Skechers Announces Second Quarter 2023 Financial Results and Record Quarterly Sales of $2.01 Billion

Rhea-AI Summary

Skechers announces record quarterly sales of $2.01 billion, a year-over-year increase of 7.7%. Direct-to-Consumer sales grew 29.1%. Inventory decreased by $332.0 million or 18.3%. The company aims for $10 billion in annual sales by 2026.

Positive

• Record quarterly sales of $2.01 billion, a year-over-year increase of 7.7%
• Direct-to-Consumer sales grew 29.1%
• Inventory decrease of $332.0 million or 18.3%
• Goal of $10 billion in annual sales by 2026

Negative

• None.

LOS ANGELES--(BUSINESS WIRE)-- Skechers U.S.A., Inc. (“Skechers” or the “Company”) (NYSE:SKX), The Comfort Technology Company™ and a global footwear leader, today announced financial results for the second quarter ended June 30, 2023.

Second Quarter Highlights

• Record quarterly sales of $2.01 billion, a year-over-year increase of 7.7%
• Diluted earnings per share of $0.98, a year-over-year increase of 69.0%
• Direct-to-Consumer sales grew 29.1%
• Inventory decrease of $332.0 million or 18.3% from December 31, 2022
• Acquired Scandinavian distributor

“Skechers second quarter results set a new quarterly sales record of $2.01 billion. This achievement continues to reflect the global demand for our comfort technology products, evidenced by double- or triple-digit sales growth in most markets. We saw increases of 20% in APAC, including 19% in China and 27% in India, as well as 16% in EMEA, including 29% in Germany and 13% in the UK,” began David Weinberg, Chief Operating Officer at Skechers. “Our strong gross margin of 52.7% was primarily driven by a higher proportion of Direct-to-Consumer sales, which grew 29%. We were able to deliver our product more effectively and improve our inventory levels, which enabled the robust sales across our comfortable, innovative, stylish and high-quality collections. As we look to the future and our goal of $10 billion in annual sales by 2026, we remain focused on improving distribution efficiencies, developing new categories including some that will be introduced later this year, enhancing our Direct-to-Consumer segment, and further expanding our international business, including the acquisition of our Scandinavian distributor, which we believe will deliver increased sales growth in the coming years.”

“The second quarter marked yet another sales record and a new milestone as we made the Fortune 500 list of largest companies, a testament to the strength of our brand and the dedication of our entire organization to consistently create, innovate and meet the footwear needs of consumers,” added Robert Greenberg, Chief Executive Officer of Skechers. “Not only are we outfitting the world in the most comfortable lifestyle footwear, but we are also offering high-performance golf and pickleball shoes, and delivering memorable collaborations like our iconic Rolling Stones collection in June and our Skechers x Ashley Park capsule launched just last week. We strongly believe in the importance of driving awareness of our vast offering. In this quarter alone, we introduced numerous targeted campaigns, including Skechers Uno with Doja Cat, one of Time’s 100 most influential people in 2023; Skechers Hands Free Slip-ins with football legend Tony Romo and Los Angeles Dodgers pitcher Clayton Kershaw, among others; as well as a brand spot with former A-Team star, Mr. T, who claims he’s the only ‘T’ in Skechers. The power of our marketing and the relevancy of our footwear resonates throughout our 4,700 Skechers stores around the world and at retailers, where consumers can slip into our footwear and leave with the understanding that they just purchased unbelievable comfort technology. This is what motivates the Skechers team — the enthusiasm from our partners around the world, and most importantly, the satisfaction from new shoppers and returning loyal fans of our brand. With this incredible momentum, I am confident in our vision for an even more successful future.”

Second Quarter 2023 Financial Results
	Three Months Ended June 30,								Change
(in millions, except per share data)	2023				2022				$		%
Sales	$	2,012.5			$	1,867.8			144.7		7.7
Gross profit		1,060.5				897.6			162.9		18.2
Gross margin		52.7	%			48.1	%				460 bps
Operating expenses		842.8				743.4			99.4		13.4
As a % of sales		41.9	%			39.8	%				210 bps
Earnings from operations		217.7				154.2			63.5		41.2
Operating margin		10.8	%			8.3	%				260 bps
Net earnings		152.8				90.4			62.4		69.0
Diluted earnings per share	$	0.98			$	0.58			0.40		69.0

Second quarter sales increased 7.7% as a result of a 17.9% increase internationally and a 4.6% decrease domestically. Direct-to-Consumer increased 29.1% and Wholesale decreased 5.9%. On a constant currency basis, sales increased 9.1%.

Wholesale sales declined $67.3 million, or 5.9%, which includes a decrease in AMER of 18.7%, partially offset by increases in APAC of 14.3% and EMEA of 7.4%. Wholesale volume decreased 13.1% and average selling price increased 8.0%.

Direct-to-Consumer sales grew $212.0 million, or 29.1%, which includes increases in AMER of 28.2%, APAC of 25.1%, and EMEA of 47.2%. Direct-to-Consumer volume increased 23.8% and average selling price increased 4.4%.

Gross margin was 52.7%, an increase of 460 basis points, primarily due to a higher proportion of Direct-to-Consumer sales and higher average selling prices.

Operating expenses increased $99.4 million, or 13.4%, and as a percentage of sales increased 210 basis points to 41.9%. Selling expenses increased $20.5 million, or 12.3%, and as a percentage of sales increased 40 basis points to 9.3%. The increase was due to higher brand demand creation expenditures. General and administrative expenses increased $78.9 million, or 13.7%, and as a percentage of sales increased 170 basis points to 32.6%. Increased expenses were primarily driven by labor, increased facility costs, including rent and depreciation, and warehouse and distribution expenses.

Earnings from operations increased $63.5 million, or 41.2%, to $217.7 million.

Net earnings were $152.8 million and diluted earnings per share were $0.98 compared with prior year net earnings of $90.4 million and diluted earnings per share of $0.58.

In the second quarter, the Company’s effective income tax rate was 17.7%.

“Despite anticipated headwinds in the domestic wholesale market, we successfully navigated the challenges and achieved record quarterly sales in addition to a new second quarter earnings record,” stated John Vandemore, Chief Financial Officer of Skechers. “With sustained momentum in our Direct-to-Consumer business globally and broad-based strength in our international wholesale business, aided by healthy inventory levels and an innovative pipeline of comfort technology products, we continued to show the strength of the Skechers brand and to execute our long-term growth strategy.”

Six Months 2023 Financial Results
	Six Months Ended June 30,								Change
(in millions, except per share data)	2023				2022				$		%
Sales	$	4,014.4			$	3,687.4			327.0		8.9
Gross profit		2,039.1				1,721.7			317.4		18.4
Gross margin		50.8	%			46.7	%				410 bps
Operating expenses		1,597.8				1,391.7			206.1		14.8
As a % of sales		39.8	%			37.7	%				210 bps
Earnings from operations		441.3				330.1			111.2		33.7
Operating margin		11.0	%			9.0	%				200 bps
Net earnings		313.2				211.6			101.6		48.0
Diluted earnings per share	$	2.00			$	1.35			0.65		48.1

Year-to-date sales increased 8.9% reflecting a 19.5% increase in international sales and a 4.7% decrease domestically. Direct-to-Consumer increased 27.1% and Wholesale decreased 1.0%. On a constant currency basis, sales increased 11.1%.

Wholesale sales decreased $24.0 million, or 1.0%, due to a decrease in AMER of 15.9%, partially offset by increases in EMEA of 14.6% and APAC of 19.2%. Wholesale volume decreased 7.3% and average selling price increased 6.6%.

Direct-to-Consumer sales grew $351.0 million, or 27.1%, due to increases in AMER of 28.4%, APAC of 21.7% and EMEA of 40.4%. Direct-to-Consumer volume increased 25.2% and average selling price increased 1.5%.

Gross margin was 50.8%, an increase of 410 basis points, primarily driven by a higher proportion of Direct-to-Consumer sales and higher average selling prices in Wholesale.

Operating expenses increased $206.1 million or 14.8%. As a percentage of sales, operating expenses increased 210 basis points to 39.8%. Selling expenses increased $40.9 million or 14.9%, primarily due to higher global demand creation expenditures. General and administrative expenses increased $165.3 million or 14.8%, primarily driven by labor, increased facility costs, including rent and depreciation, and warehouse and distribution expenses.

Earnings from operations increased $111.2 million to $441.3 million.

Net earnings were $313.2 million and diluted earnings per share were $2.00, an increase of 48.1% over the prior year.

The Company’s effective income tax rate was 18.1%.

Balance Sheet

Cash, cash equivalents and investments totaled $1.07 billion, an increase of $285.4 million, or 36.2% from December 31, 2022, primarily due to an increase in earnings and favorable changes in working capital, offset by capital expenditures of $147.4 million, payments of $70.4 million, net of cash acquired, related to the acquisition of our Scandinavian distributor and the completion of $60.0 million of share repurchases year-to-date.

Inventory was $1.49 billion, a decrease of $332.0 million or 18.3% from December 31, 2022.

Share Repurchase

During the second quarter, the Company repurchased approximately 579,475 shares of its Class A common stock at a cost of $30.0 million. Year-to-date 2023, the Company has repurchased nearly 1.3 million shares of its Class A common stock at a cost of $60.0 million. At June 30, 2023, approximately $365.7 million remained available under the Company’s share repurchase program.

Outlook

For the third quarter of 2023, the Company believes it will achieve sales between $1.95 billion and $2.0 billion and diluted earnings per share of between $0.70 and $0.75. Further, the Company believes that for the fiscal year 2023, it will achieve sales between $7.95 billion and $8.1 billion and diluted earnings per share of between $3.25 and $3.40.

Store Count
	Number of Stores
	December 31, 2022		Opened (1)		Closed (1)			June 30, 2023
Domestic stores	539		21		(8	)		552
International stores	905		143		(56	)		992
Distributor, licensee and franchise stores	3,093		330		(262	)		3,161
Total Skechers stores	4,537		494		(326	)		4,705
(1) Includes the conversion of 58 third-party stores to International stores previously included in Distributor stores as a result of the acquisition of our Scandinavian distributor.

Second Quarter 2023 Conference Call

The Company will host a conference call today at 4:30 p.m. ET / 1:30 p.m. PT to discuss its second quarter 2023 financial results. The call can be accessed on the Investor Relations section of the Company’s website at investors.skechers.com. For those unable to participate during the live broadcast, a replay will be available beginning July 27, 2023, at 7:30 p.m. ET, through August 10, 2023, at 11:59 p.m. ET. To access the replay, dial 844-512-2921 (U.S.) or 412-317-6671 (International) and use passcode: 13739533.

About Skechers U.S.A., Inc.

Skechers U.S.A., Inc., a Fortune 500^® company based in Southern California, designs, develops and markets a diverse range of lifestyle and performance footwear, apparel and accessories for men, women and children. Collections from The Comfort Technology Company™ are available in approximately 180 countries and territories through department and specialty stores, and direct to consumers through digital stores, and over 4,700 Company- and third-party-owned physical retail stores. The Company manages its international business through a network of wholly-owned subsidiaries, joint venture partners, and distributors. For more information, please visit about.skechers.com and follow us on Facebook, Instagram, Twitter and TikTok.

Reference in this press release to “Sales” refers to Skechers’ net sales reported under GAAP. This announcement contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may include, without limitation, Skechers’ future domestic and international growth, financial results and operations including expected net sales and earnings, its development of new products, future demand for its products, its planned domestic and international expansion, opening of new stores and additional expenditures, and advertising and marketing initiatives. Forward-looking statements can be identified by the use of forward-looking language such as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “plan,” “project,” “will,” “could,” “may,” “might,” or any variations of such words with similar meanings. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in forward-looking statements. Factors that might cause or contribute to such differences include the disruption of business and operations due to the COVID-19 pandemic; delays or disruptions in our supply chain; international economic, political and market conditions including the effects of inflation and foreign currency exchange rate fluctuations around the world, the challenging consumer retail markets in the United States and the impact of Russia’s war with Ukraine; sustaining, managing and forecasting costs and proper inventory levels; losing any significant customers; decreased demand by industry retailers and cancellation of order commitments due to the lack of popularity of particular designs and/or categories of products; maintaining brand image and intense competition among sellers of footwear for consumers, especially in the highly competitive performance footwear market; anticipating, identifying, interpreting or forecasting changes in fashion trends, consumer demand for the products and the various market factors described above; sales levels during the spring, back-to-school and holiday selling seasons; and other factors referenced or incorporated by reference in Skechers’ annual report on Form 10-K for the year ended December 31, 2022 and its quarterly reports on Form 10-Q in 2023. Taking these and other risk factors associated with the COVID-19 pandemic into consideration, the dynamic nature of these circumstances means that what is stated in this press release could change at any time, and as a result, actual results could differ materially from those contemplated by such forward-looking statements. The risks included here are not exhaustive. Skechers operates in a very competitive and rapidly changing environment. New risks emerge from time to time and we cannot predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, you should not place undue reliance on forward-looking statements as a prediction of actual results. Moreover, reported results should not be considered an indication of future performance.

SKECHERS U.S.A., INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
	As of				As of
(in thousands)	June 30, 2023				December 31, 2022
ASSETS
Current assets
Cash and cash equivalents	$	896,514			$	615,733
Short-term investments		80,648				102,166
Trade accounts receivable, net		940,201				848,287
Other receivables		69,307				86,036
Inventory		1,486,012				1,818,016
Prepaid expenses and other		197,007				176,035
Total current assets		3,669,689				3,646,273
Property, plant and equipment, net		1,417,225				1,345,370
Operating lease right-of-use assets		1,230,635				1,200,565
Deferred tax assets		461,021				454,190
Long-term investments		96,591				70,498
Goodwill		101,483				93,497
Other assets, net		131,013				83,094
Total non-current assets		3,437,968				3,247,214
TOTAL ASSETS	$	7,107,657			$	6,893,487
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	802,234			$	957,384
Accrued expenses		300,071				294,143
Operating lease liabilities		261,954				238,694
Current installments of long-term borrowings		76,388				103,184
Short-term borrowings		36,654				19,635
Total current liabilities		1,477,301				1,613,040
Long-term operating lease liabilities		1,069,384				1,063,672
Long-term borrowings		236,763				216,488
Deferred tax liabilities		20,224				8,656
Other long-term liabilities		112,523				120,045
Total non-current liabilities		1,438,894				1,408,861
Total liabilities		2,916,195				3,021,901
Stockholders’ equity
Preferred Stock		—			—
Class A Common Stock		134				134
Class B Common Stock		20				21
Additional paid-in capital		362,769				403,799
Accumulated other comprehensive loss		(87,707	)			(84,897	)
Retained earnings		3,564,133				3,250,931
Skechers U.S.A., Inc. equity		3,839,349				3,569,988
Noncontrolling interests		352,113				301,598
Total stockholders' equity		4,191,462				3,871,586
TOTAL LIABILITIES AND EQUITY	$	7,107,657			$	6,893,487

SKECHERS U.S.A., INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(Unaudited)
	Three Months Ended June 30,							Six Months Ended June 30,
(in thousands, except per share data)	2023			2022				2023			2022
Sales	$	2,012,516		$	1,867,804			$	4,014,444		$	3,687,398
Cost of sales		951,992			970,225				1,975,341			1,965,656
Gross profit		1,060,524			897,579				2,039,103			1,721,742
Operating expenses
Selling		187,118			166,609				315,678			274,818
General and administrative		655,673			576,812				1,282,115			1,116,862
Total operating expenses		842,791			743,421				1,597,793			1,391,680
Earnings from operations		217,733			154,158				441,310			330,062
Other income (expense)		2,792			(19,259	)			12,715			(25,005	)
Earnings before income taxes		220,525			134,899				454,025			305,057
Income tax expense		38,942			28,739				82,158			62,731
Net earnings		181,583			106,160				371,867			242,326
Less: Net earnings attributable to noncontrolling interests		28,824			15,756				58,665			30,699
Net earnings attributable to Skechers U.S.A., Inc.	$	152,759		$	90,404			$	313,202		$	211,627
Net earnings per share attributable to Skechers U.S.A., Inc.
Basic	$	0.99		$	0.58			$	2.02		$	1.36
Diluted	$	0.98		$	0.58			$	2.00		$	1.35
Weighted-average shares used in calculating net earnings per share attributable to Skechers U.S.A., Inc.
Basic		154,970			155,941				155,055			155,969
Diluted		156,571			156,748				156,654			157,074

SKECHERS U.S.A., INC. AND SUBSIDIARIES
Supplemental Financial Information
(Unaudited)
Segment Information
	Three Months Ended June 30,								Change
(in millions)	2023				2022				$			%
Wholesale sales	$	1,073.0			$	1,140.3			(67.3	)		(5.9	)
Gross profit		431.5				414.5			17.0			4.1
Gross margin		40.2	%			36.3	%					390 bps
Direct-to-Consumer sales	$	939.5			$	727.5			212.0			29.1
Gross profit		629.0				483.1			145.9			30.2
Gross margin		66.9	%			66.4	%					50 bps
Total sales	$	2,012.5			$	1,867.8			144.7			7.7
Gross profit		1,060.5				897.6			162.9			18.2
Gross margin		52.7	%			48.1	%					460 bps

	Six Months Ended June 30,								Change
(in millions)	2023				2022				$			%
Wholesale sales	$	2,367.6			$	2,391.6			(24.0	)		(1.0	)
Gross profit		943.5				869.4			74.1			8.5
Gross margin		39.9	%			36.4	%					350 bps
Direct-to-Consumer sales	$	1,646.8			$	1,295.8			351.0			27.1
Gross profit		1,095.6				852.3			243.3			28.5
Gross margin		66.5	%			65.8	%					70 bps
Total sales	$	4,014.4			$	3,687.4			327.0			8.9
Gross profit		2,039.1				1,721.7			317.4			18.4
Gross margin		50.8	%			46.7	%					410 bps

Additional Sales Information
	Three Months Ended June 30,						Change
(in millions)	2023			2022			$			%
Geographic sales
Domestic
Wholesale	$	390.8		$	521.0		(130.2	)		(25.0	)
Direct-to-Consumer		411.1			319.5		91.6			28.7
Total domestic sales		801.9			840.5		(38.6	)		(4.6	)
International
Wholesale		682.2			619.3		62.9			10.2
Direct-to-Consumer		528.4			408.0		120.4			29.5
Total international sales		1,210.6			1,027.3		183.3			17.9
Total sales	$	2,012.5		$	1,867.8		144.7			7.7
Regional sales
Americas (AMER)	$	1,027.0		$	1,033.9		(6.9	)		(0.7	)
Europe, Middle East & Africa (EMEA)		433.3			374.5		58.8			15.7
Asia Pacific (APAC)		552.2			459.4		92.8			20.2
Total sales	$	2,012.5		$	1,867.8		144.7			7.7
China sales	$	302.4		$	254.9		47.5			18.6
Distributor sales	$	99.8		$	128.4		(28.6	)		(22.3	)

	Six Months Ended June 30,						Change
(in millions)	2023			2022			$			%
Geographic sales
Domestic
Wholesale	$	832.7		$	1,059.6		(226.9	)		(21.4	)
Direct-to-Consumer		710.0			559.0		151.0			27.0
Total domestic sales		1,542.7			1,618.6		(75.9	)		(4.7	)
International
Wholesale		1,534.9			1,332.0		202.9			15.2
Direct-to-Consumer		936.8			736.8		200.0			27.1
Total international sales		2,471.7			2,068.8		402.9			19.5
Total sales	$	4,014.4		$	3,687.4		327.0			8.9
Regional sales
Americas (AMER)	$	1,972.9		$	1,980.8		(7.9	)		(0.4	)
Europe, Middle East & Africa (EMEA)		967.8			815.7		152.1			18.6
Asia Pacific (APAC)		1,073.7			890.9		182.8			20.5
Total sales	$	4,014.4		$	3,687.4		327.0			8.9
China sales	$	584.4		$	527.9		56.5			10.7
Distributor sales	$	203.8		$	225.4		(21.6	)		(9.6	)

SKECHERS U.S.A., INC. AND SUBSIDIARIES
Reconciliation of GAAP Earnings Financial Measures to Corresponding Non-GAAP Financial Measures
(Unaudited)
Constant Currency Adjustment (Non-GAAP Financial Measure)
We evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of period-over-period fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our results of operations, thereby facilitating period-to-period comparisons of our business performance and is consistent with how management evaluates the Company’s performance. We calculate constant currency percentages by converting our current period local currency financial results using the prior-period exchange rates and comparing these adjusted amounts to our prior period reported results.
	Three Months Ended June 30,
	2023											2022				Change
(in millions, except per share data)	Reported GAAP Measure			Constant Currency Adjustment				Adjusted for Non-GAAP Measures				Reported GAAP Measure				$			%
Sales	$	2,012.5		$	24.6			$	2,037.1			$	1,867.8			169.3			9.1
Cost of sales		952.0			9.6				961.6				970.2			(8.6	)		(0.9	)
Gross profit		1,060.5			15.0				1,075.5				897.6			177.9			19.8
Operating expenses		842.8			9.3				852.1				743.4			108.7			14.6
Earnings from operations		217.7			5.7				223.4				154.2			69.2			44.9
Other income (expense)		2.8			(4.4	)			(1.6	)			(19.3	)		17.7			(91.7	)
Income tax expense		38.9			1.1				40.0				28.7			11.3			39.4
Less: Noncontrolling interests		28.8			1.5				30.3				15.8			14.5			91.8
Net earnings	$	152.8		$	(1.3	)		$	151.5			$	90.4			61.1			67.6
Diluted earnings per share	$	0.98		$	(0.01	)		$	0.97			$	0.58			0.39			67.2

	Six Months Ended June 30,
	2023											2022				Change
(in millions, except per share data)	Reported GAAP Measure			Constant Currency Adjustment				Adjusted for Non-GAAP Measures				Reported GAAP Measure				$		%
Sales	$	4,014.4		$	83.9			$	4,098.3			$	3,687.4			410.9		11.1
Cost of sales		1,975.3			44.1				2,019.4				1,965.7			53.7		2.7
Gross profit		2,039.1			39.8				2,078.9				1,721.7			357.2		20.7
Operating expenses		1,597.8			27.4				1,625.2				1,391.7			233.5		16.8
Earnings from operations		441.3			12.4				453.7				330.1			123.6		37.4
Other income (expense)		12.8			(17.3	)			(4.5	)			(25.1	)		20.6		(82.1	)
Income tax expense		82.2			2.4				84.6				62.7			21.9		34.9
Less: Noncontrolling interests		58.7			3.2				61.9				30.7			31.2		101.6
Net earnings	$	313.2		$	(10.5	)		$	302.7			$	211.6			91.1		43.1
Diluted earnings per share	$	2.00		$	(0.07	)		$	1.93			$	1.35			0.58		43.0

 

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Investor Relations

Eunice Han

investors@skechers.com

Press

Jennifer Clay

jennc@skechers.com

Source: Skechers U.S.A., Inc.

FAQ

What were Skechers' quarterly sales for Q2 2023?

Skechers' quarterly sales for Q2 2023 were $2.01 billion, a year-over-year increase of 7.7%.

What was the growth rate of Direct-to-Consumer sales?

Direct-to-Consumer sales grew 29.1%.

What was the decrease in inventory?

Inventory decreased by $332.0 million or 18.3%.

What is Skechers' goal for annual sales by 2026?

Skechers aims for $10 billion in annual sales by 2026.