Skechers USA Inc ((SKX)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Skechers’ recent earnings call painted a mixed picture for the company. While it celebrated record sales and robust international growth, challenges in China and increased operating expenses posed significant hurdles. The uncertainty in the global trade environment further complicates the situation.
Record Sales Achievement
Skechers achieved a significant milestone by reporting record sales in the first quarter of 2025, with revenue reaching $2.41 billion, or $2.46 billion on a constant currency basis. This achievement underscores the company’s strong market presence and growth potential.
Strong International Growth
International sales were a major highlight, accounting for 65% of Skechers’ total business. The EMEA region grew by 14%, and The Americas saw an 8.3% increase. Notably, APAC sales, excluding China, grew by 12%, showcasing the brand’s expanding global footprint.
Wholesale and Direct-to-Consumer Growth
Skechers reported a 7.8% increase in wholesale sales and a 6% rise in direct-to-consumer sales year over year. This growth across multiple channels indicates the company’s successful strategy in reaching diverse consumer bases.
Expansion of Retail Footprint
The company ended the quarter with 5,318 stores worldwide, having opened 51 company-owned stores. Skechers plans to open an additional 150 to 170 stores in Q2 2025, signaling its commitment to expanding its retail presence.
Challenges in China and APAC
Sales in China declined by 16%, leading to an overall 2.6% decrease in APAC sales. The challenging macroeconomic environment in China remains a significant concern for the company.
Operating Margin Decrease
Increased operating expenses led to a decrease in operating margin to 11% from 13.3% the previous year. This highlights the financial pressures the company faces despite its sales growth.
Increased Inventory Levels
Inventory levels rose by 30% compared to the previous year, partly due to elongated transit times related to the Suez Canal closure. Managing these inventory levels will be crucial for future profitability.
Uncertainty in Global Trade Environment
The global trade environment remains uncertain, with tariffs affecting production costs. This necessitates strategic adjustments in sourcing and pricing, adding complexity to Skechers’ operational strategy.
Forward-Looking Guidance
Despite the macroeconomic uncertainties, Skechers remains focused on expanding its distribution centers and enhancing its product offerings. The company did not provide specific guidance due to the dynamic environment but expressed confidence in navigating these challenges.
In summary, Skechers’ earnings call reflected a mixed sentiment, with record sales and international growth overshadowed by challenges in China and increased operating expenses. The company’s strategic focus on expansion and adaptation to the uncertain global trade environment will be key to its future success.