Dive Brief:
- Skechers reported record second-quarter sales of $2.16 billion, up 7.2% year over year, according to a Thursday release.
- DTC sales were up more than 9%, driven by a 41% uptick in the region comprising Europe, the Middle East and Africa. Wholesale sales increased 5.5%, largely due to a 10% rise in the Americas.
- The company is still on track to reach its long-term target of $10 billion in sales by 2026, CFO John Vandemore said in the release. Skechers also authorized a $1 billion share repurchase program “to return cash to shareholders in a disciplined manner.”
Dive Insight:
The robust earnings come after a record first quarter that saw a sales increase of 12.5% to $2.25 billion. Skechers ended the first half of fiscal 2024 with sales up 9.8% year over year to $4.4 billion. The company has reached record sales in its last several quarters.
However, strength in the U.S. wholesale market and DTC sales in Europe was tempered by a slowdown in DTC sales in the U.S. and China, Wedbush analysts led by Tom Nikic said in emailed comments.
The second quarter saw a sluggish 1.4% domestic DTC growth rate year over year “against the year’s toughest compare” of 29% in 2023, Nikic said. He added that Skechers attributed the low numbers to “slowing foot traffic in stores” while adding that “digital traffic improved.”
Meanwhile, China sales growth slowed to 3% in Q2 following four straight quarters of double-digit increases, Nikic said. He noted that Skechers management attributed the lag to lackluster sales on and around June 18, which is the second biggest shopping season in China after Singles Day.
Overall wholesale was up 4%, but “management noted that shipping delays caused by the Red Sea disruption pushed some wholesale shipments out to 2H,” Nikic said. He added that at the end of the second quarter, in-transit inventory was up about 150%, “demonstrating the delays in the supply chain which should result in stronger growth in 2H when the product reaches the market.”
Skechers Chief Operating Officer David Weinberg said in the release that the company was “extremely encouraged by the demand for Skechers product as demonstrated in second half orders, which has led us to raise our full-year outlook for sales and earnings.”
Upcoming product releases and activations for the company include a Skechers x John Deere collaboration launching at the end of July, the August global expansion of the company’s basketball footwear line and the upcoming role of Skechers spokesperson Snoop Dogg as a broadcast commentator in Paris.
