Skechers(US:SKX)2024-07-26 02:07Financial 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]