Skechers U.S.A. (SKX -0.46%), renowned for its performance and lifestyle footwear, announced impressive third-quarter results on October 24, 2024. The highlight was a 15.9% surge in revenue to $2.35 billion, surpassing the management's guidance range. Earnings per share (EPS) climbed to $1.26, beating expectations of $1.10 to $1.15. However, the quarter did see a dip in gross margin from 52.9% to 52.1% compared to the same period last year. This decline was mainly due to competitive pricing pressures. Overall, the quarter was robust, showcasing strong sales, especially in international markets.
| Metric | Q3 2024 Result | Management's Guidance | Q3 2023 Result | Change (%) |
|---|---|---|---|---|
| Revenue | $2.35 billion | $2.30-2.35 billion | $2.025 billion | 15.9% |
| Diluted EPS | $1.26 | $1.10-1.15 | $0.93 | 35.5% |
| Gross Margin | 52.1% | N/A | 52.9% | -80 basis points |
| Net Earnings | $193.2 million | N/A | $145.4 million | 32.9% |
Source: Expectations based on management's guidance, as provided in 2024-07-25 earnings report.
Overview of Skechers U.S.A.
Skechers U.S.A., a globally recognized brand in the footwear industry, is headquartered in California and has a well-diversified product line catering to different segments, including casual, active, and performance footwear. Recently, it emphasized brand recognition and product innovation. Skechers focuses on creating products that integrate style and comfort, supported by comprehensive marketing strategies that include celebrity endorsements.
In this quarter, the company continued to invest in its marketing strategies, enhancing its distribution reach and expanding its global footprint. Its distribution strategy covers a mix of direct-to-consumer and wholesale channels. Innovative product features such as Skechers Hands Free Slip-ins and Arch Fit Technology remain pivotal to its growth. These strategies have helped establish the company as a key player in the competitive footwear market.
Quarterly Financial and Operational Highlights
Skechers saw a remarkable increase of 15.9% in revenue to $2.35 billion, matching the high end of its guidance. This was driven by strong wholesale growth of 20.6% and a 9.6% rise in direct-to-consumer sales. Regionally, EMEA sales grew by 30%, the Americas by 14%, and the Asia Pacific region by 7%. The diluted EPS of $1.26 reflected a 35.5% increase over the previous year, indicating strong financial health.
Despite its sales success, gross margin slightly dropped to 52.1% compared to 52.9% the previous year. This decline was attributed to competitive pricing adjustments required to boost sales volume. Operating expenses also showed an uptick by 15.2% to $989.6 million, primarily due to marketing and distribution investments.
The company's commitment to campaign efforts, featuring celebrities such as Snoop Dogg, played a crucial role in maintaining its market presence. Moreover, key product innovations emphasized technological advances in their design, leading to favorable market reception.
Looking deeper into the quarterly performance, Skechers pursued several store openings while addressing currency fluctuation challenges that impacted financial outcomes. It opened 140 new stores, with a focus on enhancing supply chain resilience and operational efficiencies, despite environmental and regulatory challenges in markets like China and India.
Looking Forward
The company projects fourth-quarter sales between $2.165 billion and $2.215 billion, with a diluted EPS between $0.70 and $0.75. For the entire fiscal year, revenue is expected to reach $8.925 billion to $8.975 billion, with EPS between $4.20 and $4.25. These figures suggest a cautious, yet optimistic outlook moving forward, considering market dynamics and expansion efforts.
Skechers plans to continue investing in innovative product offerings and expanding its global reach are crucial for maintaining momentum. The upcoming quarters will likely see Skechers maintaining a strong focus on sustainability initiatives and direct-to-consumer sales, vital for driving long-term growth.
