The $9 Billion Gamble: Skechers’ Historic Buyout and the Geopolitical Shoe That Could Drop
20min read The largest footwear industry buyout in history—Skechers USA’s $9.42 billion privatization led by 3G Capital—has thrust the athletic apparel giant into the spotlight. While the deal’s 28–30% premium to its pre-announcement stock price signals confidence in the brand’s long-term value, it also underscores the precarious reality of operating in an era of escalating trade wars and supply chain chaos. For Skechers, this is not merely a financial maneuver but a strategic retreat into the shadows of private equity, where the pressures of Wall Street’s quarterly scrutiny might be replaced by the quiet calculus of operational survival.
The Case for Going Private: Navigating a Hostile Landscape
The decision to exit the public markets is framed as a response to macroeconomic headwinds, chief among them the 145% tariff on Chinese imports imposed by the Trump administration and later escalated to 125% in 2024. These tariffs, combined with supply chain disruptions like the Suez Canal blockage, have strained Skechers’ profitability. In 2024, despite a 13% revenue increase to $9.04 billion, the company’s inventory swelled by 26% to $1.92 billion—a warning sign of overstocking amid shifting demand. The withdrawal of annual forecasts in April 2025, due to tariff-related uncertainty, further highlights the volatility Skechers seeks to avoid.
This graph illustrates the stock’s 30% decline in 2024, narrowing to $61.55 on the day of the announcement—$1.45 below the $63-per-share offer. the gap reflects investor skepticism about the company’s ability to navigate tariffs and geopolitical risks, even as the premium suggests underlying optimism about its brand strength.
3G’s Playbook: Cost-Cutting or Cultural Clash?
3G Capital, renowned for its aggressive restructuring of companies like Kraft Heinz, now faces a unique challenge with Skechers. While the firm’s history of slashing costs could pressure Skechers to reduce its 15% reliance on Chinese manufacturing—a segment contributing $1.35 billion in annual revenue—the deal’s terms grant the Greenberg family continued operational control. This arrangement may mitigate concerns about brand dilution but raises questions about whether 3G’s cost discipline can coexist with Skechers’ growth ambitions.
The footwear industry’s broader vulnerability is evident in . While Skechers outpaced rivals like Under Armour (UAA) and Columbia Sportswear (COLM), its 11% sales drop in China—a market critical for its expansion—highlights the risks of overexposure to a slowing economy. Meanwhile, newly imposed global minimum tax rules threaten to erode its profit margins further, complicating efforts to offset tariff costs through price hikes or sourcing optimization.
Analysts Split on the Long Game
Wall Street analysts are divided but cautiously bullish. Evercore ISI’s view that the deal sets a “valuation benchmark” for the sector aligns with GuruFocus’ $69.02 fair-value estimate—a 12% premium to current levels—suggesting confidence in Skechers’ global footprint expansion, including 77 new stores in 2024. Yet Cowen & Co.’s focus on potential operational restructuring hints at unresolved tensions between 3G’s austerity and Skechers’ need for innovation.
This timeline underscores the escalating trade war, with tariffs nearly tripling since 2020. For Skechers, which derives 85% of U.S. imports from China, the trajectory poses existential risks unless U.S.-China relations thaw—a prospect analysts like Tom Nikic of Needham deem “unlikely in the near term.”
Conclusion: A High-Stakes Bet on Brand Resilience
Skechers’ privatization is a high-wire act. On one hand, it secures the Greenbergs’ legacy and buys time to retool supply chains and navigate tariffs. With $1.38 billion in cash, the company has a cushion to experiment—a luxury denied to public firms. The 3G partnership, if balanced, could deliver the discipline needed to reduce inventory bloat and optimize margins, potentially positioning Skechers for a future IPO at higher valuations.
Yet the risks are stark. A failure to resolve trade tensions could amplify losses in China and Europe, where sales are already contracting. The stock’s closing discount to the offer price—a rare occurrence in buyouts—suggests investors are not yet convinced. For the deal to succeed, Skechers must prove it can do what no footwear giant has yet achieved: thrive in a world where geopolitics and globalization are locked in a perpetual tango. The $9 billion question is whether the brand’s iconic shoes will outpace the storm clouds on the horizon.
In the end, this deal is less about footwear and more about fortitude—a test of whether private capital can weather the storms that public markets fear to face.
