Investment Rating - The report does not explicitly provide an investment rating for the sporting goods industry, but it indicates a cautious optimism among executives, with 44% feeling optimistic about 2025 [29][70]. Core Insights - The sporting goods industry has maintained a growth rate of 7% annually from 2021 to 2024, but this is expected to slow to 6% from 2024 to 2029 due to economic challenges and cautious consumer behavior [29][70]. - The report highlights the dual agenda of companies focusing on both profitability and revenue growth amidst a challenging environment [29][70]. - A significant opportunity exists in addressing the 1.8 billion people globally who do not meet the World Health Organization's recommended activity levels, representing a market potential equivalent to twice the adult population of India [33][36][48]. Summary by Sections Executive Summary - The sporting goods industry faces a challenging environment with a projected annual growth rate of 6% from 2024 to 2029, influenced by economic factors and consumer caution [29][70]. - Despite challenges, 44% of industry executives express optimism for 2025, indicating a cautious confidence in navigating opportunities [29][70]. Key Themes - The industry is experiencing a shift in consumer behavior, with a growing divide between active and inactive consumers, creating both challenges and opportunities for brands [37][39]. - The rise of challenger brands has led to a market share reshuffle, with established companies like Adidas and Nike losing ground to new entrants [39][52]. - The demand for live fitness experiences has surged, with 81% of consumers participating in live fitness classes, indicating a shift towards community-oriented fitness solutions [42][53]. Market Dynamics - The report emphasizes the need for companies to balance revenue growth with productivity improvements in response to a cautious consumer landscape [70][75]. - Geopolitical uncertainties and potential tariff increases pose significant risks, necessitating strategic adjustments in supply chain management [72][88]. - Sustainability remains a priority, but the focus has shifted due to external pressures, with only half of executives prioritizing sustainability compared to two-thirds the previous year [89][90].

Sales and Financial Performance - Skechers reported a significant growth in net sales, with a focus on expanding its product offerings and consumer base[18]. - Sales increased 12.1% to $8.97 billion for the year ended December 31, 2024, setting a new annual record[128]. - Sales for the year ended December 31, 2024, reached $8,969,351, a 12.1% increase from $8,000,342 in 2023[190]. - Net earnings attributable to Skechers U.S.A., Inc. increased by $93.7 million, or 17.2%, to $639.5 million[130]. - Net earnings for the year ended December 31, 2024, were $729.6 million, an increase of 12.3% from $649.9 million in 2023[196]. - Gross profit rose by $615.0 million, or 14.8%, to $4.77 billion, with a gross margin increase of 120 basis points to 53.2% due to lower costs per unit[132]. - Operating expenses increased by $495.6 million, or 14.7%, to $3.86 billion, with selling expenses up 18.3% and general and administrative expenses up 13.8%[133]. - Basic net earnings per share rose to $4.21, a 19.3% increase from $3.53 in the prior year[190]. - Total assets increased to $8,455,758, up from $7,547,351, representing a growth of 12.0% year-over-year[188]. - Cash and cash equivalents were $1,116.5 million, with 92.0% held outside the U.S.[144]. Market Presence and Expansion - The company operates through two segments: Wholesale and Direct-to-Consumer, with growth expected from new partners and expanded shelf space[19][20]. - Skechers aims to expand its market presence through new product introductions and leveraging third-party digital marketplaces[20]. - As of December 31, 2024, the company had 5,296 Skechers-branded retail stores in 122 countries[104]. - The company plans to continue developing new comfort innovations and expanding its distribution infrastructure to support growth[129]. - The company aims to implement market strategies to broaden its global reach and attract new partners and consumers[129]. Employee and Corporate Responsibility - As of December 31, 2024, Skechers employed approximately 20,100 individuals globally, with about 10,100 full-time and 10,000 part-time employees[35]. - Skechers is committed to corporate responsibility, investing in environmental, social, and governance (ESG) initiatives to improve community and environmental health[39]. - In 2024, Skechers donated $1.6 million to Petco Love Foundation and $2.0 million to the Skechers Foundation, supporting community and youth well-being initiatives[43]. - The company has initiated a new employee stock purchase plan, which is expected to enhance employee engagement and retention[194]. Risks and Challenges - The company faces intense competition in the footwear industry, which may lead to price reductions, cost increases, and reduced profit margins if not managed effectively[49]. - Skechers' international sales are primarily derived from manufacturing in China and Vietnam, exposing the company to risks such as political instability and labor cost increases[57]. - Global economic conditions and conflicts may adversely affect the company's ability to sell products, potentially impacting financial results[63]. - A global financial crisis could tighten credit markets and lead to higher inflation, adversely affecting customer demand and distribution channels[64]. - Natural disasters and climate change could disrupt operations and increase costs, affecting revenue and business continuity[66]. - Foreign currency exchange rate fluctuations can impact sales and profitability, complicating financial comparisons across periods[68]. - Changes in tax laws and trade policies may impose additional costs and affect competitive pricing, impacting sales and operations[70][72]. - Compliance with labor and trade laws by contract manufacturers and suppliers is critical; violations could harm the company's reputation and operations[74]. - Unanticipated litigation could divert management's attention and incur substantial legal fees, adversely affecting financial condition[76]. Operational and Logistical Considerations - Skechers' logistics and distribution systems are critical for product delivery, with potential disruptions from natural disasters or system failures impacting operations[61]. - The company has invested in industry-standard security technology to protect personal information, but any compromise could result in legal liabilities and damage to brand reputation[80]. - The company relies heavily on IT systems for e-commerce and customer data management, and disruptions could negatively impact business operations[84]. - A multi-year Enterprise Resource Planning (ERP) implementation is underway, requiring significant investment and carrying risks of operational disruptions and cost overruns[85]. Marketing and Brand Strategy - The company has a diverse marketing strategy, utilizing celebrities and athletes to promote its brand, including partnerships with figures like Harry Kane and Joel Embiid[28][27]. - Skechers focuses on innovative comfort technologies in its footwear, such as Skechers Hands Free Slip-ins® and Skechers Arch Fit®[23]. - The company emphasizes sustainability, with several distribution centers designed for LEED certification, including a LEED Gold certified facility in Southern California[40]. - The company emphasizes environmentally sustainable practices, including the introduction of a collection utilizing recycled materials[41]. Financial Management and Investments - The company has announced a new share repurchase program allowing for the purchase of up to $1.0 billion in shares, with $789.9 million remaining available[152]. - Capital expenditures for 2024 were $416.8 million, with expectations for 2025 to be between $600 million and $700 million[150]. - The company recorded a cumulative foreign currency translation loss of $97.8 million and a gain of $11.5 million for the years ended December 31, 2024 and 2023, respectively[172]. - Total current liabilities increased to $2,256,484, up from $1,660,867, marking a 35.8% rise[188]. - Inventory levels increased to $1,919,386, compared to $1,525,409 in 2023, representing a 25.8% increase[188].

Core Viewpoint - NIKE Inc. has shown a significant recovery in its stock performance year-to-date, with shares rising 5.8%, outperforming the broader Shoes & Retail Apparel industry and the Consumer Discretionary sector [1][2]. Stock Performance - NIKE's stock has experienced a notable recovery after a significant decline in 2024, having lost 23% in the past year and 32.5% over the past two years [2]. - The current share price is $80.02, reflecting a 16.6% premium over its 52-week low of $68.62, but a 23% discount from its 52-week high of $103.94 [5]. Strategic Initiatives - CEO Elliott Hill's strategies are credited with revitalizing the brand and driving sustainable growth, including a shift to a full-price digital model and reduced reliance on promotions [7][8]. - NIKE is refining its production and distribution strategy to maintain exclusivity and demand, although this has led to a faster decline in classic footwear sales [9][10]. - A recent partnership with SKIMS aims to introduce a new range of women's athletic wear, merging performance technology with body-conscious design [11]. Financial Estimates - The Zacks Consensus Estimate for NIKE's fiscal 2025 EPS has increased slightly, while estimates for fiscal 2026 remain unchanged, indicating reduced analyst confidence [12]. - For fiscal 2025, sales and EPS are expected to decline by 9.8% and 47.9% year-over-year, respectively [13]. Market Positioning - NIKE is currently trading at a forward 12-month P/E multiple of 35.36X, higher than the industry average of 28.4X and the S&P 500's average of 21.64X [21]. - Despite trading below its five-year high, the current valuation may be considered expensive given the ongoing challenges [22]. Challenges and Outlook - NIKE faces sustained softness in its lifestyle segment and declining digital revenues, alongside challenges in Greater China affecting revenue growth [16][17]. - The company acknowledges higher-than-expected inventory levels and is actively reducing aged inventory to align supply with demand [18]. - NIKE projects a low-double-digit revenue decline for the third quarter of fiscal 2025, with expected gross margin contraction [19].

Financial Data and Key Metrics Changes - In 2024, Skechers achieved constant currency sales of over $9 billion, a 13% increase, and diluted earnings per share of $4.40, representing a 26% increase [8][25] - The company recorded a strong gross margin of 53.2% and a double-digit operating margin of 10.1% [8][25] - Fourth-quarter sales reached $2.21 billion, reflecting a 13% increase, with earnings per share of $0.65, a 16% increase compared to the prior year [28][35] Business Line Data and Key Metrics Changes - Wholesale sales grew by 17%, with domestic sales increasing by 31% and international sales by 10% [19][30] - Direct-to-consumer sales increased by 8.4%, with international improving by 9.3% and domestic by 6.8% [20][28] - The performance division, including soccer and basketball footwear, is expected to become increasingly important for growth [45] Market Data and Key Metrics Changes - Domestic sales rose 18%, while international sales improved by 10% [9][17] - In the Americas, sales increased by 14%, with EMEA growing by 25% and APAC by 3.3%, led by strong performance in India, Japan, South Korea, and Thailand [18][31] - China experienced a decline of 11% in sales due to a challenging macroeconomic environment [18][32] Company Strategy and Development Direction - Skechers is focused on expanding its product offerings and enhancing its distribution network to meet global consumer needs [13][16] - The company plans to invest in expanding distribution centers in the U.S., Europe, and China to support growth [24][41] - Strategic partnerships and innovative marketing campaigns are being leveraged to enhance brand awareness and drive sales [14][15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges such as unfavorable foreign currency exchange rates and macroeconomic weakness in China but expressed confidence in long-term strategies [39][41] - The company expects sales in 2025 to range from $9.7 billion to $9.8 billion, with earnings per diluted share projected between $4.30 and $4.50 [40][41] - Management emphasized the importance of maintaining a durable balance sheet and ample liquidity while navigating uncertainties [38][41] Other Important Information - Skechers repurchased approximately 5.2 million shares at a cost of about $330 million during the year [38] - The company ended the year with 5,296 Skechers stores worldwide, including 1,787 company-owned locations [21] Q&A Session Summary Question: Guidance on gross margin for fiscal 2025 - Management indicated that they do not anticipate a material change in gross margin overall, expecting stability with some fluctuations [50][56] Question: US wholesale growth expectations - Management expects to gravitate back to mid-single-digit growth for the wholesale channel, acknowledging the challenges of duplicating last year's nearly 20% growth [65][68] Question: Impact of foreign exchange on EPS - Management noted that foreign exchange impacts are significant, estimating a hit of between 15 and 20 cents on EPS due to the strengthening of the US dollar [70][72] Question: International revenue deceleration - Management clarified that the decline in international revenue was primarily due to challenges in China, while other markets showed robust growth [78][80] Question: Mitigation strategies for tariffs - Management plans to redirect manufacturing relationships, engage with vendors, and consider pricing adjustments to mitigate tariff impacts [90][91]

Sales Performance - Full year 2024 sales reached $8.97 billion, a year-over-year increase of 12.1%, or $9.04 billion on a constant currency basis, reflecting a 13.0% increase[4] - Fourth quarter sales were $2.21 billion, a year-over-year increase of 12.8%, with wholesale sales growing 17.5% and Direct-to-Consumer sales growing 8.4%[5] - For fiscal year 2025, the company expects sales between $9.70 billion and $9.80 billion, with diluted earnings per share between $4.30 and $4.50[18] - For the year ended December 31, 2024, total sales reached $8,969.4 million, up 12.1% from $8,000.3 million in 2023[29] - Total sales for the three months ended December 31, 2024, reached $2,212.4 million, an increase of $251.5 million or 12.8% compared to $1,960.9 million in 2023[30] Earnings and Profitability - Diluted earnings per share for 2024 were $4.16, a year-over-year increase of 19.2%, and $4.40 on a constant currency basis, reflecting a 26.1% increase[4] - The company reported net earnings of $639.5 million for 2024, a 17.2% increase from the previous year[14] - Skechers' net earnings for Q4 2024 were $115.4 million, slightly up from $112.1 million in Q4 2023[27] - Net earnings attributable to Skechers U.S.A., Inc. for the three months ended December 31, 2024, were $99.3 million, an increase of $43.1 million or 49.4% compared to $87.2 million in 2023[32] - Diluted earnings per share for the three months ended December 31, 2024, increased to $0.65, up $0.30 or 53.6% from $0.56 in 2023[32] Gross Margin and Profit - Gross margin for the full year improved to 53.2%, an increase of 120 basis points compared to the previous year, driven by lower costs per unit[12] - The gross margin for total sales improved to 53.3% in Q4 2024, up from 53.1% in Q4 2023[29] - Gross profit for Q4 2024 was $1,178.3 million, representing a 13.1% increase compared to $1,041.4 million in Q4 2023[27] - Gross profit for the three months ended December 31, 2024, was $1,178.3 million, up $150.5 million or 14.5% from $1,041.4 million in 2023[32] Expenses and Liabilities - Operating expenses for 2024 increased by 14.7% to $3.86 billion, with selling expenses rising by 18.3% due to higher global demand creation expenditures[13] - Total liabilities rose to $3,635.5 million as of December 31, 2024, compared to $3,147.3 million as of December 31, 2023[25] Store Expansion - The total number of Skechers stores increased to 5,296 by December 31, 2024, with 681 new stores opened during the year[19] Tax and Assets - The effective income tax rate for 2024 was 16.9%, reflecting a favorable mix of earnings in lower tax jurisdictions[15] - The company’s total current assets increased to $4,449.4 million as of December 31, 2024, from $3,952.6 million as of December 31, 2023[25] - Skechers' retained earnings increased to $4,436.2 million as of December 31, 2024, up from $3,796.7 million in 2023[25] Market Performance - Domestic sales increased to $841.6 million, up $128.7 million or 18.0% from $712.9 million in the previous year[30] - International sales totaled $1,370.8 million, reflecting a $122.8 million increase or 9.8% from $1,248.0 million in 2023[30] - Direct-to-Consumer sales increased by 8.4% to $1,081.7 million in Q4 2024, compared to $998.3 million in Q4 2023[29] - Direct-to-Consumer sales in the domestic market for the year ended December 31, 2024, were $1,553.0 million, an increase of $70.6 million or 4.8% from $1,482.4 million in 2023[30] - China sales for the year ended December 31, 2024, were $1,218.2 million, a slight decrease of $10.4 million or 0.9% from $1,228.6 million in 2023[30] Future Outlook - The company anticipates continued growth in both domestic and international markets, focusing on new product development and market expansion initiatives[22] - The company reported a constant currency sales adjustment of $71.8 million for the year ended December 31, 2024, indicating a strong performance when accounting for foreign exchange fluctuations[31]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2024 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-14429 SKECHERS U.S.A., INC. (Exact name of registrant as specified in its charter) Delaware 95-4376145 (State or other jurisdiction of incorporation or organization) (I. ...

Skechers U.S.A., Inc. (NYSE:SKX) Q3 2024 Earnings Conference Call October 24, 2024 4:30 PM ET Company Participants Melissa Tankersley - Digital Marketing Manager David Weinberg - Chief Operating Officer John Vandemore - Chief Financial Officer Conference Call Participants Jay Sole - UBS Laurent Vasilescu - BNP Paribas Jim Duffy - Stifel Alex Straton - Morgan Stanley Chris Nardone - Bank of America Krisztina Katai - Deutsche Bank Krista Zuber - TD Cowen Paul Kearney - Barclays Jesalyn Wong - Evercore Operato ...

[Financial Highlights and Executive Summary](index=1&type=section&id=Financial%20Highlights%20and%20Executive%20Summary) Skechers reported record Q3 sales of $2.35 billion, a 15.9% increase, driven by strong global demand across all channels and strategic brand initiatives Q3 2024 Key Performance Indicators | Metric | Value | Change (YoY) | | :--- | :--- | :--- | | Record Quarterly Sales | $2.35 Billion | +15.9% | | Wholesale Sales | - | +20.6% | | Direct-to-Consumer Sales | - | +9.6% | | Diluted EPS | $1.26 | +35.5% | - The company achieved broad-based geographic growth, with sales increasing **30% in EMEA**, **14% in the Americas**, and **7% in Asia Pacific**, demonstrating strong global demand despite challenging market conditions in some areas[2](index=2&type=chunk) - Strategic focus remains on product innovation, particularly comfort technologies like Skechers Hands Free Slip-ins, and raising brand awareness through high-profile ambassadors (Snoop Dogg, Joel Embiid, Howie Mandel) and expansion into team sports like soccer and basketball[2](index=2&type=chunk) [Third Quarter 2024 Financial Performance](index=2&type=section&id=Third%20Quarter%202024%20Financial%20Performance) Q3 sales rose 15.9% to $2.35 billion, driven by strong wholesale and DTC growth, while net earnings increased 32.9% despite a slight gross margin contraction Q3 2024 Financial Summary (in millions, except per share data) | Metric | Q3 2024 | Q3 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Sales (in millions) | $2,347.7 | $2,025.0 | +15.9% | | Gross Profit (in millions) | $1,223.0 | $1,071.9 | +14.1% | | Gross Margin | 52.1% | 52.9% | -80 bps | | Earnings from Operations (in millions) | $233.4 | $213.2 | +9.5% | | Operating Margin | 9.9% | 10.5% | -60 bps | | Net Earnings (in millions) | $193.2 | $145.4 | +32.9% | | Diluted EPS | $1.26 | $0.93 | +35.5% | [Q3 Sales Performance by Channel and Region](index=2&type=section&id=Q3%20Sales%20Performance%20by%20Channel%20and%20Region) Q3 sales saw strong growth in Wholesale (+20.6%) and DTC (+9.6%), with international sales, particularly EMEA, outpacing domestic growth - **Wholesale:** Sales grew **$241.4 million** (**20.6%**), with volume up **21.2%** and average selling price down **0.5%** - Growth was led by EMEA (**+30.9%**) and AMER (**+21.6%**)[3](index=3&type=chunk) - **Direct-to-Consumer:** Sales grew **$81.3 million** (**9.6%**), with volume up **10.7%** and average selling price down **1.0%** - Growth was led by EMEA (**+28.0%**) and APAC (**+10.0%**)[3](index=3&type=chunk) Q3 2024 Sales Growth by Region | Region | Sales (in millions) | Growth (YoY) | | :--- | :--- | :--- | | Americas (AMER) | $1,156.1 | +13.6% | | EMEA | $625.6 | +30.2% | | Asia Pacific (APAC) | $566.0 | +7.4% | [Q3 Profitability and Expenses](index=2&type=section&id=Q3%20Profitability%20and%20Expenses) Q3 gross margin contracted by 80 basis points to 52.1% due to lower selling prices, while operating expenses increased 15.2% but improved as a percentage of sales - Gross margin decreased to **52.1%** from **52.9%** in the prior year, a change driven by lower average selling prices[3](index=3&type=chunk) - Selling expenses increased **18.4%** due to higher demand creation expenditures, while General & Administrative expenses rose **14.4%** from increased labor and facility costs[3](index=3&type=chunk) - The effective income tax rate for the quarter was **14.7%**, a decrease from the prior year due to the release of certain allowances and other provision adjustments[3](index=3&type=chunk) [Nine Months 2024 Financial Performance](index=3&type=section&id=Nine%20Months%202024%20Financial%20Performance) Nine-month sales grew 11.9% to $6.76 billion, with gross margin improving 160 basis points to 53.1% and net earnings increasing 17.8% Nine Months 2024 Financial Summary (in millions, except per share data) | Metric | 9M 2024 | 9M 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Sales (in millions) | $6,756.9 | $6,039.4 | +11.9% | | Gross Profit (in millions) | $3,589.1 | $3,111.0 | +15.4% | | Gross Margin | 53.1% | 51.5% | +160 bps | | Earnings from Operations (in millions) | $738.8 | $654.5 | +12.9% | | Operating Margin | 10.9% | 10.8% | +10 bps | | Net Earnings (in millions) | $540.1 | $458.6 | +17.8% | | Diluted EPS | $3.50 | $2.93 | +19.5% | [YTD Sales Performance](index=3&type=section&id=YTD%20Sales%20Performance) Year-to-date sales showed balanced growth across Wholesale (+12.1%) and DTC (+11.6%), with international sales, particularly EMEA, driving overall expansion - **Wholesale:** Sales increased **12.1%** year-to-date, with volume up **12.5%**[4](index=4&type=chunk) - **Direct-to-Consumer:** Sales increased **11.6%** year-to-date, with volume up **11.8%**[4](index=4&type=chunk) Nine Months 2024 Sales Growth by Region | Region | Sales (in millions) | Growth (YoY) | | :--- | :--- | :--- | | Americas (AMER) | $3,276.5 | +9.6% | | EMEA | $1,745.7 | +20.5% | | Asia Pacific (APAC) | $1,734.7 | +8.4% | [YTD Profitability and Expenses](index=3&type=section&id=YTD%20Profitability%20and%20Expenses) Year-to-date gross margin expanded 160 basis points to 53.1% due to lower freight costs, while operating expenses increased 16.0% and rose as a percentage of sales - Gross margin improved to **53.1%** from **51.5%** in the prior year, mainly due to lower costs per unit driven by reduced freight expenses[4](index=4&type=chunk) - Operating expenses as a percentage of sales increased to **42.2%** from **40.7%**, with selling expenses up **22.2%** and G&A expenses up **14.5%**[4](index=4&type=chunk) [Financial Position and Shareholder Returns](index=3&type=section&id=Financial%20Position%20and%20Shareholder%20Returns) Skechers maintained strong liquidity with $1.60 billion in cash, increased inventory to $1.71 billion, and repurchased $90.0 million of stock in Q3 - Cash, cash equivalents, and investments totaled **$1.60 billion**, an increase of **$211.8 million** from December 31, 2023[4](index=4&type=chunk) - Inventory was **$1.71 billion**, an **11.9%** increase from December 31, 2023, to support expected demand[4](index=4&type=chunk) - During Q3, the company repurchased **1.4 million shares** for **$90.0 million** - **$910.0 million** remains available under the share repurchase program[4](index=4&type=chunk) [Business Outlook](index=3&type=section&id=Business%20Outlook) Skechers forecasts Q4 sales of $2.165-$2.215 billion and raised full-year 2024 guidance to $8.925-$8.975 billion in sales, confident in reaching $10 billion by 2026 Q4 2024 Outlook | Metric | Guidance Range | | :--- | :--- | | Sales (in billions) | $2.165 Billion - $2.215 Billion | | Diluted EPS | $0.70 - $0.75 | Full Year 2024 Outlook | Metric | Guidance Range | | :--- | :--- | | Sales (in billions) | $8.925 Billion - $8.975 Billion | | Diluted EPS | $4.20 - $4.25 | - Management expressed confidence in achieving the long-term goal of **$10 billion** in sales by 2026[3](index=3&type=chunk) [Operational Metrics](index=4&type=section&id=Operational%20Metrics) Skechers' global retail footprint expanded to 5,332 stores as of September 30, 2024, a net increase of 164 stores year-to-date Store Count as of September 30, 2024 | Store Type | Dec 31, 2023 | Opened | Closed | Sep 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Domestic | 563 | 42 | (13) | 592 | | International | 1,085 | 149 | (83) | 1,151 | | Distributor, licensee & franchise | 3,520 | 315 | (246) | 3,589 | | **Total Skechers stores** | **5,168** | **506** | **(342)** | **5,332** | [Supplemental Financial Information](index=7&type=section&id=Supplemental%20Financial%20Information) This section details Q3 segment performance, geographic sales, and non-GAAP constant currency reconciliation, highlighting wholesale vs. DTC margins and EMEA's strong growth [Segment Information (Wholesale vs. Direct-to-Consumer)](index=7&type=section&id=Segment%20Information%20%28Wholesale%20vs.%20Direct-to-Consumer%29) Q3 saw Wholesale sales grow 20.6% with 42.8% gross margin, while DTC grew 9.6% with 66.3% gross margin, and YTD Wholesale margin improved significantly Q3 2024 Segment Performance (in millions) | Segment | Sales (in millions) | Growth (YoY) | Gross Profit (in millions) | Gross Margin | | :--- | :--- | :--- | :--- | :--- | | Wholesale | $1,416.0 | +20.6% | $605.4 | 42.8% | | Direct-to-Consumer | $931.7 | +9.6% | $617.6 | 66.3% | Nine Months 2024 Segment Performance (in millions) | Segment | Sales (in millions) | Growth (YoY) | Gross Profit (in millions) | Gross Margin | | :--- | :--- | :--- | :--- | :--- | | Wholesale | $3,969.8 | +12.1% | $1,738.5 | 43.8% | | Direct-to-Consumer | $2,787.1 | +11.6% | $1,850.6 | 66.4% | [Geographic Sales Information](index=8&type=section&id=Geographic%20Sales%20Information) Q3 international sales grew 16.4% to $1.43 billion, outpacing domestic growth, with EMEA as the key driver, while China sales declined 5.7% Q3 2024 Geographic Sales (in millions) | Geography | Sales (in millions) | Growth (YoY) | | :--- | :--- | :--- | | Domestic | $916.0 | +15.3% | | International | $1,431.7 | +16.4% | | **Total** | **$2,347.7** | **+15.9%** | - China sales for Q3 2024 were **$252.4 million**, a decrease of **5.7%** from **$267.6 million** in Q3 2023[13](index=13&type=chunk) [Reconciliation to Non-GAAP Measures (Constant Currency)](index=9&type=section&id=Reconciliation%20to%20Non-GAAP%20Measures%20%28Constant%20Currency%29) Non-GAAP constant currency reconciliation shows Q3 sales growth unaffected by FX, while nine-month growth was 12.7%, 80 basis points higher than GAAP - The constant currency presentation is a non-GAAP measure that excludes the impact of period-over-period fluctuations in foreign currency exchange rates to facilitate performance comparisons[15](index=15&type=chunk) Q3 & 9M 2024 Sales Growth: GAAP vs. Constant Currency | Period | Reported GAAP Growth | Constant Currency Growth | | :--- | :--- | :--- | | Three Months | 15.9% | 15.9% | | Nine Months | 11.9% | 12.7% | [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) This section presents unaudited condensed consolidated balance sheets and statements of earnings for Q3 and nine-month periods ending September 30, 2024 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2024, total assets reached $8.65 billion, driven by receivables and inventory growth, with total liabilities at $3.73 billion and equity at $4.82 billion Key Balance Sheet Items (in thousands) | Account | Sep 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | | :--- | :--- | :--- | | Total Current Assets | $4,698,508 | $3,952,604 | | Total Assets | $8,646,041 | $7,547,351 | | Total Current Liabilities | $2,396,656 | $1,660,867 | | Total Liabilities | $3,733,527 | $3,147,309 | | Total Stockholders' Equity | $4,820,535 | $4,310,210 | [Condensed Consolidated Statements of Earnings](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings) The income statement details Q3 2024 sales of $2.35 billion and net earnings of $209.3 million, with nine-month sales at $6.76 billion and net earnings at $614.2 million Statement of Earnings Highlights (in thousands) | Line Item | Three Months Ended Sep 30, 2024 (in thousands) | Nine Months Ended Sep 30, 2024 (in thousands) | | :--- | :--- | :--- | | Sales | $2,347,705 | $6,756,935 | | Gross Profit | $1,223,046 | $3,589,117 | | Earnings from Operations | $233,424 | $738,753 | | Net Earnings | $209,309 | $614,211 | | Net Earnings Attributable to Skechers | $193,221 | $540,145 |

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2024 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-14429 SKECHERS U.S.A., INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) 228 Manhattan Beach Blvd. Ma ...

Financial Data and Key Metrics Changes - The company reported record second-quarter sales of $2.16 billion, an increase of 7.2% year-over-year, or $145 million compared to last year [8][19] - On a constant currency basis, sales increased by 8.7% to $2.19 billion [8][19] - Gross margins improved to 54.9%, a 220 basis point increase from the previous year [19][25] - Earnings per share were $0.91, a 7.1% decrease compared to the prior year, but $0.97 on a constant currency basis [27][19] Business Line Data and Key Metrics Changes - Direct-to-consumer sales grew by 9.2% year-over-year, exceeding $1 billion for the first time in the company's history [21][16] - Domestic direct-to-consumer sales increased by 1.4%, while international sales rose by 15% [21][16] - Wholesale sales increased by 5.5% year-over-year, driven by a 14% increase in domestic wholesale [23][19] Market Data and Key Metrics Changes - Domestic sales increased by 7.7%, while international sales grew by 6.9%, representing 60% of total sales [14][19] - By region, sales in the Americas increased by 7.2%, EMEA by 14%, and APAC by 2.2% [14][24] - In China, sales grew by 3.4% year-over-year, with a 7% increase on a constant currency basis [25][19] Company Strategy and Development Direction - The company announced a new $1 billion share repurchase plan, enhancing its existing program [8][29] - Skechers aims to achieve $10 billion in annual sales by 2026, focusing on expanding its direct-to-consumer segment and global brand presence [18][30] - The company is investing in local production in India to navigate regulatory hurdles and improve supply chain efficiency [15][49] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the second half of 2024, citing strong order flow and consumer demand despite macroeconomic challenges [20][31] - The company is adjusting its full-year guidance upward due to improved visibility into the order book and continued positive consumer response to its products [20][19] - Management acknowledged challenges in the supply chain and regulatory environments but remains confident in the long-term growth potential [15][31] Other Important Information - The company ended the quarter with 5,267 Skechers branded stores worldwide, including 1,702 company-owned locations [17] - Capital expenditures for the quarter were focused on new store openings and direct-to-consumer technologies [28] - The company is actively addressing supply chain disruptions and inventory imbalances caused by increased transit times [15][27] Q&A Session All Questions and Answers Question: Can you explain the sources of the raise in guidance? - Management indicated that better visibility into the back half order book, particularly on the wholesale side, and strong order flow contributed to the raised guidance [34][35] Question: What are the expectations for consumer behavior in the footwear retail landscape? - Management noted a decline in foot traffic in brick-and-mortar stores but strong performance in e-commerce, indicating a shift in consumer purchasing behavior [39][40] Question: Can you elaborate on the impact of the regulatory environment in India? - Management acknowledged a significant impact from regulatory changes but expressed optimism about local production improvements and long-term opportunities in the market [49][50] Question: What are the expectations for wholesale growth in the back half of the year? - Management expects continued strength from direct-to-consumer sales and a strong domestic wholesale order book to drive growth in the second half [56][76] Question: How is the company addressing potential tariff impacts? - Management stated that while there is exposure to China, they are diversifying production and are prepared to react to any changes in the tariff landscape [78][79]