Select a page
Published through Thomas J. Ryan | July 27, 2022 | Feature, SGB Executive
Skechers USA’s sales and earnings exceeded their average in the current quarter, but the company maintained its outlook for the year due to increasing macroeconomic headwinds around the world.
When asked by an analyst on a conference call about the possible influence of an economic slowdown, John Vandemore, chief financial officer, noted that many companies have pointed to a “much more dubious future,” and the doubt is reflected in Skechers. conservative positions.
Vandemore added: “Things are becoming relatively dynamic. We see smart trends in most of our sales problems, especially globally. But we are aware that the environment will make the task a little more complicated for the average consumer. We believe that we will be offering a very intelligent price on our product, as well as the comfort, taste and quality that characterizes us. We believe this is a favorable context in an environment where the economy is under a form of restraint.
David Weinberg, Chief Operating Officer, added: “Historically, as those economic movements happen, for me it’s more about the product than the value. People don’t tend to buy for value if it’s not what they want.
What we provide, and what we provide today with our new entries in add-ons and convenience and making it more comfortable in a wide diversity of categories, gives us opportunities, even in times of slowdown, for other people who are for our products because they have value on the right, but not on the lower end, and brings that quality and convenience with them and their fashion. As in the past, we have the opportunity to take advantage of an unfavorable scenario by providing the right product at the right value. It’s a mix for us.
In the quarter ended June 30, sales rose 12. 4 to $1. 88 billion, beating the company’s forecast for revenue of between $1. 75 billion and $1. 80 billion.
Net revenue declined 34. 2% to $90. 4 million, or 58 cents consistent with participation, basically because transportation prices increased to offset supply chain challenges.
The EPS beat forecasts by 50 cents to cents.
Weinberg said the overall expansion of 12 percent, or 16 percent at constant exchange rates in the quarter, was the result of a buildup in domestic and foreign business of 15 percent and 10 percent, respectively. Excluding China, where operating activities were limited, upd building sales through 20%.
By region, the expansion was driven by increases of 21% in the Americas and 8% in EMEA, which grew by 17% at constant exchange rates. APAC sales remained strong year-over-year, basically due to lockdown measures in China, which began to ease in June and were offset by expansion in other Asia-Pacific markets at most. On a constant currency basis, APAC sales increased by 5%.
The wholesale industry of Skechers in the U. S. The U. S. economy grew 30% due to double-digit innovations in all genres and categories, adding apparel and accessories. Weinberg said: “This reflects strong customer demand and increased product availability. In addition to expansion in the United States, nearly each and every market in the Americas saw double-digit expansion, adding Mexico and Canada. »
The wholesale expansion in EMEA was mainly due to the sales of distributors, specifically in the Middle East, Africa, Scandinavia and Turkey. Currency difficulties partially offset innovations in EMEA due to the weakening of the euro and the continued disruption of shipments to Russia.
ACPA wholesale sales declined primarily due to lockdown measures for much of the quarter in China. India, which faced temporary business closures and lockdown measures in the current quarter of last year, again forged an expansion this year, driven by pent-up demand and took a step forward in product availability. South Korea, Malaysia and suppliers in Australia and New Zealand also saw an improvement.
Weinberg added, “As China continues to handle the effects of COVID, we are confident in the long-term Skechers in this region. “
DTC’s domestic sales declined, basically due to a difficult comparison of retail outlets with last year, partially offset by the expansion of e-commerce. China, which experienced lockdown measures for much of the quarter, recorded a decline in sales at retail and online outlets, innovations were noted compared to the first quarter. Most of the company’s retail outlets in China have reopened, traffic has not returned to pre-closing levels. Almost all other countries have shown innovations.
In the current quarter, 46 company-owned Skechers retail stores were opened, adding 15 large retail stores in the United States, seven in India, and nine in China. Thirty-four locations closed in the quarter, adding five concept retail stores in the U. S. Skechers ended the quarter with 4355 retail stores worldwide, of which 2993 were third-party retail stores, adding 123 that opened in the current quarter.
The rollout of the brand’s newest e-commerce platform continued in the current quarter with the launch of new sites in Belgium, Czech Republic, Hungary, Italy, the Netherlands and Portugal. Two more sites in Europe, two in South America and one in Japan will be unveiled this year. The Skechers Plus loyalty program is expected to expand into overseas markets, with Canada, the United Kingdom, Germany and Spain.
Operating expenses increased 14. 0% and, as a percentage of sales, increased through 50 foundation issues to 39. 8%, compared to 39. 3% last year. . General and administrative expenses increased by $65. 9 million or 12. 9%, mainly due to higher labor, storage and distribution prices and higher rents. The source of operating income decreased 23. 4% to $154. 2 million.
Vandemore said Skechers, in the quarter of the moment, continued to face demanding situations similar to shipment delays, specifically in Asia due to COVID-like countermeasures, but also domestic processing congestion in its distribution centers and retail wholesale partners.
“Our origin chain and logistics groups work diligently to ensure that our products are delivered to our customers and retail outlets and, in the end, succeed in our customers in the most temporary and successful way possible,” Vandemore said. “However, we expect the supply chain to disrupt to continue to restrict our ability to fully meet customer demand and lead to distribution inefficiencies throughout the year. However, we remain confident that our growing operational capacity and disciplined execution will gradually moderate the effect of this dynamic.
For the third quarter of 2022, Skechers expects sales of between $1800 million and $1850 million and EPS of between 70 and 75 cents. In the third quarter of 2021, EPS 66 cents on sales of $1550 million.
For the full year, Skechers expects sales of between $7200 million and $7400 million and EPS between $2. 60 and $2. 70. In 2021, adjusted EPS $2. 59 on sales of $6290 million.
Photo courtesy of Skechers