Skechers Treading Through Challenges, Direct-to-Consumer Growth, and Ambitious Goals

In its recent earnings report, Skechers USA demonstrated financial strength, exceeding earnings per share (EPS) expectations and achieving significant milestones in sales and market expansion. The company reported an EPS of $0.56, surpassing the estimated $0.55, and experienced a 4.4% YoY increase in revenues, reaching $1.96 billion, although slightly below the projected $2.03 billion. Notably, Direct-to-Consumer sales exhibited substantial growth of 20.3%.

Skechers' inventory, standing at $1.53 billion, marked a 16.1% decrease from December 31, 2022. The guidance for the upcoming quarter anticipates EPS between $1.05 and $1.10, below the estimated $1.20, with revenues expected in the range of $2.175 billion to $2.225 billion, lower than the $2.19 billion estimates.

For fiscal year 2024 (FY24), Skechers provided guidance with EPS expectations between $3.65 and $3.85, falling below the estimated $4.18. Total revenues for FY24 are predicted to be between $8.60 billion and $8.80 billion, lower than the projected $8.92 billion.

In 2023, Skechers achieved an annual sales record of $8 billion, marking a 7.5% increase from the previous year. Diluted EPS increased by 46.6% to $3.49 for the full year. Direct-to-Consumer sales experienced a strong 24.3% growth, reflecting robust consumer demand. The company efficiently decreased inventory levels by 16.1%, highlighting effective inventory management.

In Q4 2023, Skechers' sales reached a record $1.96 billion, a 4.4% increase from the previous year. The company repurchased $60 million worth of Class A common stock during the quarter, and its total Skechers store count increased to 5,168 by the end of 2023.

Despite an 8% decline in Wholesale sales, Skechers remains optimistic due to positive trends in January shipments and orders for the first half of the year. The growth in the Direct-to-Consumer segment demonstrates strong consumer preference and successful retail expansion.

Key financial metrics from the income statement revealed a 4.4% increase in fourth-quarter sales, driven by a 20.3% growth in Direct-to-Consumer sales, despite an 8.3% decrease in Wholesale sales. The gross margin significantly improved to 53.1%, up 470 basis points, primarily due to higher average selling prices and a larger proportion of Direct-to-Consumer sales.

Looking ahead, Skechers expects sales to range between $8.60 billion and $8.80 billion for FY24, with diluted earnings per share expected to fall within the range of $3.65 to $3.85. The company's growth strategy focuses on international expansion and deepening Direct-to-Consumer relationships, aiming for a sales goal of $10 billion by 2026. Capital expenditures for 2024 are projected to be between $350 and $400 million, including the construction of a second distribution center in China.