Skechers(SKX)2025-02-07 02:33Financial Data and Key Metrics Changes - In 2024, Skechers achieved constant currency sales of over 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 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 9.8 billion, with earnings per diluted share projected between 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]