Earnings call transcript: Skechers Q4 2024 misses EPS forecast, stock dips
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Overview
The earnings call reveals strong financial performance with record sales and EPS growth, indicating effective market strategies and product innovation. Despite elevated inventory levels, management maintains a positive outlook, with stable margins and a robust share repurchase program. The Q&A section highlights broad international growth, excluding China, and a commitment to sustain operating margins. While FX impacts and SG&A pressures are noted, the overall sentiment remains positive due to strong guidance and shareholder returns.
Key Financial Performance
Sales (Full Year) $9,040,000,000, a 13% increase year-over-year due to strong demand across various segments and geographies.
Earnings Per Share (Full Year) $4.4, a 26% increase year-over-year attributed to effective global diversification and strong performance in domestic wholesale.
Gross Margin (Full Year) 53.2%, reflecting a favorable channel mix.
Operating Margin (Full Year) 10.1%, indicating a stable performance despite challenges in the macroeconomic environment.
Sales (Fourth Quarter) $2,210,000,000, a 13% increase year-over-year driven by growth across segments and geographies.
Direct to Consumer Sales (Fourth Quarter) $1,080,000,000, an 8.4% increase year-over-year, with strong performance in both retail and e-commerce channels.
Wholesale Sales (Fourth Quarter) $1,130,000,000, a 17% increase year-over-year, with domestic sales growing by 31%.
Domestic Sales (Fourth Quarter) $1,090,000,000, a 14% increase year-over-year, driven by strong consumer demand.
International Sales (Fourth Quarter) $642,400,000, a 3.3% increase year-over-year, with growth in most markets except China.
Inventory (End of Year) $1,920,000,000, a 26% increase year-over-year, primarily due to elevated in-transit inventory.
Accounts Receivable (End of Year) $990,600,000, an increase of $130,300,000 year-over-year, reflecting higher wholesale sales.
Cash and Cash Equivalents (End of Year) $1,380,000,000, maintaining liquidity of $2,130,000,000 including a revolving credit facility.
Capital Expenditures (Fourth Quarter) $133,400,000, with significant investments in distribution infrastructure and new store openings.
Share Repurchase (Full Year) Approximately 5,200,000 shares at a cost of approximately $330,000,000, reflecting a commitment to return value to shareholders.
Effective Tax Rate (Fourth Quarter) 11.8%, down from 20.3% in the prior year, due to a favorable mix of earnings in lower tax jurisdictions.
Effective Tax Rate (Full Year) 16.9%, down from 18.8% in the prior year.
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Operating Highlights
New Product Launches: SKECHERS expanded its performance footwear line, introducing soccer and basketball styles, and launched cricket footwear and apparel in India.
Innovative Technologies: The company is focusing on signature technologies like SKECHERS hands-free slip-ins and SKECHERS arch fit.
Collaborations: SKECHERS announced partnerships with John Deere, Martha Stewart, Snoop Dogg, and the Rolling Stones for co-branded footwear.
Market Expansion: SKECHERS opened 77 company-owned stores in Q4, including its first stores in the Philippines and Prague, and plans to open 180-200 stores in 2025.
International Growth: SKECHERS reported 10% growth internationally, with significant increases in markets like India, Japan, and South Korea.
Operational Efficiencies: The company is enhancing its distribution network and expanding distribution centers in the U.S., Europe, and China.
Inventory Management: SKECHERS is actively managing inventory levels, particularly in China, to ensure fresh stock and meet demand.
Strategic Shifts: SKECHERS is focusing on expanding its performance division and enhancing its direct-to-consumer business.
Marketing Strategy: The company is increasing marketing efforts, including a Super Bowl campaign featuring Kansas City Chiefs coach Andy Reid.
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Risk or Challenges
Foreign Currency Exchange Risks: Unfavorable foreign currency exchange rates impacted reported results, with a total expense of $34.7 million in the fourth quarter, significantly affecting sales and earnings.
Regulatory Challenges: The implementation of global minimum tax regulations is expected to elevate the effective tax rate for the year to between 22-23%, impacting overall profitability.
Supply Chain Disruptions: Supply chain disruptions due to the Red Sea crisis and the closure of the Suez Canal have led to increased shipping times and elevated in-transit inventory, particularly affecting operations in Europe.
Economic Weakness in China: China's macroeconomic environment remains challenging, with a reported sales decline of 11% in the fourth quarter, impacting overall growth projections.
Tariff Impacts: Incremental U.S. tariffs on goods from China have created uncertainty, potentially affecting pricing strategies and production allocations.
Inventory Management: Elevated inventory levels, particularly in transit, pose challenges for managing stock efficiently, especially in the context of anticipated sales growth.
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Guidance & Outlook
Sales Growth: SKECHERS delivered sales of over $9 billion, a 13% increase on a constant currency basis.
Product Innovation: The company launched innovative products and expanded into new categories, including soccer and basketball footwear.
Athlete Partnerships: Expanded roster of elite athletes to include players from various sports to enhance brand recognition.
Direct to Consumer Expansion: Opened interactive performance stores and enhanced shopping experiences to grow direct to consumer business.
Marketing Campaigns: Broad-based marketing campaigns across various platforms to engage customers.
Distribution Network Enhancement: Focused on enhancing distribution centers in the U.S., Europe, and China for greater efficiency.
New Store Openings: Expected to open 180 to 200 company-owned stores worldwide in 2025.
2025 Sales Guidance: Expected sales in the range of $9.7 billion to $9.8 billion.
Earnings Per Share Guidance: Expected earnings per diluted share in the range of $4.3 to $4.5.
Capital Expenditures: Anticipated capital expenditures between $600 million and $700 million for the year.
Operating Margin Outlook: Expected to sustain a double-digit operating margin of 10.1%.
First Quarter Sales Guidance: Expected sales in the range of $2.4 billion to $2.425 billion.
First Quarter EPS Guidance: Expected net earnings per share in the range of $1.1 to $1.15.
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Shareholder Return Plan
Share Repurchase Program: SKECHERS repurchased approximately 5,200,000 shares during the year at a cost of approximately $330,000,000. In the fourth quarter alone, they repurchased about 1,900,000 shares at a cost of $120,000,000.
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Key Q&A
Q:What kind of outlook should we think about when it comes to modeling gross margin for fiscal 2025?
A:We're not anticipating a material change in the gross margin overall. The business looks fairly balanced in growth, so we might not see as much of that incremental accretion from the emphasis on international DTC, but we think the year should offer us a continued opportunity to appreciate the gross margin improvement we've made over the last three years.
Q:Is there something in the SG&A that is a source of pressure to the operating margin?
A:Our objective is obviously to sustain this recently achieved double digit operating margin. What you mentioned sounds a bit rough. I would probably suggest that our objective is to guide to flat.
Q:What are your expectations for U.S. wholesale growth this fiscal year?
A:I do believe we're going to start gravitating back down toward that longer term horizon of kind of a mid single digit growth number for wholesale.
Q:What is the FX impact on EPS for FY 2025?
A:It's a sizable impact. It's probably going to be on the order of between $0.15 and $0.2 right now as we look forward.
Q:What is your outlook for the international part of the business?
A:China was the drag. We mentioned it was down about 11%. Really absent China, we saw very broad strength across the world across geographies.
Q:What are your plans for demand creation spending?
A:We're a little heavier weighted in the first quarter. We do have a spot coming up this weekend, which unfortunately isn't free.
Q:What is your strategy regarding tariffs?
A:We're going to apply the same tactics as before, which involves redirecting origin and manufacturing relationships to avoid tariffs.
Q:What is the expected EBIT margin for Q1?
A:I would say we certainly at this point expect to see SG&A deleverage in the first and second quarter.
Q:What is the impact of FX on your financials?
A:The most significant impact we've seen globally is about FX.
Q:What is your inventory situation?
A:The inventory is incredibly healthy. The biggest contributor to increased inventory year on year is merchandise in transit.
Q:Review of Unclear Management Responses
A:Management appeared to avoid giving a direct answer regarding the specific EBIT margin for Q1, stating only that they expect to see SG&A deleverage without providing a clear range.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
China point
Comfort
Cybersecurity Engineering
Dollar
EBIT margin
EMEA
Engineering Lead
FX
Laurent BNP
Lead SKECHERS
Officer SKECHERS
SKECHERS afternoon
SKECHERS slip
Suez Canal
Vandemore Chief
administration
currency exchange
demand creation
exchange rate
feature
geography
headwind
impact
item
luck Vandemore
material
pressure
project
regime
room
run rate
shipping
tariff situation
tax regulation
transit increase
transit inventory
week
SKX Transcript
Earnings call transcript: Skechers Q1 2025 results show steady growth
Unknown4-24
The earnings call reveals several challenges: increased operating expenses, a decline in gross and operating margins, and heightened inventory levels. The lack of a clear shareholder return plan and management's vague responses in the Q&A further contribute to uncertainty. Despite revenue growth, the flat EPS and cautious pricing strategy due to tariffs suggest pressure on profitability. The absence of new partnerships or positive guidance adjustments, coupled with the potential impact of tariffs in upcoming quarters, indicates a likely negative stock price reaction.
Skechers U.S.A., Inc. (SKX) Q1 2025 Earnings Call Transcript
Unknown4-24
The earnings call reveals several concerning factors: increased operating expenses, currency risks, economic pressures in China, and a refusal to provide guidance due to market uncertainty. Despite a slight revenue increase, gross margins declined, and operating expenses rose. The Q&A highlighted uncertainties in China and the U.S. markets, with management offering unclear responses. No share repurchase program was announced, and inventory levels are high. These factors, along with the refusal to give guidance and increased expenses, suggest a negative outlook for the stock price over the next two weeks.
Earnings call transcript: Skechers Q4 2024 misses EPS forecast, stock dips
Positive2-6
The earnings call reveals strong financial performance with record sales and EPS growth, indicating effective market strategies and product innovation. Despite elevated inventory levels, management maintains a positive outlook, with stable margins and a robust share repurchase program. The Q&A section highlights broad international growth, excluding China, and a commitment to sustain operating margins. While FX impacts and SG&A pressures are noted, the overall sentiment remains positive due to strong guidance and shareholder returns.
Skechers U.S.A., Inc. (SKX) Q3 2024 Earnings Call Transcript
Positive10-24
The earnings call reflects strong financial performance with record sales and a significant increase in earnings per share. Despite some concerns about China, the company has raised its guidance, indicating confidence in other markets. The share repurchase plan and strategic focus on India further support a positive outlook. The Q&A highlights management's optimism and strategic initiatives. Overall, the positive financial results, optimistic guidance, and strategic initiatives outweigh the risks, suggesting a positive stock price movement.
SKX Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
