future. But today,

anybody more in invest and all It's I of very, and together all part it than industry, you'll to and else answers are believe it's the in shows very right so product, get product continue those wholesale now. our about We direct-to-consumer. brand the good things feel identity about hitting

Operator

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

Jim Duffy

time job with evidence phenomenal a Skechers of with team, And sell in share David, otherwise earnings the of you calls, that's lot side. gain dealing that's for a run to My the XXX the Great are that. very difficult sympathies market. clear

growth to how there, the capacity Let and me what additional just thought and in that? start guessing really below center on I'm forecast. DC began your it China. I And XXXX. distribution I'm have ramp wanted been prior question China to might curious since China about this where takes ask you about capacity a has China DC in you

David Weinberg

Well, of the distribution to not all care first center take originally, volumes. was the

So and third knew parties spread We we China logistics a was we were because when in lot finished. it done. it's people out used underutilized of

using our facility, a use. work taking that now distribution are bigger for We our own piece of

is it think we do when an capacity, excess to will which on done, Singles' because some Day, complete outsize. use a throughout holidays facility we'll So meant the have is we but new it never job big this was

online So more I grow set we'll direct-to-consumer building. move do bigger significantly into percentages with efficient the and up and think And more be very, second China. us efficiencies businesses we gain should through in very our well it to as and

Jim Duffy

you capacity. investments Should Great. contribution can speak begin delevering the that there investment? impact a expect And from you John, to into ahead as the scaling P&L we of

John Vandemore

the pretty until really earliest David's comment, from is that China so the at in capital the is hit we've we're echo XXXX, just to once as that and globe we nature. adapt distribution would though, capacity the efficient more better the more what utilize potentially the Well, see starting, won't in we to spend first largely seen I we is current we market. XXXX, as get center we to across utilize similar the capacity installed as learned in it what

the absorb our that of of us actually of a DC. bit more into to in slowdown COVID third-party allowed One own service benefits the was China of post little demand

get say although start-up absorb really distribution existing a we ], we than had really would of that's even our needed. that the we But had into as sizably with [ But we China actually provide in come So before because event see the those largely a current factor of COVID internally. center, play. efficiency acceleration the the it gain about of to and due otherwise our would more saw talk didn't it we that didn't as have be perspective going been refine costs it lot an any wasn't results. ability closer, capacity extraordinary bit we to And I case into we'll expectation, because that a 'XX when in little to 'XX, it's

Jim Duffy

Very good. a modeling quick Then just question. detail

spoke the the prior You creation the in timing simply relative of second half back demand be to elevated give quarter, back this should year. creation that demand year? a Is to in that of

John Vandemore

be honest. It's a little bit of both, to

And -- about slip-in with be seeing result, is I around our we As lot today. the lot Skechers important we're a of in technology, a of for copycat we leading of feel we're comfort technologies particularly a to with incredibly as mentioned, those and supporting of of year, think, marketplace. marketing last work which midpoint out hands-free the message of our it's innovation, the one

and So get technology brand Skechers. we firmly ahead to want of that make as out we sure that

would bit argue, little that as bit, is I it replicated the a Skechers it's little intense make perception one is elsewhere. most consumers' comfort QX sure easily a within and always it's of timing investment that our So technology a it not that solidly to understood technology, be of is can incremental period

Operator

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

Krista Zuber

This is And David. for Zuber on congrats, Krista John.

Just X for us. questions

but kind First ASPs QX, side little on really and this and of DTC you're things. of expectation balance bit the just some QX in lapping a easier wholesale challenging ASPs for the the of year, on more

play follow-up how of kind have And you're just slip-ins. one of the that So out balance expecting to for year? the on then just the I

John Vandemore

I about would year to than is Yes. say be volume this price. more going

what nearly in last elevation to some of ASPs, over we've seen product from going couple expect and That's not years. see largely stem mix. although will We the

technology-laden and continue our the choosing pricing from products, Comfort see driving doing anything from actually a within that's higher-value apart We ASPs consumers we're portfolio perspective. to

So to is that drive going much sales year's in expect of I come more this units. from would

will not ton. we'll of in see little ASP a bit again, We there, -- a but

Krista Zuber

technology. Okay. Great. on just then And the Slip-in

past this category about think that opportunity there's technology. with You've here the in to expansion an mentioned

you that's of total kind that any et within affords comfort Arch can technology, of be innovation the you how the Slip-ins of Just the from of framing playing Fit, at from this that kind point? line this give profile margin out and of product sort around the sort kind cetera, it

John Vandemore

Yes.

that DTC I in the landed largely bit that coincident normal, technology-laden continue product. value, mean to you reductions last you're mix see grows again, it's stemming back you'll some delivered I up with rates coming a to freight but that. of from gross some the see faster think as now. benefit seeing in years we've margin costs been product is gravitation performance over evidenced than couple from I also wholesale, the higher margin coming from expect and little on of business gross

So what to largely both seen and see. kind I think you'll in you've of what recently continue that's

lap begin that. will We to

you iteration certainly everybody's coming widely some also the products, would exceed that and becoming kind able of product. I second better. getting how is dream be say, never of to won't So think quite I even lift just a benefiting expectations It's then of from technology the pronounced team of technology. technology And they've that prevalent. to as design just manifestation would the it keeps install been from deeply continues design with there and

the portfolio be for a will that reasons I of a really a think time. very can spectrum one it's broadly we this that of feature why is long product endure so our technology, across the believe employed And

Operator

from question the Rick next comes James. with Our of line Raymond Patel

Rakesh Patel

super Congrats a and year. strong a new you you Can mid- you alluded the that the should coming expected. rebound? that X the products? of would broadening being bit be unpack than mean you milestone, the quarter? year wholesale some secondly, accounts? X.X% of Are wholesale growth performance little up in you the it you think on digits that do rate driver volume as Does the orders Just David. as see about single earlier being accounts within on this what we slower a shape great modeling domestic as for launch of same higher second further, bit in color Is growing for performance to growth to high the be little impressive the primary And we

John Vandemore

stores. really what technology. or advantage world the well. in sold factor, in a everybody that. through in really our open we've poised biggest own as take our supporting holiday, able to you're to those It I wholesale be really customers I price and also we was pretty was wholesale proliferate of was more then technologies, seeing year to last Not and And they decent think post they've comfort is the this the think buying embrace were and most marketing to some equipped seen immediately time technologies started of with

sold saw to than an sooner acceleration anything is product think more what not existing as fulfill of was else customers orders, I what really, we So new out. wanting orders as much

said margins. we Inventories saw lean. we all good price always a good of We As year, saw were last sustainability. really

of suffering starting as out finally from that the there see some of we're issues the partners some think to themselves cleanse last of were benefit I they of the year. inventory

will I continue. think so that And

As knew said of first at the we the the year, we would half grow. beginning of the year

in end quarter growth I now, the up second shipments again, this start down probably for we of right quarter, say, expect think similar see and pretty expect optimistic in of of at growth. quarter signals, to a accounts see to timing point it the as stock in similar us in the that we But particular boils can a domestic level wholesale. We'll, to second back-to-school. I'd second the lead toward to in continue the always you level would

David Weinberg

think of based happens product now. on I it's performance of seeing that sell-through this to important primarily remember the all that they're

if all the to the the and when happen through move So shops and it. things likes comes back that original you in piece go the is good consumer product

seeing you're positive have a what inventory, around. So against pieces where manipulation purchased it sell-throughs sell-throughs that starts available open buy of and you sits we're all already and against from sell-throughs, of to

Rakesh Patel

the forward. gross with us and of puts going help takes margins also you Can

freight? year benefit in do a what's rates? the way to the Aside freight from in to on you we've that about the think quarter? expect seen given freight how DTC remain exit the volatility just the right outperformance, And Does second the

John Vandemore

lot further from Yes. this. We don't a expect

of that from the although observed speaks quarter see rates We are where a of to driver, because generally. of a Red routes QX be normal on situation. freight some to kind returned you it rates look But don't now, influence a Certainly, freight. I a as you'd there's the forward, anything, that think now. contribution or don't stable, think kind we'd significant Sea was If I impact last that in a positive negative always that European right significant to margin. We have think will expect be either impact. gross big the fact said

continue is to what you're think going as product as benefit from I that mix. channel mix well to us see

Operator

question next comes from with Adrienne the line of Barclays. Yih Our

Adrienne Yih-Tennant

My cost. add is me Fabulous to let my congratulations. first And start similar Great. year. on input the the question

have if that midpoint brand sounds incremental XQ the year-end? importantly, I'm the but of owning more question spend? any starts and growth, it's it dollar growth then of expire, sales top of to non-freight And And upside, from in your creation sort technology. XQ freight wondering a technology, sales the visibility second more XX% if demand sort you should spend, relative awareness costs XQ. like how on and this But you that? to growth on the baked there you baked of brand think we my So in owning about have through Have within is input that -- is is on Or in awareness? in ad it's more

John Vandemore

with that's, to input our quite worth terms of don't on In costs, anything regards commenting we see frankly, projections.

impact our the higher basis FX, which and in. is product a we average. So on this any having we the really a answer couple is cetera. always there don't it input the typically costs, here with movement would of quarter points at level It that et margins nothing material on discussing. is or overall honest But of than worth juncture, There's in gross margins. hundred lean marketing, I see say

you the quantum kind can of think I that's expect.

it the factors terms I it of entirety In the our year. is say that sales, into would but projection, certainly of really spend benefits

really QX So just with aligning it's marketing. sales not about the

the the As it's call, we is, we reasons we guide through working. on marketing of the said the that is the full to one year out did flow upside there,

our category pure continue We in comfort in general slip-ins of and excel hands in particular. to this technology

year. benefit the quarter spend will the so of in of the entirety And balance the the

of said, construct the they as depend timing back-to-school. on that. where one-to-one really there's the to a than end more So for chance of back out there's we've does That can or to always our highly need not being a QX correlation. take shipments we exceed be accounts guidance that such tried not of meet stock likely

can I materialize that. on I'm say, optimistic the do calls about more So bit but what any slightly of little we would probably want more see we we in anything, a the to before make decided quarter if quarter,

David Weinberg

reason. take growing marketplaces fuel places advertising them. or the try But showing we from have need it's try to some flattening into. we where to deteriorating anticipate perspective, have should definitely those point for it significant now usually my -- anticipatory. are we territories try that is no from deterioration those spend growth out I go to We in to whatever that that out We to Yes. are potential

time. upfront, beyond, So we lot and a what but may our comes back that when and we be world drives later fourth growth, a anticipate investing of white for business. have that's our international are around quarter, do It we anticipate and we at space, the it quarter third

can demand, of white reflection there, out space the we and absorb. the a see what think we to is it continue we space what So

our So process on will going thought do it what it reflect sales. does for forward on

Adrienne Yih-Tennant

It's great offense to see a days. company these playing

congrats. So

Operator

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

Tom Nikic

hear on And David, you more. hitting Hopefully, on earnings we call. congratulations XXX

David Weinberg

I'll doctor said [indiscernible] let that. my

Tom Nikic

ask I to wanted China. about

in compares China X So the difficult in the and some seem straight of get How bit we for growth. the obviously, macro China quarter, should mixed. quarters the has think about think growth the last of been of a pretty year? opportunities coming solid in the China out rest had of I you and headlines China more of double-digit the

John Vandemore

recovery, Well, of in China of all is incredibly reflects strong pretty by there despite team what our continues a what work off implied, lot considered. story by we one the things which you reiterating succeed saw be the pleased persist. with And China this that quarter. first, challenges it start a We're for I'd some us to to of

of look lot brand. growth market. of term a the mind, optimistic more long Keep for the cautiously is we has China at we we'll that continue of it to As recovery. remain see in think a We the opportunity year, balance that

story runway. of look you at the a would more when much mature compares, the brand in a so not it lot as And of because be market as it's has

China just that's product into the a runway. long has getting introduced of Some

years, recovery So continued we the flush a to also growth. of we've that, of but good some I We year, remain fully that really despite the to acknowledge has market issues, in remark that cautiously to do X.X still out it's over optimistic. do kind and work the would some last fact see

optimistic, so albeit remain we cautiously about the And future.

Tom Nikic

minutia. bit so opening I the of can get think store give how can of the to Understood. to many sort year. a stores net we earlier. Can ask If gave little you this year modeling openings plan I just a you you for us plans close John, store

John Vandemore

incorporate that any specifically. that like when We objective mean, because be together close continuing be do to guidance, out we'd I don't some my stores give put I all say, would them to to we not contribute. we would expectations.

So about the a number and it's stores, we're Again, get the to talking when we much right is to us mind, give open number. attempting just store in keep to a more net store. not important for

want So we'll about exercise making sure continue to to and discipline always continue something the opening to do. that's we're right we'll the us, for store

Operator

Evercore. the line question Wong of Jesalyn next with from Our comes

Jesalyn Wong

good John, a David, of quarters. congrats set on

for we operating to should out for basis is XXX course about -- called the margins. But a how operating be thinking margins points strong quarter, margin from quarter, year given Rick's be part on there this such question this other of Just you surprise yet, the Last away seems be into single up our wanting But to to high we're conservative there. estimates. more guiding bit of long-term first target. in X% a a quarter And Domestic positive little wholesale digits. earlier. this to orders dig mid-single to digits terms only are up operating How year?

John Vandemore

Yes.

comes significantly into the the second front, play quarter. On the again, in pretty wholesale timing

of Again, we quarter the thought. you'll stronger came in than I that's think So range our originally see first in I would acknowledge incorporated that why part also guidance.

could was continues, definitely be of between fact June, difference surprise. when to the of So be that of range. of If and timing good the trend we got towards into be QX end the that a cognizant higher get a But end you that we'll kind again, that QX. it just

seeing trends. And put seeing But given good for again, of to to things like QX, what So are the we it on as range keep beyond we're good seen. trends well. year we've the balance really we realistic a

get our have that pause isn't goal. there about gives anything don't we're until the progression. the more a goal closer about quarter into take lot drive the achieve of help to to operating there certainly gives terms year. us objective. We've would still I In It's out that. to want our that actions to but been digits. but And victory concern, to still us optimism that of that's ability to pull the for margin, certainly and optimistic we're really levers this said year, declare for to again, look, say has double our back our I We

Jesalyn Wong

the seems All quarter? year? the there we just up throughout well. Any last to on Maybe about exit we seen have a on think holding question second trends second how color the e-mail. that half into very additional And should and with EMEA even quarter be right.

John Vandemore

it I was the significant the great. most surprise Europe. Yes, strength continued for in on side the was mean, Probably direct-to-consumer us

the in And we're watching was that we market the of our our that's the that products, certainly Comfort saw as side We're strong So well Technologies. exceptionally for else. But the encouraging closest consumer performed expecting years, demand last has what challenges which the for everybody We recognize relative of business to our dynamic consumer in demand to of had certainly us. market. continued the at just its over share for in course X as the growth quarter highly the Strong business carefully there. it environment.

side the from things, to and outsized of of expect growth to probably to be think it's that. Europe we the international remainder I kind going an element of see to if a we're contributor to year, the going come DTC

Operator

with the Nardone comes next Chris America. of question of Our Bank line from

Christopher Nardone

provide you're I comment today in and the trends the is the an you what was relative on some you're uncertainty like in seeing your manufacturing large market. the how your to wondering if you demand can capacity of regulation update business, business given maybe could India your looks recent seeing?

John Vandemore

Yes. size our is enacted a on of importantly, importation. it bigger regulatory markets recently It's but term. bigger long kind country, it of see environment, regulatory markets, limitations more relaxation would the in not The the though. of certainly and marketplace. stand-alone I the is say is one term, long of international is We one We of some opportunities India don't we a think what short-term did

So issue it continues to be deal with. an we

to it. in all, We our work industry-wide have issue. a the partners. market we issue objectives and something term Skechers that's that's the continue honestly. more product that to capacity The to in India. short continue manufacturing to not And bear simply issue on That's at of is an more with manufacture And

largest a it's in from election, came to India long get involved So up we'll quarter time the pleased done. continue with awful it's an world's something bit I also the that some which now little and watch. to macro was because they're had takes influences concerns

great cautiously we'll but market. regulatory footwear for scheme near-term going see the of and about and a need the I we're optimistic full of so before Skechers apparel benefit kind community term, what balance runway. to resolved is over broader to again, the the we the have, and the providers ultimately clarity long And year, of be of But think,

about enthusiastic to in continue be be we'll month. visiting We and a

Christopher Nardone

That's very what helpful. of And on quick technology then Slip-in you frame a terms rolling broadly, your business. in, across your we're can follow-up help just inning More international markets? out in

David Weinberg

more technology lot has a I a unique think, appeal to argue fantastic the into more products, it's I'm Are Or and it We a joking. it runway. with this we early, incorporating -- Cricket? may would States. in -- early Baseball I that even Look, talking way but will I or don't for that's resonating consumers, think be We're United is of consumers.

due that It's a Hyper say our of to our Slip-ins. its room so the we're timing markets. say, percentage because I the to widths I isolation. just for products as who technology for our technology. I domestic side to different those mention, on stages. the And more isn't we're measure Fit, use need in technologies advantages mean And develop ourselves we're But on to as whichever Burst bringing have that concentration would early specific press Cushioning, go Max forward. about It's and in to our be both at juncture international the this not hands-free call more of individuals Chris, just continuing there's would choose the lot well I in international ways. Definitely on This to can wide rollouts. Arch though hard sometimes it's continuing you would it's complete and deployed portfolio it's the also different how that a Skechers surprise it. to

John Vandemore

that's and word we're go not it's that everyone this that capacities a enhance to is features all we a the identity, and the or to us And we technologies something categories, product marketplace compete categories we brand only more the important all and importantly a comfort as to all available a expanding more the we be expanding in of -- going athletics stylish remember that use everybody or bring comfort it's for to into important and feature. to others. continue forward into our to and myriad move to use products importantly have the the And continue whole to But or with our for not features better in it's and piece into specific, the categories -- but the is that not technology wants all may all expanding lack technical to wear. you'll invent bring keep may our all showcase new brand, some that it's design a of and of of available of

Operator

Stanley. comes Morgan Straton next from question of with Alex the Our line

Alexandra Straton

first up wholesale, a in came that nice Congrats XXX zoom quarter. points. wanted looks the over expansion margin. a again of from to like on lot I gross quarter basis It on

level it that highs about and you forward? margin the can think kind business how right going of is for part the to talk gross So hitting just through why of

David Weinberg

Yes.

was able the of why we think, year that's that there put and domestic quite it of benefited side between just side of last this international earlier. into And the our as kind and I of did to obviously, relative we year about earlier, Technologies. product lot impact in things, DTC so wholesale talked Alex, and things the disparity to the disproportionately many we're It Comfort a play of well. and weren't on

other it's always the On and way because is the think us. our under edge control to is about total it DTC, -- for leading almost the the

aspect And impact business of side so of more we're wholesale business, other any our than be to be it much pricing, quickly seating. able things, that it the

And that a we saw wholesale catch we're particularly kind in And way seeing this benefit up, more last so year. ETC quarter. pronounced of

Alexandra Straton

time? kind think settles this from of kind then rate And Is Or over where since of levels. from Great. maybe pre-COVID so you down bigger level? up stepped just on has picture much here? it margin that gross new the Maybe they've come

John Vandemore

Well, we'll for to drive margin. continue look opportunities to gross

on more in had be year. think of there'll the freight clearly, because we year-over-year play I some basis, first last quarter uplift a the in

we at accretion. for will just that our accrete. So direct-to-consumer naturally an business that continued as allows our But to outsized wholesale, grow relative pace also

of modest go of influences than or mix And near up, term, the would the input not that product at unless expect I seen think over last couple we freight major albeit changes. other we've to it's the more something mix so over leaps rather to the and pace about it at from continue business, bounds of a years costs,

Operator

Sam our the And Williams with next of from comes question Trading. line Poser

Samuel Poser

of I'm of you what me on we neighborhood how year. XXX going -- how mean was you're I mean -- should The -- David this be can I we're thinking other the us margin. give think year? let a on -- for, looking the for about so just like but range follow to each not up just gross time. up what gross can us give a margin for long you bps, a I mean,

John Vandemore

definitely to year. we over balance north. the this the to drive continue it was Again, we're than I'd quarter -- higher say This expect year of going

there. basis XXX into come to play up see think I mix can lot XXX, of there's it that But love we'd points. a

out neighborhood start So see business business it's the over unfold of mind, range we with. But the rest as may the kind tremendous of of of dragging we great an again, of one that change. the things in mean margins of, the business, operating balance lucrative you out keep down I business margin I'd year, the that's see But success business. know, the a in could gross which have it I'm bit. have Sam, effect as always is as distributor an we operating our a incredibly cautious as margin

business per of be accounts playing increased margins of and XXX then kind let getting overall. out gross se point. the point that margin margin. the on So this what we're of at out the product intent of into basis really the and kind give not on we a the gain to We blend really constructive it XXX had focus But range number, to if I would are

Samuel Poser

had a the that one you fell than But their talked kind properly actually I'm earlier them quarter XXrd XX this know their earlier week year, likely that less -- see as likely means later it of year a back-to-school. big year to July in this into back-to-school. peculiar goods goods many And little your like later June than accounts then last concerned, year. timing quarter you last of more your as it's mean, about situation that of -- make makes of switches year, everything. the far versus I the into long more looks is third set which included and for where wholesale they I that X, up get it a number? for Is the sure need the biggest of falls we back-to-school second weeks little which because

John Vandemore

tough that's Yes, decision to for someone. just really a call

I this what as windows on set we've certainly see is QX, incorporate always second deliveries, that's our a are some QX it know customers long the We order expectation shipping point you that shipping care get is we're much another, that all fully we But don't the we'd to see feasible consumers of the to of from we in hands out our up guidance. much one we'll based Again, current flow. given certain. at be So we as but windows on sell-throughs. not that's continue care and about strong to we it quarter, -- in until do, really a or action see too get to sell earlier it I point the lot. goes the not the way the into in improvements adjusting arbiter quarter really who can actually would to that start through shipment earlier, saw comment business going And able the our and because can it David's how to ultimate and

Samuel Poser

you've gross years, can been sort on demand, about looks the And The running, especially wholesale in I how, much to and then other margin me, internal the in little one that a of evolution of side, part things. good in like much How the last And going? improved has but you bit shape. it -- general, your over think you've measuring a thing. currency the mix outside I mean, changed? processes, this played and And that sort internal that of inventory is how is where processes is various of of talk

John Vandemore

us, many well. I our because that of to your business of that channel. that work the of styles maintaining lot applied sure we're similar Yes, a with not price structures discount about has operating And that integral in the for properly we're alongside integrity is arranged. strategy the are although properly team direct-to-consumer you're as on promotional and results seeing the think products just product at your product It's level, making margin, been

lot is off that make just the concerted for the seen innovation innovation. it's mean one level. comfort the the certainly I also thing. pay at a more get margin the getting right contribute technology. value something to our we're to merchandise not It's effort that it's consumer The is product. But So of we've willing of consumer sure to

aspect a business combination So effort increasingly to thing, around align it's profitability. every better of our factors, one a not of It's right out. but lot driving just internally it's point you're a of lot to of

Operator

conclude this at your have therefore, you may this participation. session. also your question-and-answer of we reached does time. Thank And lines the end And you for the conference, today's and disconnect

Skechers U.S.A. (SKX) 25 Apr 242024 Q1 Earnings call transcript