Skechers Goes Private Amid Tariff Headwinds: Can 3G Capital Steer the Brand to Stability?

In a bold move to navigate escalating tariff pressures and volatile markets, Skechers U.S.A., Inc. has agreed to a transformative $9.4 billion going-private transaction led by 3G Capital. The deal, set to close in late 2025, marks a pivotal shift for the third-largest global footwear brand, which faces a 145% tariff on Chinese-made goods and 26% duties on Indian imports. Skechers’ leadership, including founder Robert Greenberg, will retain control while leveraging 3G’s operational expertise—a partnership that could either insulate the company from public market volatility or deepen its exposure to geopolitical risks.

The Deal’s Structure: A Premium Payoff with Strings Attached

The transaction offers Skechers shareholders $63.00 per share in cash, a 30% premium over its 15-day volume-weighted average stock price. Alternatively, investors can elect a mixed consideration of $57.00 cash plus a non-transferable equity unit in a new LLC, though this option is limited to 20% of outstanding shares. The structure aims to balance immediate liquidity with long-term alignment, as the Greenberg family has already pledged to take the mixed option.

Tariff Pressures and the Case for Privatization

Skechers’ reliance on international manufacturing—62% of its $9 billion annual revenue comes from overseas—has made it a prime casualty of U.S. trade policies. The company’s decision to go private, supported by 68% of shareholders in a March vote, reflects a strategic retreat from public scrutiny. As tariffs on Chinese goods alone add billions in annual costs, the partnership with 3G could provide the agility to renegotiate supplier contracts, pivot manufacturing hubs, or absorb costs without quarterly earnings pressure.

This comparison underscores Skechers’ volatility, with its shares down 22% since 2023 amid tariff fears, while Nike and Under Armour have seen smaller declines. The 30% premium in the buyout suggests investors now see Skechers’ fundamentals as undervalued.

Risks and the 3G Factor

The deal isn’t without hurdles. Regulatory approvals remain pending, and litigation could delay the transition. Skechers’ global supply chain also faces headwinds: 180 countries represent its markets, but geopolitical tensions threaten access. 3G’s track record—turning around Burger King and Heinz through cost-cutting and operational rigor—could prove critical. However, Skechers’ founder-led model and focus on “Comfort Technology” must be preserved to maintain brand loyalty.

A Calculated Gamble with Long Odds

The transaction’s $9.4 billion valuation and 60% shareholder pre-approval indicate investor optimism about Skechers’ core strengths: a loyal customer base, a 5,300-store global footprint, and a 2024 revenue growth rate of 8% despite tariffs. 3G’s $4.5 billion investment (via cash and JPMorgan-backed debt) signals confidence in the brand’s scalability. Yet, the LLC structure’s non-listing and SEC reporting exit may deter future capital-raising flexibility.

Conclusion: A High-Stakes Bet on Stability

Skechers’ going-private move is a high-stakes gamble to shield itself from tariff volatility and market skepticism. With 3G’s operational discipline and Skechers’ existing strengths, the partnership could stabilize margins and fuel international expansion. However, the 145% Chinese tariff burden and geopolitical risks loom large. For now, the 30% premium and leadership continuity offer a compelling case—investors betting on Skechers’ future are banking on a brand that can adapt, even in a storm.

The deal’s success will hinge on whether 3G can replicate its turnaround magic in the footwear sector, where competitors like Nike face their own headwinds. Skechers’ pivot to private ownership may prove a lifeline—or a leap into uncharted territory. The verdict, as always, will be written in the soles of its sneakers.