Financial Data and Key Metrics Changes - Reported net sales for Q1 increased 1.1% year over year to $114.1 million, slightly ahead of expectations [18] - Retail sales increased 20.5% to $36.6 million, while wholesale sales decreased by $5 million or 6.3% to $74.8 million [18] - Gross profit for Q1 was $47 million, representing 41.2% of sales, the highest gross margin reported in Q1, compared to 39.1% in the same period last year [19] - Adjusted net income for Q1 was $5.5 million or $0.73 per diluted share, compared to $3.1 million or $0.41 per diluted share a year ago [21] Business Line Data and Key Metrics Changes - The rubber boot business, particularly the XTRA TUF brand, experienced strong demand with double-digit growth in Q1 [6][8] - MUC brand also saw better than expected growth, particularly in the women's segment, driven by improved winter weather [10] - The Rocky brand group showed increases in both work and outdoor categories, with Rocky work delivering the strongest performance [12][13] - Georgia Boot faced a softer March due to economic uncertainty, but new product introductions continued to perform well [11] Market Data and Key Metrics Changes - Retail segment saw a 20% top line growth, indicating strong demand across distribution channels [5] - The company is shifting sourcing from China to countries like Vietnam, Cambodia, and India, aiming to reduce reliance on Chinese manufacturing [7][28] - The B2B Lehigh business reported high teens sales growth, marking the third consecutive quarter of double-digit gains [16] Company Strategy and Development Direction - The company plans to implement price increases on most footwear styles in response to higher tariffs, while maintaining flexibility to adjust prices based on future changes [7][29] - There is a focus on diversifying sourcing to mitigate tariff impacts, with a goal to reduce product sourced from China to less than 20% by year-end [28] - The company aims to maintain gross profit dollars despite anticipated pressure on gross margins due to tariffs [24] Management's Comments on Operating Environment and Future Outlook - Management acknowledged growing macroeconomic uncertainty but expressed confidence in navigating the current retail environment due to a diverse brand portfolio [5][18] - The company reiterated its full-year 2025 guidance, expecting low single-digit revenue growth over 2024 levels [23] - Management noted that consumer demand has not shown panic despite rising prices, indicating a stable retail environment [34] Other Important Information - Interest expense decreased significantly to $2.4 million from $4.5 million year over year due to lower interest rates from refinancing [20][21] - Inventory levels increased by 6.3% year over year, as the company accelerated receipts to mitigate tariff impacts [22] Q&A Session Summary Question: Can you elaborate on the guidance and the migration out of China? - Management indicated a strong inventory position allowing them to navigate tariff impacts and transition sourcing out of China effectively [27][28] Question: What are wholesale partners saying about consumer ability to absorb price increases? - Management noted that retail partners are cautiously optimistic, with no significant panic from consumers regarding price increases [32][34] Question: How much capacity is being shifted to third-party manufacturers in Vietnam and India? - Management stated that approximately 90-92% of products have found new homes, with ongoing efforts to transition the remaining 8% from China [56][57]

Group 1 - The core issue in the Asian market is that many consumers struggle to find athletic shoes that fit properly, leading to discomfort and potential foot health problems [1][6][10] - Research indicates that 63% to 72% of individuals wear shoes that do not match their foot length and width, a problem that is particularly pronounced in Asia due to differences in foot shape [1][3][10] - The design of most Western athletic shoes is based on Western foot data, which does not accommodate the wider and shorter foot shapes common in Asia, resulting in a mismatch in fit and comfort [3][8][10] Group 2 - Many consumers are unaware of their own foot shapes, leading to incorrect shoe purchases and inappropriate usage of shoes for different activities, which can cause discomfort and injuries [3][13][15] - The design logic of athletic shoes has historically centered around Western standards, neglecting the unique characteristics of Asian foot shapes, which can lead to various foot health issues [8][10][12] - Common design features in athletic shoes, such as high heels and narrow toe boxes, can exacerbate foot problems for Asian consumers, leading to conditions like bunions and plantar fasciitis [10][12][19] Group 3 - There is a growing demand for shoes designed specifically for wider Asian foot shapes, prompting some brands to introduce models that cater to these needs [19][21] - Brands are beginning to offer more specialized fitting services, including 3D foot scanning and dynamic gait analysis, to help consumers find the right shoe for their foot type [19][21][23] - A comprehensive guide for consumers on how to select the right athletic shoes has been compiled, emphasizing the importance of understanding one's foot shape and the specific requirements for different types of athletic activities [21][24][25]

Core Insights - On has opened its first flagship store in Chengdu, marking the end of a five-year exploration period in China [1][3] - The company plans to expand its store count in China to over 100 by 2026, currently operating 66 stores [1][3] - On's new Cloudboom Strike LS shoe, featuring innovative LightSpray™ technology, aims to enhance production efficiency and comfort [5][6] Group 1: Store Expansion - The flagship store in Chengdu covers 500 square meters and showcases a variety of products for different sports [1][3] - On's strategy emphasizes the need for more self-operated retail stores in China, moving away from reliance on wholesale channels [3] - The company aims to open more flagship stores in both China and other regions in the future [1][3] Group 2: Product Innovation - The Cloudboom Strike LS is the first mass-produced racing shoe using LightSpray™, a technology that simplifies the manufacturing process [5][6] - The shoe weighs only 170 grams, making it lighter than competitors, which is crucial for professional runners [6] - On's team has developed a unique formula for the shoe's material, enhancing durability and comfort [5] Group 3: Financial Performance - On's annual compound growth rate from 2021 to 2024 exceeds 47% [7] - In 2024, the company reported a net revenue of 2.318 billion Swiss francs (approximately 19 billion RMB), a year-on-year increase of 29.4% [7] - The net profit for 2024 reached 242 million Swiss francs (approximately 1.984 billion RMB), showing a remarkable growth of 204% [7]

Core Insights - The Chinese women's footwear market is projected to exceed 220 billion yuan in 2024, following a market size of over 215 billion yuan in 2023, with a compound annual growth rate of 1.20% over the past four years [1][3]. Market Overview - The women's footwear industry includes products made from leather, synthetic leather, textile materials, and rubber, categorized into men's, women's, and children's shoes [1]. - Low-top shoes and boots are the primary consumer products in the Chinese women's footwear market, with low-top shoes accounting for over 45% of the market share in 2023 [3]. Competitive Landscape - The domestic women's footwear market is highly competitive, featuring numerous brands, including both global and local players such as Red Dragonfly, Qianbaidu, Daphne, and Belle [4]. - Most domestic fashion and casual brands focus on diversified business strategies, covering high heels, sports shoes, and casual shoes, while sports brands primarily emphasize sports shoes and extend into casual and flip-flop segments [4].

Financial Data and Key Metrics Changes - The company achieved record first-quarter sales of $2.41 billion, representing a 7.1% increase year-over-year, and $2.46 billion on a constant currency basis, up 9% [8][27] - Earnings per share were $1.34, essentially flat compared to the prior year [34] - Gross margin was 52%, down 50 basis points from the previous year, primarily due to lower average selling prices from higher promotions in certain markets [31] - Operating expenses increased 180 basis points as a percentage of sales to 41% [32] Business Line Data and Key Metrics Changes - Direct-to-consumer sales grew 6% year-over-year to $879.4 million, with domestic growth of 11% driven by strong e-commerce performance [27][17] - Wholesale sales increased 7.8% year-over-year to $1.53 billion, with international sales up 9.5% [28][16] - The domestic wholesale growth reflected broad-based demand across kids, men's, and women's categories [16] Market Data and Key Metrics Changes - Domestic and international sales both increased by 7%, with EMEA growing 14% and The Americas growing 8.3% [9][14] - In APAC, sales decreased by 2.6%, primarily due to soft consumer spending in China, but grew 12% when excluding China [10][30] - EMEA sales for the first quarter increased 14% year-over-year to $718.2 million [29] Company Strategy and Development Direction - The company views international markets as its primary growth engine, with 65% of total business coming from international sales [9][21] - Investment priorities focus on expanding distribution centers, enhancing product offerings, and growing direct-to-consumer capabilities [20][21] - The company aims to navigate current macroeconomic uncertainties by leveraging its brand strength and global market position [21][42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating current challenges, citing a strong demand for Skechers products globally [26][38] - The company acknowledged the uncertainty in the macroeconomic environment but remains optimistic about growth opportunities, particularly in international markets [31][38] - Management emphasized the importance of flexibility in sourcing and production to adapt to changing market conditions [92][108] Other Important Information - The company ended the quarter with $1.24 billion in cash and cash equivalents, maintaining liquidity of $1.85 billion [35] - Inventory increased by 30% year-over-year to $1.77 billion, primarily due to elongated transit times [35][36] - Capital expenditures for the quarter were $147.1 million, focusing on distribution infrastructure and new store openings [36] Q&A Session Summary Question: Discussion on tariff situation and production in China - Management indicated that they are actively pursuing cost-sharing, sourcing optimization, and pricing adjustments to address tariff impacts, with a focus on minimizing production from high-cost locations [49][50] Question: Market volatility and consumer demand - Management noted that while there is uncertainty in the U.S. and China markets, consumer demand for Skechers products remains robust, particularly in international markets [60][62] Question: Inventory management and pricing strategy - Management is closely managing inventory levels and is prepared to adjust pricing strategies based on market conditions, emphasizing the importance of consumer perception [78][97] Question: Sourcing and production flexibility - Management confirmed that they are exploring flexible sourcing options and optimizing production locations to mitigate tariff impacts, with a focus on maintaining quality and cost-effectiveness [92][108]

Financial Data and Key Metrics Changes - The company achieved record first-quarter sales of $2.41 billion, a 7.1% increase year-over-year, and $2.46 billion on a constant currency basis, up 9% [8][27] - Earnings per share were $1.34, essentially flat compared to the prior year [34] - Gross margin was 52%, down 50 basis points from the previous year, primarily due to lower average selling prices from higher promotions in certain markets [31] Business Line Data and Key Metrics Changes - Direct-to-consumer sales grew 6% year-over-year to $879.4 million, with domestic growth of 11% driven by strong e-commerce performance [27][17] - Wholesale sales increased 7.8% year-over-year to $1.53 billion, with international sales up 9.5% [28][16] - The company ended the quarter with 5,318 Skechers stores worldwide, including 1,821 company-owned locations [18] Market Data and Key Metrics Changes - Domestic and international sales both increased by 7%, with EMEA growing 14% and The Americas growing 8.3% [9][14] - In the Asia Pacific region, sales decreased by 2.6%, primarily due to soft consumer spending in China, but grew 12% when excluding China [10][30] Company Strategy and Development Direction - The company views international markets as its primary growth engine, investing in retail store networks and enhancing distribution efficiencies [10][21] - Skechers aims to expand its distribution centers in the U.S., China, and Europe to manage expected growth and improve delivery efficiency [20][21] - The company is focused on evolving and innovating its footwear to meet consumer needs and drive demand globally [21][42] Management's Comments on Operating Environment and Future Outlook - Management acknowledged increasing macroeconomic uncertainty and waning consumer sentiment but expressed confidence in navigating these challenges [9][26] - The company remains committed to its strategic plan and believes it is well-positioned to thrive despite current market dynamics [26][42] - Management did not provide specific revenue or earnings guidance due to the dynamic environment but remains optimistic about growth opportunities [39][38] Other Important Information - Inventory increased by 30% year-over-year to $1.77 billion, primarily due to elongated transit times, but decreased by 7.6% compared to the prior quarter [35][36] - Capital expenditures for the quarter were $147.1 million, focusing on distribution infrastructure and new store openings [36] Q&A Session Summary Question: Can you discuss the company's production in China and tariff strategies? - Management emphasized that they are looking at sourcing optimization, vendor cost sharing, and pricing adjustments to manage tariffs, with two-thirds of the business being outside the U.S. [49][51] Question: What markets are experiencing notable volatility? - The U.S. and China are noted as presenting the most uncertainty, with robust consumer demand for Skechers products remaining strong in most other markets [60][62] Question: How do you view the potential for price increases in response to tariffs? - Management indicated that pricing is being considered but will depend on consumer receptiveness and the overall impact on the business [78][80] Question: What is the company's approach to inventory management amidst tariff changes? - The company is managing inventory closely, with a focus on minimizing at-risk inventory and ensuring high fidelity to delivery [97][99] Question: Are there specific products that are currently made in China and not in Vietnam? - Management noted that most kids' footwear is produced in China due to quality and cost considerations, but they have the ability to back up production in multiple locations [145]

Market Performance - Markets closed higher for the third consecutive session, with the Dow up 486 points (+1.23%), S&P 500 up 108 points (+2.03%), Nasdaq up 457 points (+2.74%), and Russell 2000 up 38 points (+2.00%) [1] - The indexes have increased between +2% to nearly +5% this week, despite initial concerns regarding Jerome Powell's position as Fed Chair [1] Key Stocks - The "Magnificent 7" stocks, including NVIDIA (NVDA), Amazon (AMZN), Tesla (TSLA), and Microsoft (MSFT), all rose over +3% during the session, although they remain down year-to-date, with Microsoft down -8% and Tesla down -35% [2] Economic Reports - Existing Home Sales for March were reported at 4.02 million units, below the anticipated 4.13 million and February's 4.27 million, indicating a continued housing market challenge [3] - Durable Goods Orders for March increased by +9.2%, significantly surpassing the estimated +1.6%, suggesting businesses may be pulling forward orders ahead of tariff announcements [4] - Initial Jobless Claims remained stable at 222K, reflecting a relatively calm labor market despite recent layoffs [4] Q1 Earnings Reports - Alphabet (GOOGL) reported Q1 earnings of $2.81 per share, exceeding the expected $2.02, with revenues of $76.50 billion compared to the $75.53 billion consensus [5] - Alphabet's cloud revenues reached $12.26 billion, up from $9.57 billion year-over-year, and YouTube ad revenue grew by 90 basis points to +8.93% [6] - GOOGL's shares rose +5% in after-market trading following a +2.5% increase prior to the earnings release, although it remains down roughly -10% year-to-date [6] Other Company Earnings - Intel (INTC) reported Q1 earnings of +$0.13 per share, surpassing the expected $0.01, with revenues of $12.7 billion, slightly above the $12.3 billion estimate [7] - Despite outperforming expectations, Intel's shares fell -5% in late trading due to a pullback in next-quarter guidance [7] - Skechers (SKX) reported Q1 earnings of $1.34 per share, beating the expected $1.18, but revenues of $2.41 billion fell short of the $2.44 billion projection, leading to an -8% decline in shares [8]

Core Insights - Skechers reported revenue of $2.41 billion for the quarter ended March 2025, reflecting a year-over-year increase of 7.1% [1] - The earnings per share (EPS) was $1.34, slightly up from $1.33 in the same quarter last year, with an EPS surprise of +14.53% against the consensus estimate of $1.17 [1] Revenue Performance - Geographic Revenue in Asia Pacific was $589 million, down 2.6% year-over-year and below the estimated $618.58 million [4] - Domestic Wholesale sales reached $496.20 million, representing a 4.2% increase year-over-year, but below the average estimate of $533.12 million [4] - Domestic Direct-to-Consumer sales were $357.50 million, exceeding the estimate of $335.74 million with a year-over-year growth of 10.8% [4] - Revenue from Europe, Middle East & Africa was $718.20 million, up 14.4% year-over-year and above the estimated $708.61 million [4] - International Direct-to-Consumer sales were $521.90 million, slightly below the estimate of $543.09 million, with a year-over-year increase of 2.9% [4] - Revenue from the Americas was $1.10 billion, reflecting an 8.3% year-over-year increase but below the estimated $1.12 billion [4] - International Wholesale sales were $1.04 billion, slightly above the estimate of $1.03 billion, with a year-over-year growth of 9.6% [4] - Total Wholesale sales amounted to $1.53 billion, a 7.8% increase year-over-year, but below the average estimate of $1.55 billion [4] - Total Direct-to-Consumer sales were $879.40 million, a 6% increase year-over-year, but below the estimate of $885.27 million [4] Stock Performance - Skechers shares have returned -14.8% over the past month, compared to a -5.1% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

3. Nvidia Nvidia's revenue surged 12% year over year in Q4, driven by record quarterly data center revenue. Nvidia also guided for nearly 65% growth in revenue for Q1, but fears of a slowdown sent the artificial intelligence (AI) stock tanking 13.2% in March. Nike expects its current-quarter revenue to drop by a mid-teens percentage, but tariffs pose a new threat. In fiscal 2024, 50%, 27%, and 18% of Nike's namesake brand footwear were produced in Vietnam, Indonesia and China, respectively, so having to pay ...

Group 1: Earnings Season Overview - The earnings season has commenced, with several consumer-facing companies, including Chipotle Mexican Grill (CMG), American Airlines (AAL), and Skechers (SKX), scheduled to report this week [1] - Guidance from these companies will be critical in assessing the state of the consumer and their post-earnings stock performance [1][8] Group 2: Chipotle Mexican Grill (CMG) - CMG shares have declined nearly 25% in 2025, underperforming the S&P 500, with negative EPS revisions leading to a Zacks Consensus EPS estimate of $0.28, down nearly 10% since January [2] - Year-over-year growth is projected at 3.7%, with sales expected to increase by 8.5% to $2.9 billion, reflecting a 5% downward revision [3] - CMG has consistently posted double-digit percentage year-over-year sales growth, with the latest period showing sales of $2.8 billion, a 13% improvement [5] Group 3: American Airlines (AAL) - AAL's guidance will be a significant factor in its earnings release, especially following Delta Air Lines' (DAL) recent results, which indicated a cautious outlook due to economic uncertainty [10] - Analysts have reduced their EPS expectations for AAL, reflecting a broader theme of uncertainty that is likely to influence the stock's movement post-earnings [11][13] Group 4: Skechers (SKX) - SKX shares have dropped over 30% in 2025, following a strong multi-year performance, with analysts cutting EPS expectations by 23% to a current estimate of $1.18 [14][16] - Revenue expectations for SKX remain stable, with quarterly sales projected at $2.4 billion, while margins will be a key focus in the earnings report [16][19] - The stock has seen a decline of approximately 9% over the past two years, suggesting that much of the negative sentiment may already be reflected in the share price [19]