SKX - Earnings call transcript Q2 2024

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Operator

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

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

begin. may You

Unknown Executive

Skechers, John for Call. Thanks Senior an Second XXXX XXXX. here Operating Quarter Manager the on company Officer, with Hey, style starting since name joining is Conference at team Chief call development Skechers' My the a Chief My as I've Jared David Earnings been on the everyone. product Skechers and Dollerbrook. is OG Weinberg; One Financial Product us Snoop intern Also our from joining in Officer, and sneaker Snoop favorite the Vandemore. Dogg Colap. are I'm

begin, statements like statements and and the made risks, we statements the estimates objectives, addressing expectations, statements of remind Certain company's call forward-looking involve today's known everyone current contain forward-looking beliefs, company results plans, Before of future I expectations and would actual differ its on based report and or certain and occur. statement. implied Form the to limitation, of cause performance reports XX-K refer expressed safe actual Form achieve may the that the unknown company's which These forward-looking reports without including harbor events. on to including, with statements or SEC, our results quarterly filed future assurance the such factors, materially statements. by annual can no on to Please other results, be There its will from and any on XX-Q. uncertainties

may business, Officer, over on affect call like For conditions, Weinberg. company's Chief turn would and With flows that Skechers' Operating the of to more information to operations. and I that, these uncertainties risks cash financial David results the

David Weinberg

you call. second thank for us joining Good our conference today quarter XXXX afternoon, on and

an were X.X% record period. Sales increase $XXX compared year. marked for another million sales $X.XX The last second to of quarter or the billion,

second Hans an X.X%. repurchase $X We're point event currency price-driven record currency to in record announce all demand of particularly segments. comfort a global margins across were pleased comfort given regions program. [indiscernible] and within drove to product a XX.X%, and GOLF the our and and resulting The Strong basis SKECHERS Kids noteworthy GO impacting also Skechers sales sales, from foreign our resonated for technologies and innovative new replaces China enhances billion interests. GO growth Walk significantly diverse quarter our infusion plan, increase supply and products shopping of sales consumers as chain Gross and share headwinds. increase. in were XXX existing Dog $X.XX Snoop billion, such offering to The of with difficult which shipments ages SKECHERS a disruptions On constant basis, are and a all our Europe, collection

includes recently We feature [indiscernible] to Free which phone, Arch also Air-cooled this many expanded our memory have comfort just our SKECHERS and innovations, HANSE product are which of SKECHERS many categories. part one comfort company. Fit, Burst technology Hyper is of and convenience all being additional the comfort SKECHERS more, of

our partnered successfully offering. further like have leaders product enhance to with We technology Goodyear industry

America. and Recently, you Alexander your for and for regardless on both of Boot are including that with for compete SKECHERS with with Jamaica across [indiscernible] Harry athletes new England matter iconic product Ukraine, you In Winter, branding of and competed division. testers and Bobby elevate style. football We perfect boots, or global stages you innovation John that skill also the category, rugged incorporates Deere. performance athletes Euros footwear level, and Golden at John technologies, to collaborated Comfort a fit the wearing Kane where partnership performs. No The Deere Reed and train elite our we the technologies the with comfort announced can SKECHERS Copa equipped blend our the trust

also ceremony [indiscernible] SKECHERS as games. Malaysian They including Golf The opening and dual, Andy well our include footwear will use continues will the out Golfer to Volleyball Diego during This of to [indiscernible] [indiscernible] we Chilean Beach Henderson, this Mac the American Partain in XX Mohamed Fitzpatrick [indiscernible] wearing daily be team and Brook Defender Bundesliga athletes competing. Miles branded Walker, Spanish [indiscernible] as Star, Kudus, for rolling Amor. and globally Garcia. Ham continue West ambassador roster athletes during Race uniforms. With Canadian Olympic signed recently in Philadelphia month, and see grow, weekend, football will SKECHERS SKECHERS British Stryker, playing Rising and Aka be

of basketball as Rising more And we globally Los Jackson. Sparks SKECHERS world. WNBA around Race next We forward, with rolling Angeles out see basketball are bring signing Star and the many ahead announcing we month, the opportunities

engage the Comfort or comprehensive technology multi-platform hospital through with every delivering you're so prioritize unwavering comfort. XXX-degree your ultimate basketball company, that the in whether We innovation, companion SKECHERS be a style and an consumers feels pickleball, we pair exceptional, restaurant, in or golf, and marketing diverse looks comfort working and approach. playing will office, As

second and [indiscernible]. Skechers Ashley Harry and Singer campaigns quarter, women with slippings with as hands-free included global first regional apparel the Uno Park German Skechers Actress Skechers the football starring In campaigns and talent. SKECHERS commercial, as this men well cane. for

with of Harry athletes Jamie bots English retired This as introduced Snoop new quarter, campaign featuring [indiscernible]. and a team as with Skechers football we Gestar Dogg or elite football our well

Skechers Terrence launch for process with the L.A. campaigns in have Race campaigns Nick for did creating of with social and new as New basketball as are dedicated August, channels created Randall in football, in Joel and Man. we and the fresh As Clippers York for we well preparation we Julius global

brand drive building to scale on our within continue for profitable growth. product focused we efficiencies remain our we business awareness offering increase globally, to and intent and purchase As

results. increased sales. Sales X.X% of sales $X.XX a increased billion. increased represented record Domestic sales our X.X% new a X.X%, billion. second and International basis, our sales at quarter quarter currency constant Looking second to of X.X%, On increased $X.XX XX% total to

States, and And down. economic The industries, multiple in X/XX the APAC across X.X%. In macro XX% quarterly EMEA traffic growth the was several X.X%, China, consumer despite increased demand challenges holiday Americas In region, over period. came By United especially weakened inventory. import are led which more our foot We India addressing ongoing important constrained named square and an to extremely regulations, and navigated new product is producing XXX,XXX by actively locally center distribution we India, hurdles Mumbai. the leveraging we regulatory market, believe headwinds.

about In on-hand XXX%. were inventory, increased between second addition, created despite and extremely strong which which a year demand time. the short-term was was Europe, shifted the up by to This in-transit in sales of imbalance half down over XX% inventory, transit

Our compared in in wholesale was $X to to which of footwear Direct-to-consumer our and flat India. X.X%, the due improvements resulting result the last for increases in as of in billion wholesale aforementioned driven the quarter, double-digit XX%, and women's than first well and more volume domestic of International increased sales growth a for growth sales year, and company. was kids ASP. in challenges increased X.X%, primarily the as by men's China

locations, Skechers-branded Germany. opened big-box country. This business in retail stores. due a in the positive key of as the particularly indicator Direct-to-consumer store the X,XXX for direct-to-consumer faced in XXXX growth company-owned ended second We traffic markets XX% Domestic and sales our of strong to stores and quarter, both be are continues appetite X of company-owned XXX the in the in quarter We stores and XX% United brick-and-mortar increase improved the our Vietnam was to including which primarily for China, X.X% and of improvements softer in growth e-commerce with with an our reported consumer United worldwide, across the internationally States. with of most we in include comp brand. X an XX in of X,XXX XX XX segment locations quarter States, a

quarter. closed stores We XX in the

date, X Philippines our in X store X,XXX. India. and Although third-party China, United XXX including the This third-party period, States XX X in in stores company-owned at in opened, stores, count the In X end the we have in in and including brings XX quarter big-box stores third opened the quarter Mexico. in to X to Indonesia,

worldwide XXX Colombia, expansion remain product in America open XXXX. is across the which and and priorities, to our which expect the demand DC our remainder serves business, creation infrastructure in new month. now to an opened operational XXX in of of Panama center countries Latin company-owned Investments including offering, multiple our company-owned over this distribution direct-to-consumer We and additional

goal consumers around to at one and second or to we making franchise products the the half billion shop in business reach continue world. $XX looking on focus stores retail in worldwide of and partner to our wholesale of our where We're annual to as be want forward many our it available scale We and of XXXX. XXXX our e-commerce in and continue locations sales our

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

John Vandemore

$X.XX of good second Thank in and everyone. international afternoon, in significant year-over-year strength billion, X.X% by business record and sales continued driven Skechers our domestic our quarter growing delivered wholesale business. direct-to-consumer you, improvement David,

below in due were part results currency severe these expectations, strong, to quarter. headwinds the exchange in While foreign

[ On $X.XX basis India of strong on our X.X% a continued line -- currency constant $X.XX basis, Earnings the quarter expectations, gross regulatory a XXX our from continued encouraged response by obstacles consumers. hoodie lackluster headwinds ] to China, margins. comfort Despite chain, $X.XX were exceeded reflecting constant growing in in to from with in our share more the technologies navigating these are and per sales in positive a we the currency billion. other expectations, supply and

the we guidance year visibility year into are later, As we have a of and discuss adjusting up will as full half the result. second our improved

XX%. internationally, growth Sales billion and Turning continued was the strength both company's double-digit first prior for with our history. impressive to quarter, X.X% in which Domestic and channel. driven lighter locations exceeded last our to followed the a quarter, comparison $X X.X% and XX%, physical foot grew channels in our rose XX% including brick-and-mortar Growth retail we direct-to-consumer. our e-commerce e-commerce as grew year-over-year year's difficult but by in increase. trends, in marked market improvements traffic faced of growth Consistent year sales in observed a broader we direct-to-consumer

for strong. Global of comfort prior speaks focus the consumers key demand X.X% reasonable the style, Skechers and product continuing Skechers our see momentum remains order billion. at enduring wholesale in demand the Domestic XX% expansion sales products In build wholesale, second are range the $X.XX robust our the flow, reflecting and global of a of purchasing The long-term year-over-year continues on year. million strong market versus increased a in the sales for to broad of appeal points, a which quality grew price. to $XX or a for remains consumer delivering and we direct-to-consumer brand to trend half our and footprint price priority driving year across growth.

wholesale markets China. by pockets of many in sales were international Our results were India flat in weighed softer and like down select strength essentially as markets

XXXX. negatively the in disruptions chain second of from supply business Sea with the addition, deliveries Red In into Europe crisis impacted shifting half our

sales. the growth direct-to-consumer regional across our to the all In billion, turning by for including markets, grew over half double-digit domestic driven wholesale, business Americas, outside X.X% $X.X increased The quarter for year-over-year Now to the the accounted States. of United sales second Americas which growth.

pressures resonating with to is While products with the remains spending, consumers. macro on Skechers environment at delivering high-quality challenging prices commitment reasonable discretionary

currency sales year-over-year. situation, to we of the disruptions. year X.X% warranted. aforementioned recovery as increased but increased by In the channels. XXX to are of standards in regulatory negatively in we the with Asia consumer closely Skechers, sales versus regulatory opportunity We for prepare driven on basis X.X% have EMEA, seen In More in points our to the long-term the opportunity direct-to-consumer a $XXX.X improvements we possesses. we'll than year. recently, in prior and near updates Wholesale long-term to $XXX.X focused strong market supply we this compared and challenged China's performance unfavorable growth positive our implementation the In XX.X%, the are on for was prior by to chain across over around further while in our course are million. sales remain the anticipate Gross will continuing sales the XX% believe constant believe and monitor but developments that market. India, margin due and prudently environment, term confident Pacific, were business term, economic to grew impacted softer continuing sales delays strong other basis. the We conditions. perception year-over-year China, brand these double-digit up year, million, given provide market In the for the the near the demand were efforts navigating new anticipated

basis XX.X%. favorable to basis a by was XXX improvement as costs direct-to-consumer points Operating expenses driven The points expenses a volumes. a primarily to lower and XXX freight year mix last XX.X%. of of percentage increased Selling versus as percentage sales increased sales of year-over-year

compensation-related As higher technologies quarter, to and spending XX.X%, our points and basis cost X.X% of new $XXX.X on categories. due heightening were costs, X.X% segment growth operations last brand XXX comfort from administrative expenses and to a last XX.X% due in and was year, as mentioned expansion. percentage depreciation prior awareness this our in rent decrease by was for compared realized global investments our efficiencies in of brand-building increased Earnings General direct-to-consumer and primarily of margin compared to and partially to in offset building focused largely to the primarily to quarter million, centers. distribution support year, sales the labor investments a innovative operating

diluted prior were average on were XX.X% On our outstanding. per items. prior Our or quarter diluted effective a compared balance second shares share. $X.XX decrease billion, now turning Earnings per prior to year $X.XX in of X.X% flat $X.XX the diluted tax the XX.X% was rate earnings essentially for million share a to XXX.X Inventory constant per to the compared share, weighted the sheet an X.X% year. at share $XX.X per to year. million currency And compared increase was basis,

on-hand chain mentioned, the believe an year, sales. at we the delays imbalance next increase inventories quarter are nearly Accounts to up prior and the over $X.XX higher this short-term compared inventory, which the $XX in-transit receivable XX% million David imbalance end reflecting of be course of will supply remedied and and wholesale were billion, healthy, quarter. as down was a Overall, our inventory However, XXX%. created of composition between

corporate over revolving quarter $X.XX equivalents undrawn billion investments, the billion million investments liquidity expansion new cash million including cash, of of ended to our were for $XX.X million, the Capital of openings and $XX.X and our in construction the our the related $XXX.X infrastructure, [indiscernible], and and distribution We of with to $XX.X to offices. $X.X facility. maintain when new which million store in credit related expenditures direct-to-consumer quarter related

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

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

replaces new today, billion a And announcing share we authorization, repurchase existing X-year our program. $X are which

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

Now turning to guidance.

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

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

the effective Our to rate interest minority expected is expected is with in XX% total tax to line be between and for grow sales. XX%, year and

October delivering thank sales year. between release forward and closing look the and results, We on and $XXX today. are your updating to turn achieving financial for expenditures be time growth. anticipated by Thursday, I XXXX, expect will to now We we million million committed remarks. all the remain our Capital over for on With to to for David XX. $XX call billion $XXX long-term to third We sustainable which you quarter profitable you that,

David Weinberg

price. comfort, new recent and in Thank and innovation, to and reflects the achieved we you, business across John. delivering quality products record the direct-to-consumer our with reasonable best second and quarter in both of our growth a Despite strong our challenges, wholesale the sales acceptance broad-based at globe. the commitment This a style

business the for the expand As extremely encouraged closures brand. and changes the challenges by to we delays India, the we due numerous navigate demand opportunities transit in our to see are regulatory the Canal and Suez ahead, including our

the consumers they to of with want how, when focusing also our Sketchers, Skechers of and launch to increasing about we committed Basketball, excited are where and that channel Skechers relationships customers. the on global remain our shopper recognizing launch growing third-party our We want, Football ongoing direct-to-consumer important while

initial into tracking expectations. last Going our and than we quarter, be half the second stronger above are will third the year believe

for and grateful the valuable growth we year partners as always, Skechers and the the As entire into are this future. profitable contributions we deliver of our organization

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

Operator

comes UBS. Jay Sole first [Operator from Instructions] question with Our

Jay Sole

I headwinds you like sales want about quarter like little the the the It into sounds relative sales to the to given the it dive and EPS you're and in to what and explain bit specifically to sales are supply these a bit causing EPS the guidance impacted raising raise the guidance chain headwinds of sources sounds just maybe you you you thought, in the what's raise guidance. still causing guidance continuing. raise but guidance, guidance. and the FX and earnings yet ask Can what's

John Vandemore

strong say with would the what flowing a into down side half flow the visibility chain the or particularly Europe side supply of of the that better wholesale of there the we delaying where back have to that from good are drilling year. still thing side, wholesale Well, and our back we've couple order Jay, into on in domestic orders on #X deliveries represent the really business the I function see is we bit I very distribution half the ramifications seen the on the

augmenting we've had. that's So the strength already

declines did We of like e-commerce lot good DTC platform see internationally, performance continue nicely to quarter. in some performed others, although very the we domestically, see our traffic a

order back simply all now. taken we persist there, are we of out better we that got weighted adequately another challenges to the range we've in very We've of half, that and for frankly, or the We're together, mindful So could outcomes the of some degree book domestic X have may nice international visibility quite believe in which but built a expect. wholesale.

Jay Sole

it. Got

of that, on still macro seeing speaking? I half. alleviate those there's that's FX not broadly in in you're you're order assuming for out up are issues coming the you booking that supply you're chain, that guess, whether -- from John, really the the given back kind mean, real guidance just visibility the or mean headwinds of things you're but follow not feel yet assortment, assuming confident I So there from I sort product that of that to the some acceptance the raising the persist, given consumer saying

John Vandemore

it. seen we another. Well, the some is X to budget. in that adequately ability confident in guidance degree the those X headwinds I our It wouldn't have quarter unless captured, save macroeconomic think quarter. say to but the acute we've we achieve do turned of around, raise already will we And believe, persist the we and did currency. foreign not in our outlier is was second during I'd the particularly were us

If you have strip been we our that mentioned, would range. within out, as guidance we

what of the camel's in guidance, on the evidenced kind straw internationally. consumer that's broke again, in was back the we've seen is back That still And that our what's on the continuation half year. underlying of the DTC strength of order demand prior And achieving the the of the book but there.

Operator

comes next from Vasilescu BNP. Laurent with Our question

Laurent Vasilescu

comments then a there's the we it over for John, kind about what comment to on quarter then the being around guide Is of if wanted see U.S. can Or weakening? of third overall and out blip is back-to-school? see consumer? e-commerce thinking with traffic, around and the I can just the it for of us reacceleration ask footwear kind just footwear you you're a around summer strong, environment but about the Maybe DTC landscape. retail there concerns lot David, foot the

John Vandemore

platform see quarter. quarter. same Well, though, a stores. some of our had traffic slowdown definitely did in time, really effect. did the an our We bit brick-and-mortar I the the an in odd well admit At e-commerce of That it was

of also the position are we're I a they type customers into better with wholesale recognize, back vis-a-vis inventory. important our right equipped think it's to getting where

still abundant you some favorite at your -- at maintaining I so U.S. the prior last is growth there's of the it note, look on So you comments X-year an strength is when we mentioned strong incredibly about up on think growth, market, rate. broader XX% consumer. The in year, we our basis, if nearly an thing had X-year that just it stack I'd think incredible clearly, and which

modest go and here, an think what out then in from think, We're of in expectations order expectation holiday. this in book. of back-to-school going But our overweighting is be juncture. at wholesale determined not to demand we there the largely by we see there's plenty So characterize what reacceleration. I we as where window as and consumer the we're I by also evidenced is domestic seeing e-com would

Laurent Vasilescu

is shift Very And talk million Okay. assume to it XQ? then you helpful. a can about XQ Like shift? and the between $XX fair

John Vandemore

say I effect an it's mean bit a because only to fair over challenging Well, little this it's of will felt a I question. the has course answer time. been

of in simply the QX X when they the of demand second but particular, QX, the concrete little right? that wasn't product. QX half keep feeling straddle as So and we're I like we that chain, bit vis-a-vis European to to is in because say the year known and would quantify, absolutely depending time And you us of route always supply of Asia tough It's ship a is is window, guidance What for the upon couldn't can the there's moved shipments the quarter. particularly get aspect missed for mind, impacting been think a go. make distribution it assume amount what's that into I our orders and just for to material a

evidenced I globally. books in said, order it's As the

over And expect we next finalizing occur good the of feel going that normalization quarter supply or so the the is very orders to out and those X. we about chain

Laurent Vasilescu

XQ Is you still helpful, XXX And to about it? you've how think about XXX do I right my if I that think know way guide good margins mentioned I margin, but think the can be friend, And gross so, gross Very question, gross [ margins? beds be Don. don't could think quarter, to we to ]. last they posers --

John Vandemore

anticipated. benefit we from and say than was little bit more -- this had anticipated. quarter I mean, than We we more picked I freight of would mix Well, a a up

to did rates. lot balance get we have but would smaller year, for expect year. expect are course we watching I a out bit. a over is this mix the of freight bit throughout the the the We'll higher benefit little in keep of But As as say of we a don't previously, It even the we had mind that said more year. to related, we although the progress

been Red impact, there's Sea from -- obviously, rate crisis. the some Some

balance much lift to of over the have expect think, with that put We we that. so year. with . achieving I ultimately, that I that year the tell the rates contractual you the and that back front would we all when But into half previously you as is don't as model, of half monitor we're consistent, what we that had saw the the over mentioned. we'll though

Operator

question is . from Our Stifel. Duffy Jim next with

Peter McGoldrick

for on McGoldrick Peter is This Jim.

wanted First, the regulations I ask BIS to in India. about

You the between capacity the impacts . of market? And relative gap of gap, local the to the and the supply are What's you the regulatory that magnitude local and planning demand? for mentioned production timing near-term distribution. the sort the opportunity progression long-term of bridge to how some bridging in environment

John Vandemore

thing is effect the there our in I'd The environment regulatory from impact in Asia significant a was on this Pac -- That India first our say had particular, quarter. sales. a noticeable

better one definitely won't it of say simply it's focus it's percentage, accommodate a in perspective, chain insufficient is we demand. better. give from The I It's quarter. suffice build continue of our total getting and the we and attendant news local areas our and uncertainty today, our felt that the primary to to to So production. good a but supply

an the in a positive domestic from the timing international certification it's bit -- manufacturing. going with seen to optimistic a that's be for have the complement to things then tough and when that But us. needed that's and to things market of get a as of able back market the significantly on expect trends regards some ultimately, maybe call develop be that processes, But half would will production company what's year, India we better. year. little perspective we continue locally, but course to But international overall, I market to a over towards the someday We manufacturing of even look change. are to both export continue with both about

impact over seen had positive we We have been has that of trends I again, encouraging And late, the better back as well. an in some a believe it So enough, can't half get of QX. impact, significantly big definitely the will and stress that year.

Peter McGoldrick

the like double Revenue All talk outside to on X/XX of balance with, insights noted promotional. definitely holiday period. influence important X/XX strong time. on is the to to up the currency about follow as Can X% challenges unique I'd nearly the right. consumer Then this that you might the and over what a rate the despite event, of X/XX China. increased We're come expecting rest XX, trends plans periods saw any as be your the constant for first out half and was sales in of realized It's to that growth it's plans the the through I would half a we And of hard the we we've for basis. in of looking should quarter currency to I read they second was for second actually XX? And argue the not quarter. year China. It's and because definitely very growth that the half. a encouraging. on such expect foreign also were note of pretty growth this that faced really significant currency think, in headwind year key

lot a more saw activity we on mentioned, X/XX price-driven David year. As this

lot so seen. growth less that's liked simply have compelled to have overall than And would we a

on road to China said, think As we recovery. is to we also continue the

event seen half recovering. things context than a second But year a watching we be are we've certainly is the of in far. better the how carefully. what expect We that of will thus big Double market XX

of continued think PL outperformance to aspect we what ride the relative market, some international which long encouraging term. which to brands, for in most continue the to the I think I brand Again, resonance I seen is think speaks and to the other we've Skechers expect there

Operator

Our with Kernan next question comes from John TD Cowen.

John Kernan

to clear Maybe geographical or increase line of bit you anything specifically It in be got the where and in of Is a we wholesale. DTC a good color from little . international going accelerate the you've year back helpful. have from globally like reads a But little for there a on perspective there unpack would just half the QX. that's sounds channel were more. sight more guidance that

Robert Greenberg

wholesale the going half the factors lead side is probably best the DTC, benefit back the I'd think strong. as for of pick timing growth. well. those book Canal are we to the Europe And in the give is strength domestic wholesale the can order crisis very from Suez going the say I then of be up year issue from characterization on the to we're continued

I think this some of some the around we quarter, the also just the that headwinds foreign India, regulatory the currency. of absence in of issues particularly saw

do that also think probably from here, to would expect we've feel it up sailing but weighted makes We like the them I don't for growth. contemplated smooth other We issues. appropriately. I some of we say, of I more the be But most purely currency unique the had of why they non-constant that's in. of bit would challenging think thought below sales reason than of initial anticipated quarter part were the be. kind a this made And our where it combination events anyone going we

David Weinberg

year, this particular talk December Johnson, case, Europe, there pick from We're the see out fair a getting it's better end And what and early, went July. to June into from more and June difficult time of the June you we longer the it's and simply just the January, very think December flow went see a it every domestic place as wholesale start, wholesale European January and because it's and domestic beginning July even the it part we the and most to to of point though we our of demand in picking about in late. part this to is while so whole shift year the for biggest number doesn't can and takes to of point shifts quarter, while July, shipments at that are up get commented a guarantee extreme to great that from those this in up what I Asia places. a for

business shows very last and a demand side, important, year to reiterate one in other XX% John increase in the just to new I some consumers. increasing -- and have just difficult picked of has we consumer increase the wholesale said that direct-to-consumer the hold in strength up on from U.S. time. while think a also shifted and the to domestic So have given just our what because it's

Some go direct-to-consumer.

their Some wholesale go that partners to have. we favorite

about business the So you think the U.S. continues. in And in in sale when a up overall direct pick it, wholesale we wholesale

more have are XX% there than direct-to-consumer. the wholesale unit been So would there growth in in with

a shows just to place. demand that more So going different

increase up for guidance us, the in is quarter. So things I into the of significant a piece well third think very the both line which

John Kernan

we perspective, That's do the spot, supply QX really ocean and don't different into contracts -- you maybe on quick as cost freight we couple but like buy the an and environment on Do think your you how months. a see XXXX? do about And skyrocketed timing costs headwind? rates freight get It spot the chain as this a just follow-up have looks maybe of from helpful. of on some issues. last

Robert Greenberg

you you think everything until time QX buying, not the QX we're higher into and some simply the we the very the inventory. Also, Well, to out because spot and factor, noted, to certainly be turn are There don't effects is needs have market. more of of opportunities of is as spot go to first important spot. in the it acutely rates probably takes we which feeling expect John, a I point

the reasons tough but that to margin in is is mentioned, help both expect will So the also were we incorporated are call of one sits. the in play other quite think of rates which flow factors our we've and in some rate It's bonds it's until of outcome believe final our an for than improvement at [indiscernible] a frankly, improvement at of why to gross we goods, below guidance. weighted right question, David of into now, we do spot end from here. that culmination as container the where about that. average Laurent's increase cautious well offset day, we we other the overall the see some that a There the But

relatively play. it last of consistent or believe why be come And will will because that We freight improvement that's consistent some to year. into

John Kernan

categories maybe newer the you the acquisition. are follow-up talk growth customer you've to And then you on Can in recently cohorts of one and the Understood. some the performing? hiring they're just launched how

David Weinberg

again, So it. I missed I say that

John Kernan

of customer and launches. some the . to acquisition product acquiring of you some And the you're cohorts with newer talk

David Weinberg

hard It's to tell you.

right moving to soccer is sign football out Europe commercial more biggest the Our launch to are really not just and basketball. now a our in our performance of moving to push athletic. consumer, on that's and And going first we're

our customers. are our happening base the existing our what's think comfort of is I features and expanding that

athletics, brands, And the significantly we're achieving of to performance normal we very along into looking We're beginning get acquiring forward we're that. other as our more from acquisition still higher mix. just but at

Operator

Straton Alex Stanley. from comes with question next Our Morgan

Alexandra Straton

little as wanted Suez it it then sounds from commentary, positive to of maybe on near-term some X a on bit from Obviously, China. that's you're but your you focus just Canal. on quarter-over-quarter, just also a It wholesale the were temporary like like seems slowed I international But like basis. not ago as issues months

how talk just back what there? bit of about expecting a the little half, think you the can type you're we So should of shape growth . about

Robert Greenberg

We our I we recovery. And surprised were been versus the Certainly, the about abated in we had know yes, We over side impact the I we we've the a results would consistent couple some and still expect on said some international And had I macro challenges. of We mentioned We distinct positive. market it's original particularly a Europe. year. growth on impacts things. outsized seen. net somewhat a China in of was of on last years, would India. as know are on say, QX wholesale improvement we've as they there China bit an the at those felt, view expectations. mentioned our characterize rather So think our

again, kind adjustment why So had the in obviously, Chinese that, view, we which And improvement. know pick foreign right? that the we quarter timing, quarter-over-quarter but this particularly where a I on is was would also sales. They seen grand there's don't didn't saw you big again, currency in unanticipated I that's note, recent but would have growth, the this line outcome been of with more the double

would again, for. optimism China we continued have market certainly characterize So as a I

diminish expect do be will and continue to there appetite in presents. bumps This market of invest the one market in is but the any We in that road. the to it opportunity way doesn't our them, we think

Alexandra Straton

they quick follow-up selling Great. expenses. know bit one this just Maybe grew a I quarter. quite on

back about you a what lot expense had the Should falling of know quarter. I the into How creation . we start Or in the I takes think should there? think that about puts XX%. are half? demand that off? and

Robert Greenberg

the half than that the continue back the about. level expected. was the will but it next not that and those then P certainly that to on sales of the were similar. now of and severe invest just a we've And And talked not next of some will be more -- deleverage back around talked quarter up into point half we've strength expect We'll we more We of visibility be of kind the continue quarter. over issues we will of in growth the of increases some that about, move get and over the do in believe of balance we . with the quarter to year timing-related year, coupled some had seen originally case made the that

Operator

next Our from Rick comes James. question Patel with Raymond

Rakesh Patel

wholesale further hoping expectations for your into dig was you year. for I can the

past, of on the this out book you have versus you wholesale follow-up, given to the the being you've the in Do strength a a the how for domestic about just And far order you think side. then international? . is your alluded still as line domestic sight in believe see just wholesale high reasonable I outcome, as single-digit grow able to So global range. as

Robert Greenberg

perspective, wholesale expectation the based results the continue order probably we moment, think really But year wholesale global see full From more So opportunity to probably, I at that honesty, for see global see. in end accurate and the range. what good we be good of on is things. low likely book to side all about but the what definitely of on feel at an definitely for the we

factors this I think be keep kind of are we in on only overall, But say Europe conditions doubled the as would our improving. in quarter is to particular. timing need eye I

As which goods mentioned, David is helps. reliable flow and becoming the always more of predictable, more

So strong certainly if not again, we we the would and We speaking be have book about activity, the some not strength hadn't the order particularly we case. very of guidance. would see raised benefit that's the

Rakesh Patel

or us you remind given road. to exposure is headlines down maybe seeing not sourcing, everyone increase much they and may And about the talk tariffs potential the how also you China. may have just about whether can And

should think you that deal may with future. now right we how to strategies Just the mitigation that on about be working in

Robert Greenberg

within that, China. of can across and point obviously, that we're also of in would range sourcing Yes. what not flow -- depending the really out fundamental a I balance of when. China, countries. on to in for But significant change commonly a There's our upon as that footprint, we somewhere been and in which spread overall then ebb percent described lot Vietnam time business a the making kind we've other range the being XX-ish depending period XX% pretty kind have

for the biggest look our The also gets an quite serves to quite manufactured production. is, there's we element well. in opportunities I growth that seeing challenge note So in volumes. our market what the rate diversify of local we're would China continue that frankly, unit there of to

we trajectory, really have as static. some So seeing things keep a mentioned, markets, result, just to run to Turkey, Indonesia, other But we're we in Mexico. India. as good

So continue again, it's on. work something to we'll

may to I in react. really hypotheticals difficult to tariffs and broad it's what come, think response about

very but we've thing is quick actual that need learned results. to can't you you to to to one be that hypotheticals, really the react react think I

in particularly impact is sends mean I not the company. a just States, the That's if to whomever be thing one industry so impact from the such And tariff footprint there a as say apparel And to, should and by would I note footwear need a that a footprint. to react we as whole. somewhere be road I'd industry United that note to it's market-wide would we'll to the again, poised also leadership although be limited of that's issue. going I going going down to

you're brand And a quite have so X bit just industry, our another. across see or to the to adjustment anticipation not is of going with

Operator

Our question Evercore. with comes Gisela Wong from next

Unknown Analyst

And already of wholesale in digging pickup big is How a of kind there third fourth in then just risk And chain any the expect congestion additional do of Europe. to a from to into through coming flow And disruption so, international are growth we quarter Just on bit in -- see quarter? -- that? the the cost to supply on products is the third China. we quarter there? the if leading

was July into half, think do this early think quarter. we it second FX X% up back reads the I you into number the single-digit ex high holds ex for and Any half? trend mentioned in China,

Robert Greenberg

I Europe is give the chain, in the On inventories. we this inventory at best our June data down our think mentioned supply you were in illustrative And of end answer can I on-hand script, levels point an the on XX%.

Our in-transit over inventories were up XXX%.

that flow quarter. process flavor expect over concerned, the year, number. hope enough We one down reasons But just continues recovering is of Europe. is you be currency a we're a that will growth growth do confident single-digit that the it solid a of gives in growth. market raise on we the landing have I what guidance. high basis, the will not we to hiccups on a the we the the the get of bookings or level of delayed to That there why we is -- see continue was through. kind guidance. expected come or will to clearly already that frankly, to got know get-go of the China able that not particularly I international to do the year, had the landed to in want from -- it country of side, we would Whether say given Insofar processed to into And get are wholesale We that don't nature in be balance manifest for, lot while again, this constant of or was see. it much as So is, transit is in seeing quite how improve what

recover market how we a tends from give again, is, given it nature to early be But year. expectation the just far plus in for read perspective these Nothing can thus of that our after growth how events. it and continues selling big July you in to the

in long-term well the the the in we the to And that on we're both across and paying continue positive to think as I is been future the that are which opportunity would market will product the specific as work expect market. tactics obviously off, resonating in as We going to globe market, well. have

Operator

Our next question comes Wells Gartner from with Will Fargo.

Frederick Gaertner

into China talk a little us a more. the China curious, is inventory digging Can imported a for bit bit . little Just U.S. just of you give about Can you of China to versus China the how much sense that?

Robert Greenberg

of Well, it's with percent and production that. market. to it's obviously, coming that XX% our do about mid-teens a But of number, that mean, from I not challenge biggest a market. the XX%, coming overall from probably static sales our

of made precise, can quantum never though that's market. to not market for it's see in a the no the that production always purposes, It's efficiency You for goods. we're run going because small product

component a meaningful overall China. of that's be in to do. production I the But China efficient for Sometimes would most not consider to is the thing

Frederick Gaertner

And this looked deceleration they on like Got some it. ASPs, turned negative it quarter. we saw

on any the both Just side wholesale the curious there, . if have side. and color you DTC

Robert Greenberg

outlandish. nothing mean I really Yes.

I think we saw small movements.

mix frankly, associated, quite side anything, that's but of certainly domestic than things. think more the on I product probably

side through for international some constant bled on the currency. FX don't definitely things, gets impact of ASPs. On the of the adjust We there's those

effects our small to well and as continue things, more On the as with more products we roll side out technology technologies. slip-ins Hands-Free comfort from SKECHERS plus mix of direct-to-consumer there's other

in those prevalent, they would of promotions just more the so product, more on included And been certain get than little become life the the cycle they bit a as past. have

ASPs. on has So little consistent. overall, a that would generally pretty they I bit little speaking, were of effect say, of bit gives a But an

Frederick Gaertner

one Got it. And one for maybe me. just last

DTC. the On

but versus was versus pickup saw . e-com. slow between you in you happened, why that you in that maybe out there why traffic you delta the think just a slowdown traffic in And brick-and-mortar, think said Can e-commerce? you brick-and-mortar frame was So X? some on what the

Robert Greenberg

don't would Well, continuing all what I we on in May say in it we honesty. that industry pretty beginning was the that industry saw. I really know June. with answer reported to consistent I pretty the saw what would into that saw was have and with late the I say broader trend consistent

available our right difference. not store prior people having solution On I the to mean, But practice can the want mostly side and and that well. probably is think testament in e-com ability stores, clearly, or the that's a going as would to fulfill not our get they're quickly. to consumer fallback drive the the e-com again, the side, if years. domestic And a I fantastic. comps things great comps were think, were I trailing a our to having was of that, I note, the direct-to-consumer actually e-commerce And just year, right on available last because product, marketing of a also product bit

people So bit different and is, is the that at of is just by only there's for it also It's juncture. our each where decide we shop this that comparison where not to determined a own stores also Skechers. some to say sell point is fair

by or promoted footwear side for People or may family or their parts other different department things buy for different on malls searching that different things stores always and go other being to the to Skechers. are

regionally doing to online on weather, where people for what's is for shop on they're inclement or So what what and more it they're shopping entertainment. depends whether and it promotion,

are and go reasons, where promote specifically. we or not they'll in to pertaining our for way all shop the places various offered at times So different different different shoes

to not. And promote we why along constantly that's saying consumer that the prefers we we're So line. or our where for that Skechers whether it's knowing capture X be somewhere want all we consumer to shop,

Operator

from comes Deutsche Krisztina question Bank. next Katai Our with

Krisztina Katai

quarter expect and quarter. maybe of the performance anything ask the any consumer between demand? there's wanted at market seeing in to unpack in all? you're you underlying comment EMEA, to that you third buying XX%. and in do up we about fourth trends maybe Have Can exit the should on for Just It the changes continues I if that sort really what saw for seen well. the you region patterns

Robert Greenberg

the came us [indiscernible] mean, EMEA to of surprise product's numbers particular, DTC continued the The out DTC. out to resonating. The I of in frankly, upside. quite

an E-commerce in also We gotten which, began build there. last better strength that into it. marketplace, to and was continue really as retail presence better I have, and we something at think, is our only you advantage recall, on year

came And really year also from we through sell-through that the of trends. to beginning consumer that really demand. That today. consistent the So is saw think good down that's We why I expect we've continue. trend do a seen to

so that have people the thrive. confident direct-to-consumer the X we're despite that will talked to And about EMEA continue years, X businesses the all challenges continue last that, pretty or

John Vandemore

you centers. Europe it's goes When theirs to pass things center, well. to matter our hours down passes wholesale, Sometimes, distribution a slow then through in of that it it's timing as X lag. and through from have It realize and a basically distribution

our direct-to-consumer opening and the pandemic, online after more current inventory slightly the when both happens it stores, sometimes outlets, faster. have So we

our goes as side pickup now, up So you leveling and of just newer out see with it seeing inventory through, in like the here direct-to-consumer as And a direct-to-consumer. the passes the we're catches wholesale product well. as there's

there's both so disruptions the into we So areas, of changes, supply especially inventory way. there's chain as you feel season confident timing in the new many get . availability in along when demand but new a of

Krisztina Katai

I to up follow wanted That's great. on domestic trends. also

back-to-school environment? how sense just you have is how performing? maybe characterize the Just on promotional And you would any if domestic

Robert Greenberg

in is characterize or future. of near out I indicating the environment last largely promotional jumps now quarters. to change significant the what as we've would in couple us seen a the the same Nothing as

on I pretty glances seeing only think at initial it. We're tell to the it's back-to-school. early

meaningful really know a we this can there's juncture. at don't I give if So that's read

Operator

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

Christopher Nardone

your for a whether your U.S. year regarding direct-to-consumer guidance technology on just quarter? outperforming gauge then expectations So to thoughts and is due the whether And portfolio I'm half to a products. your your elaborate regarding the clarify you business, you're whether sales to order categories of solely your trade relative you if can little improved up book within just what to can last are changed comfort back you've seeing your more bit better-than-expected trends. still product, the broader trying

Robert Greenberg

guidance. domestic back Yes. our DTC, Relative in had the back held half view our of to earlier we on year the

Max maybe slipping, really, to fit to going both we We the from resonate but wide on ArchFit, of because to what So been as I really benefit of changed DTC had But trade would this say particular, significant more the about up think, markedly, haven't but clearly the answer to say continuing we the offer. we've it's front your also question, continuing the are our we we're lot But were across technology, our the technologies, point. domestically expectations it against. always, is from that Cushioning, lead product, nicely in it's our of vast coming seeing our our conservative even spoken those. the only I longer, they elevation growth years, comps many view I construe a domestic years, consumers that which book X.X up you that's gender should and would the the side Comfort it order in the a is, majority of newest and hands-free there. others, a the last, within relative portfolio. really division for X Skechers wholesale or to HyperBus not traditional years

are increase very they're they going market. get otherwise know those shoes can with to to in technologies, of to much All the obtain because at translate conversion comfortable than they level consumer more to combining those the

that continuing I and the of to half for on say, trend DTC be, we true. back our would hold continue year. So see modest fairly domestic But were to are the expectations

Operator

Our next with from Wedbush is Tom question Securities. Nikic

Tom Nikic

a perspective from ask that QX? should marketing models? work in our I there anything we QX . think lumpiness that through or about there wanted timing any like as Is anything SG&A. versus we to Is about

Robert Greenberg

couldn't had overinvesting Tom. G&A. out QX. that, out knew The previously I about it only get appreciate I -- were call somebody point asking we consciously I mentioned I thing in of off we that

no, investing, be nothing it I that, sales, the we'll But think but take say, in new -- line the expect you investment stores. more mean that to I to in not continue that would that growth think invest out. can you I we much will doesn't relative stands it absent in should mean as to really we're

we of things, side our line a remarks the see on coming We a did we've that did have challenges distribution see prepared though, because over will new distribution supply given lot was that marketing. of note, with to online the the put we're and good which to to into I going in of money of work had that's efficiency improved last you reflection the chain. some years continue

that nice can on side, you continued expect spot the we did not that a was So year-over-year actually investment as generally but I this at quarter. marketing would But bright well. increase say, the

This was focal off will and quarter us, a point do that we pay going for believe kind of forward.

Tom Nikic

around the and as at the with DTC that -- in the follow are products that consumer technologies you wholesale, can had robust what if have level excitement slip-in And as one seen found cetacean the On you I Understood. previously? the up new . more. U.S.

Robert Greenberg

yes. Yes,

very, that, some we're taken have technologies. timing I'd in the is think reflective both order very the to bringing for when incredible when of those I up response market clear, technology. accounts see we've the what with what technology, new, our And . which see somewhat be to what say through DTC. of wholesale we they is order commensurate seen they they

Operator

the the This conference. session. question-and-answer reached today's have concludes We end of

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

Skechers U.S.A. (SKX) 25 Jul 242024 Q2 Earnings call transcript