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 third quarter ended September
30, 2023.
Third Quarter Highlights
- Record quarterly sales of $2.02 billion, a year-over-year
increase of 7.8%
- Diluted earnings per share of $0.93, a year-over-year
increase of 69.1%
- Direct-to-Consumer sales grew 23.8%
- Inventory decrease of $436.0 million or 24.0% from
December 31, 2022
- Repurchased $40 million of Class A common stock
“Skechers’ achieved a new quarterly sales record of $2.02
billion, reflecting robust demand for our brand,” said David
Weinberg, Chief Operating Officer of Skechers. “All regions grew,
including the Americas, with growth of 7% in the United States due
to continued strength in our Direct-to-Consumer channel, and Asia
Pacific with growth of 18% in China. In addition, our inventory
levels are down significantly, and our gross margin was strong at
52.9% reflecting favorable pricing, a higher mix of
Direct-to-Consumer sales and lower unit costs. As we continue to
focus on growing our international business, enhancing our
Direct-to-Consumer presence and expanding our product offering, we
remain confident in the strength of our brand and executing
Skechers’ long-term growth strategy.”
“Our record third quarter sales were the result of our continued
innovation and determination to deliver comfort, style and quality
in every pair,” began Robert Greenberg, Chief Executive Officer of
Skechers. “We introduced a collaboration with entertainment legend
Snoop Dogg, and we launched Skechers Football boots with Harry
Kane, one of the leading strikers in the world and captain of
England's national team. Both ambassadors and their products
generated significant media and consumer attention for the brand.
And, this week, we announced the signing of two-time NBA All-Star
Julius Randle and rising star Terance Mann – both of whom are
competing in our Skechers Basketball footwear this week. Leading
professional athletes both on the pitch and on the court in
Skechers Performance footwear are a testament to our ability to
deliver comfort that performs at the highest levels of competition.
Designing desirable footwear for fans of Snoop Dogg as well as our
ambassador Martha Stewart demonstrates the diversity of style,
offering and demographic of the Skechers brand and our customers.
We believe our constant innovation to meet the needs of consumers
from all walks of life—including professional athletes, and our
impactful marketing will drive our success for years to come.”
Third Quarter 2023 Financial Results
Three Months Ended September
30,
Change
(in millions, except per share data)
2023
2022
$
%
Sales
$
2,025.0
$
1,878.4
146.6
7.8
Gross profit
1,071.9
883.9
188.0
21.3
Gross margin
52.9
%
47.1
%
590 bps
Operating expenses
858.7
754.0
104.7
13.9
As a % of sales
42.4
%
40.1
%
230 bps
Earnings from operations
213.2
130.0
83.2
64.0
Operating margin
10.5
%
6.9
%
360 bps
Net earnings attributable to Skechers
U.S.A., Inc.
145.4
85.9
59.5
69.3
Diluted earnings per share
$
0.93
$
0.55
0.38
69.1
Third quarter sales increased 7.8% as a result of an 8.6%
increase internationally and a 6.5% increase domestically.
Direct-to-Consumer increased 23.8% and Wholesale decreased 1.4%. On
a constant currency basis, sales increased 6.7%.
Wholesale sales declined $17.0 million, or 1.4%, which includes
decreases in EMEA of 8.3% and AMER of 0.5%, partially offset by an
increase in APAC of 7.1%. Wholesale volume decreased 10.8% and
average selling price increased 10.3%.
Direct-to-Consumer sales grew $163.6 million, or 23.8%, which
includes increases in AMER of 17.3%, APAC of 24.2% and EMEA of
60.8%. Direct-to-Consumer volume increased 18.8% and average
selling price increased 4.3%.
Gross margin was 52.9%, an increase of 590 basis points,
primarily due to higher average selling prices, a higher proportion
of Direct-to-Consumer sales, and lower freight costs.
Operating expenses increased $104.7 million, or 13.9%, and as a
percentage of sales increased 230 basis points to 42.4%. Selling
expenses increased $27.4 million, or 18.2%, and as a percentage of
sales increased 80 basis points to 8.8%. The increase was due to
higher brand demand creation expenditures. General and
administrative expenses increased $77.3 million, or 12.8%, and as a
percentage of sales increased 150 basis points to 33.6%. Increased
expenses were primarily driven by increased facility costs,
including rent and depreciation, and labor.
Earnings from operations increased $83.2 million, or 64.0%, to
$213.2 million, resulting in an operating margin of 10.5%.
Net earnings were $145.4 million and diluted earnings per share
were $0.93 compared with prior year net earnings of $85.9 million
and diluted earnings per share of $0.55.
In the third quarter, the Company’s effective income tax rate
was 19.5%.
“Skechers’ record quarterly sales and robust earnings growth
demonstrate the sustained momentum of our brand. Coupled with a
significant improvement in working capital, especially in our
overall inventory levels, we remain confident in the strength of
our brand and demand for our comfort technology products,” stated
John Vandemore, Chief Financial Officer of Skechers. “As we
continue to execute against our long-term growth strategy, we
believe we remain well positioned to accomplish our objective of
generating $10 billion in sales by 2026.”
Nine Months 2023 Financial Results
Nine Months Ended September
30,
Change
(in millions, except per share data)
2023
2022
$
%
Sales
$
6,039.4
$
5,565.8
473.6
8.5
Gross profit
3,111.0
2,605.7
505.3
19.4
Gross margin
51.5
%
46.8
%
470 bps
Operating expenses
2,456.5
2,145.6
310.9
14.5
As a % of sales
40.7
%
38.6
%
210 bps
Earnings from operations
654.5
460.0
194.5
42.3
Operating margin
10.8
%
8.3
%
260 bps
Net earnings attributable to Skechers
U.S.A., Inc.
458.6
297.5
161.1
54.2
Diluted earnings per share
$
2.93
$
1.90
1.03
54.2
Year-to-date sales increased 8.5%, reflecting a 15.6% increase
in international sales and a 1.1% decrease domestically.
Direct-to-Consumer increased 26.0% and Wholesale decreased 1.1%. On
a constant currency basis, sales increased 9.6%.
Wholesale sales decreased $41.0 million, or 1.1%, due to a
decrease in AMER of 11.4%, partially offset by increases in APAC of
14.5% and EMEA of 6.2%. Wholesale volume decreased 8.5% and average
selling price increased 7.8%.
Direct-to-Consumer sales grew $514.6 million, or 26.0%, due to
increases in AMER of 24.2%, APAC of 22.4%, and EMEA of 47.8%.
Direct-to-Consumer volume increased 22.9% and average selling price
increased 2.5%.
Gross margin was 51.5%, an increase of 470 basis points,
primarily driven by higher average selling prices and a higher
proportion of Direct-to-Consumer sales.
Operating expenses increased $310.9 million or 14.5%. As a
percentage of sales, operating expenses increased 210 basis points
to 40.7%. Selling expenses increased $68.3 million or 16.0%,
primarily due to higher global demand creation expenditures.
General and administrative expenses increased $242.6 million or
14.1%, primarily driven by labor, increased facility costs,
including rent and depreciation, and warehouse and distribution
expenses.
Earnings from operations increased $194.5 million to $654.5
million, resulting in an operating margin of 10.8%.
Net earnings were $458.6 million and diluted earnings per share
were $2.93, an increase of 54.2% over the prior year.
The Company’s effective income tax rate was 18.5%.
Balance Sheet
Cash, cash equivalents and investments totaled $1.27 billion, an
increase of $484.6 million, or 61.5% from December 31, 2022,
primarily due to increased earnings and favorable changes in
working capital, primarily inventory improvements as we worked
through capacity challenges and processing constraints at our
distribution centers. Increases were partially offset by capital
expenditures of $238.7 million, $100.0 million of share repurchases
year-to-date and payments of $70.4 million, net of cash acquired,
related to the acquisition of our Scandinavian distributor.
Inventory was $1.38 billion, a decrease of $436.0 million or
24.0% from December 31, 2022.
Share Repurchase
During the third quarter, the Company repurchased approximately
805,486 shares of its Class A common stock at a cost of $40.0
million. Year-to-date 2023, the Company has repurchased nearly 2.1
million shares of its Class A common stock at a cost of $100.0
million. At September 30, 2023, approximately $325.7 million
remained available under the Company’s share repurchase
program.
Outlook
For the fourth quarter of 2023, the Company believes it will
achieve sales between $1.91 billion and $2.01 billion and diluted
earnings per share of between $0.40 and $0.50. Further, the Company
believes that for the full year 2023, it will achieve sales between
$7.95 billion and $8.05 billion and diluted earnings per share of
between $3.33 and $3.43.
Store Count
Number of Stores
December 31, 2022
Opened (1)
Closed (1)
September 30, 2023
Domestic stores
539
26
(11
)
554
International stores
905
210
(76
)
1,039
Distributor, licensee and franchise
stores
3,093
637
(331
)
3,399
Total Skechers stores
4,537
873
(418
)
4,992
(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.
Third 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 third 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 October 26, 2023, at 7:30 p.m. ET, through November 9,
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:
13741251.
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 approximately 5,000 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 wars, acts of war and other conflicts around the
world; 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)
September 30, 2023
December 31, 2022
ASSETS
Current assets
Cash and cash equivalents
$
1,100,401
$
615,733
Short-term investments
64,065
102,166
Trade accounts receivable, net
929,368
848,287
Other receivables
65,323
86,036
Inventory
1,382,027
1,818,016
Prepaid expenses and other
226,565
176,035
Total current assets
3,767,749
3,646,273
Property, plant and equipment, net
1,466,145
1,345,370
Operating lease right-of-use assets
1,212,113
1,200,565
Deferred tax assets
442,875
454,190
Long-term investments
108,517
70,498
Goodwill
101,230
93,497
Other assets, net
140,635
83,094
Total non-current assets
3,471,515
3,247,214
TOTAL ASSETS
$
7,239,264
$
6,893,487
LIABILITIES AND EQUITY
Current liabilities
Accounts payable
$
820,789
$
957,384
Accrued expenses
296,313
294,143
Operating lease liabilities
264,556
238,694
Current installments of long-term
borrowings
76,695
103,184
Short-term borrowings
35,178
19,635
Total current liabilities
1,493,531
1,613,040
Long-term operating lease liabilities
1,047,896
1,063,672
Long-term borrowings
239,590
216,488
Deferred tax liabilities
20,203
8,656
Other long-term liabilities
133,781
120,045
Total non-current liabilities
1,441,470
1,408,861
Total liabilities
2,935,001
3,021,901
Stockholders’ equity
Preferred Stock
—
—
Class A Common Stock
134
134
Class B Common Stock
20
21
Additional paid-in capital
340,476
403,799
Accumulated other comprehensive loss
(98,044
)
(84,897
)
Retained earnings
3,709,548
3,250,931
Skechers U.S.A., Inc. equity
3,952,134
3,569,988
Noncontrolling interests
352,129
301,598
Total stockholders' equity
4,304,263
3,871,586
TOTAL LIABILITIES AND EQUITY
$
7,239,264
$
6,893,487
SKECHERS U.S.A., INC. AND
SUBSIDIARIES
Condensed Consolidated
Statements of Earnings
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
(in thousands, except per share data)
2023
2022
2023
2022
Sales
$
2,024,958
$
1,878,367
$
6,039,402
$
5,565,765
Cost of sales
953,040
994,432
2,928,381
2,960,088
Gross profit
1,071,918
883,935
3,111,021
2,605,677
Operating expenses
Selling
178,286
150,857
493,964
425,675
General and administrative
680,449
603,107
1,962,564
1,719,969
Total operating expenses
858,735
753,964
2,456,528
2,145,644
Earnings from operations
213,183
129,971
654,493
460,033
Other income (expense)
(7,055
)
(15,139
)
5,660
(40,144
)
Earnings before income taxes
206,128
114,832
660,153
419,889
Income tax expense
40,202
20,498
122,360
83,229
Net earnings
165,926
94,334
537,793
336,660
Less: Net earnings attributable to
noncontrolling interests
20,511
8,448
79,176
39,147
Net earnings attributable to Skechers
U.S.A., Inc.
$
145,415
$
85,886
$
458,617
$
297,513
Net earnings per share attributable to
Skechers U.S.A., Inc.
Basic
$
0.94
$
0.55
$
2.96
$
1.91
Diluted
$
0.93
$
0.55
$
2.93
$
1.90
Weighted-average shares used in
calculating net earnings per share attributable to Skechers U.S.A.,
Inc.
Basic
154,525
155,420
154,876
155,783
Diluted
156,200
156,233
156,496
156,714
SKECHERS U.S.A., INC. AND
SUBSIDIARIES
Supplemental Financial
Information
(Unaudited)
Segment Information
Three Months Ended September
30,
Change
(in millions)
2023
2022
$
%
Wholesale sales
$
1,174.6
$
1,191.6
(17.0
)
(1.4
)
Gross profit
510.0
424.6
85.4
20.1
Gross margin
43.4
%
35.6
%
780 bps
Direct-to-Consumer sales
$
850.4
$
686.8
163.6
23.8
Gross profit
561.9
459.3
102.6
22.3
Gross margin
66.1
%
66.9
%
(80) bps
Total sales
$
2,025.0
$
1,878.4
146.6
7.8
Gross profit
1,071.9
883.9
188.0
21.3
Gross margin
52.9
%
47.1
%
590 bps
Nine Months Ended September
30,
Change
(in millions)
2023
2022
$
%
Wholesale sales
$
3,542.2
$
3,583.2
(41.0
)
(1.1
)
Gross profit
1,453.6
1,294.0
159.6
12.3
Gross margin
41.0
%
36.1
%
490 bps
Direct-to-Consumer sales
$
2,497.2
$
1,982.6
514.6
26.0
Gross profit
1,657.4
1,311.7
345.7
26.4
Gross margin
66.4
%
66.2
%
20 bps
Total sales
$
6,039.4
$
5,565.8
473.6
8.5
Gross profit
3,111.0
2,605.7
505.3
19.4
Gross margin
51.5
%
46.8
%
470 bps
Additional Sales Information
Three Months Ended September
30,
Change
(in millions)
2023
2022
$
%
Geographic sales
Domestic
Wholesale
$
407.7
$
406.6
1.1
0.3
Direct-to-Consumer
386.9
339.2
47.7
14.1
Total domestic sales
794.6
745.8
48.8
6.5
International
Wholesale
766.9
785.0
(18.1
)
(2.3
)
Direct-to-Consumer
463.5
347.6
115.9
33.3
Total international sales
1,230.4
1,132.6
97.8
8.6
Total sales
$
2,025.0
$
1,878.4
146.6
7.8
Regional sales
Americas (AMER)
$
1,017.5
$
948.0
69.5
7.3
Europe, Middle East & Africa
(EMEA)
480.4
469.8
10.6
2.3
Asia Pacific (APAC)
527.1
460.6
66.5
14.4
Total sales
$
2,025.0
$
1,878.4
146.6
7.8
China sales
$
267.6
$
226.7
40.9
18.0
Distributor sales
$
120.5
$
171.1
(50.6
)
(29.6
)
Nine Months Ended September
30,
Change
(in millions)
2023
2022
$
%
Geographic sales
Domestic
Wholesale
$
1,240.4
$
1,466.2
(225.8
)
(15.4
)
Direct-to-Consumer
1,096.9
898.2
198.7
22.1
Total domestic sales
2,337.3
2,364.4
(27.1
)
(1.1
)
International
Wholesale
2,301.8
2,117.0
184.8
8.7
Direct-to-Consumer
1,400.3
1,084.4
315.9
29.1
Total international sales
3,702.1
3,201.4
500.7
15.6
Total sales
$
6,039.4
$
5,565.8
473.6
8.5
Regional sales
Americas (AMER)
$
2,990.4
$
2,928.8
61.6
2.1
Europe, Middle East & Africa
(EMEA)
1,448.2
1,285.5
162.7
12.7
Asia Pacific (APAC)
1,600.8
1,351.5
249.3
18.4
Total sales
$
6,039.4
$
5,565.8
473.6
8.5
China sales
$
852.0
$
754.7
97.3
12.9
Distributor sales
$
324.2
$
396.5
(72.3
)
(18.2
)
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 September
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
$
2,025.0
$
(21.7
)
$
2,003.3
$
1,878.4
124.9
6.7
Cost of sales
953.1
(15.9
)
937.2
994.5
(57.3
)
(5.8
)
Gross profit
1,071.9
(5.8
)
1,066.1
883.9
182.2
20.6
Operating expenses
858.7
(3.8
)
854.9
754.0
100.9
13.4
Earnings from operations
213.2
(2.0
)
211.2
130.0
81.2
62.5
Other income (expense)
(7.1
)
8.3
1.2
(15.2
)
16.4
n/m
Income tax expense (benefit)
40.2
(0.1
)
40.1
20.5
19.6
95.7
Less: Noncontrolling interests
20.5
(0.7
)
19.8
8.4
11.4
134.3
Net earnings
$
145.4
$
7.1
$
152.5
$
85.9
66.6
77.6
Diluted earnings per share
$
0.93
$
0.05
$
0.98
$
0.55
0.43
78.2
Nine Months Ended September
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
$
6,039.4
$
62.2
$
6,101.6
$
5,565.8
535.8
9.6
Cost of sales
2,928.4
28.2
2,956.6
2,960.1
(3.5
)
(0.1
)
Gross profit
3,111.0
34.0
3,145.0
2,605.7
539.3
20.7
Operating expenses
2,456.5
23.6
2,480.1
2,145.6
334.5
15.6
Earnings from operations
654.5
10.4
664.9
460.0
204.9
44.5
Other income (expense)
5.7
(8.9
)
(3.2
)
(40.2
)
37.0
(92.0
)
Income tax expense
122.4
2.3
124.7
83.2
41.5
49.9
Less: Noncontrolling interests
79.2
2.5
81.7
39.1
42.6
108.6
Net earnings
$
458.6
$
(3.3
)
$
455.3
$
297.5
157.8
53.0
Diluted earnings per share
$
2.93
$
(0.02
)
$
2.91
$
1.90
1.01
53.2
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231026318901/en/
Investor Relations Eunice Han investors@skechers.com
Press Jennifer Clay jennc@skechers.com
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