- **Record Q1 Revenue**: $2.41 billion, up 7.1% YoY, driven by 14% growth in EMEA and 8.3% in Americas.
- **International Dominance**: 65% of revenue from international markets, with APAC (ex-China) up 12%.
- **DTC Expansion**: 51 new stores opened, 15 in China, with 12% APAC DTC growth excluding China.
- **Gross Margin Pressure**: 52% gross margin due to China promotions, but 12% APAC (ex-China) DTC growth offsets challenges.
- **Tariff Mitigation**: Flexing production sources, cost-sharing, and selective price adjustments to manage U.S. tariffs.
- **China Recovery Plan**: Investing in comfort tech products and demand creation to stabilize sales in China.
- **Liquidity Strength**: $1.24 billion cash, conservative capital allocation amid macro risks.


**【CEO Summary Section】**
- Q1 2025 revenue reached $2.41 billion, a 7.1% year-over-year increase, with direct-to-consumer (DTC) sales up 6% to $879.4 million.
- International markets drove 65% of total revenue, with EMEA sales up 14% and Americas up 8.3%. APAC sales declined 2.6% due to China's economic challenges, but grew 12% excluding China.
- Expanded retail footprint: 51 new company-owned stores opened, including 15 in China, and 50 third-party stores globally.
- Strategic investments in distribution centers in the U.S., China, and Europe to support growth.

**【CFO Financial Commentary】**
- Gross margin declined 50 basis points to 52% due to higher promotions in China and customer mix.
- Operating expenses rose 180 basis points as a percentage of sales to 41%, driven by brand-building investments and DTC expansion costs.
- Earnings per share (EPS) remained flat at $1.34, reflecting $26.6 million in foreign exchange losses.
- Inventory increased 30% year-over-year to $1.77 billion due to elongated transit times from the Suez Canal closure.
- Capital expenditures of $147.1 million focused on distribution infrastructure, new stores, and digital technologies.

**【Q&A Key Highlights】**
- **Tariff Mitigation Strategy**: Levers include cost-sharing with vendors, sourcing optimization, and selective price adjustments. China production for U.S. is expected to decrease, but 2/3 of business is outside the U.S.
- **China Market Recovery**: Investments in comfort technology products and demand creation aim to stabilize sales, with 12% growth in APAC excluding China.
- **Inventory Management**: Focused on pre-clearing goods through free trade zones; Q2 and Q3 will see tariff impacts, with potential price adjustments in the U.S.
- **DTC Growth**: 150-170 new stores planned for 2025, prioritizing international markets with strong regional growth (e.g., Japan, Thailand, South Korea).
- **Kid’s Footwear Challenges**: Most kid’s products sourced from China due to regulatory requirements, but exploring alternative production sources.
- **Liquidity and Capital Allocation**: Maintained $1.24 billion in cash, with conservative capital deployment amid macroeconomic uncertainty.


Skechers U.S.A. (SKX)-24 Apr 25-2025 Q1 Earnings call transcript

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