Skechers U.S.A., Inc. reported profits grew 13.9 percent in the fourth quarter as sales advanced 12.8 percent, thanks to an 18.0 percent jump domestically and a 9.8 percent increase internationally. Sales topped guidance but earnings missed due to currency headwinds.

Full Year 2024 Highlights

  • Sales of $8.97 billion, a year-over-year increase of 12.1 percent; sales of $9.04 billion on a constant-currency basis, a year-over-year increase of 13.0 percent;
  • Wholesale sales grew 13.2 percent;
  • Direct-to-Consumer (DTC) sales grew 10.7 percent; and
  • Diluted earnings per share of $4.16, a year-over-year increase of 19.2 percent; diluted earnings per share on a constant-currency basis of $4.40, a year-over-year increase of 26.1 percent.

Fourth Quarter 2024 Highlights

  • Sales of $2.21 billion, a year-over-year increase of 12.8 percent;
  • Wholesale sales grew 17.5 percent;
  • DTC sales grew 8.4 percent;
  • Diluted earnings per share of $0.65, a year-over-year increase of 16.1 percent; diluted earnings per share on a constant-currency basis of $0.86, a year-over-year increase of 53.6 percent;
  • Repurchased $120.0 million of Class A common stock.

“We delivered record full-year sales of $8.97 billion in 2024, or $9.04 billion on a constant-currency basis, reflecting the continued robust global consumer demand supported by effective marketing campaigns,” began David Weinberg, chief operating officer of Skechers. “The year ended with a strong holiday season that enabled record fourth-quarter sales of $2.21 billion. Quarterly sales reflect 17 percent growth in Wholesale and 8 percent in direct-to-consumer, as well as 18 percent domestically and 10 percent internationally.

“By region, sales grew 14 percent in the Americas, 25 percent in the EME, and 3 percent in APAC, despite continued headwinds in China. We saw particularly strong results in the United States, across Europe, in India, and in Japan.

“Though challenging market and shipping conditions persisted in a few countries, the strength of our business is attributable to our differentiated market position, a highly attractive value proposition that combines comfort, innovation, style and quality at an attainable price. We continue to advance our product innovation with comfort technologies across the portfolio, the latest example of which is our Skechers Cricket footwear in India. Additionally, we remain committed to investing in our operations, including the expansion of our distribution centers in North America, China and Europe, as well as delivering an exceptional customer experience in direct-to-consumer, such as with the opening of our first experiential performance store in Edmonton.”

Robert Greenberg, chief executive officer of Skechers, added, “Our 2024 record sales were driven by a strong response to our comfort technology products and the outstanding execution of our talented and dedicated team in developing, marketing and managing the strategic allocation of our footwear, apparel and accessories worldwide. The flexibility, determination and creative spirit of the Skechers organization is unparalleled.

“Our innovative comfort business closely aligns with the needs of consumers of all ages, genders, activities, and professions who are embracing our lifestyle and performance product offering. The global demand for our business is a true testament to our ability to continuously evolve our diverse product portfolio and effectively create excitement for our innovations through powerful marketing campaigns.

“The success of our Skechers Hands Free Slip-ins during the holiday period was fueled in part by campaigns featuring Howie Mandel and Martha Stewart, among others. In our Performance Division, in 2024 we expanded our team of athletes with noted soccer players across Europe, Asia and South America, and NBA and WNBA basketball players, including Philadelphia 76ers’ Joel Embiid, LA Sparks’ Rickea Jackson, and most recently Charlotte Hornets’ Josh Green — all of whom have sought out Skechers for our comfort that performs.

“While the lifestyle division, with our many innovative features, remains a key sales driver, we are committed to ensuring athletes at all levels can comfortably excel, and we believe our performance division with basketball, soccer, golf, running, and pickleball footwear also has tremendous growth opportunity globally. We are confident in our strategic product, marketing and operational plans executed by our dedicated team will result in notable achievements and continued growth in the coming year,” concluded Robert Greenberg.

Fourth Quarter 2024 Financial Results
Fourth quarter sales increased 12.8 percent to $2.21 billion as a result of an 18.0 percent increase domestically and a 9.8 percent increase internationally. Wholesale increased 17.5 percent and DTC increased 8.4 percent. On a constant currency basis, sales increased 14.1 percent.

Wholesale sales grew $168.1 million, or 17.5 percent, including increases in AMER of 21.9 percent, EMEA of 21.7 percent, and APAC of 4.6 percent. Wholesale volume increased 18.1 percent and average selling price declined 0.6 percent.

DTC sales grew $83.4 million, or 8.4 percent, including increases in AMER of 7.6 percent, EMEA of 32.7 percent, and APAC of 2.5 percent. DTC volume increased 9.7 percent, and the average selling price declined 1.2 percent.

Gross margin was 53.3 percent, an increase of 20 basis points, due to favorable channel mix.

Operating expenses increased $101.7 million, or 11.2 percent, and as a percentage of sales decreased 70 basis points to 45.8 percent. Selling expenses increased $14.2 million, or 7.7 percent, and as a percentage of sales decreased 40 basis points to 8.9 percent. The increase was primarily due to demand creation expenditures, which improved as a percentage of sales. General and administrative expenses increased $87.5 million, or 12.0 percent, and as a percentage of sales decreased 30 basis points to 36.9 percent. Labor and facility costs, including rent and depreciation, primarily drove increased expenses.

Earnings from operations increased $35.2 million, or 27.0 percent, to $165.5 million.

Net earnings attributable to Skechers were $99.3 million, and diluted earnings per share were $0.65 compared with prior year net earnings of $87.2 million and diluted earnings per share of $0.56. The current year was impacted by unfavorable foreign currency exchange rates. On a constant currency basis, diluted earnings per share were $0.86, or an increase of 53.6 percent.

The company’s effective income tax rate was 11.8 percent in the fourth quarter. Compared to the prior year, the decrease was due to a favorable mix of earnings in lower tax jurisdictions and impacts from foreign currency losses.

In reporting third-quarter results, Skechers had forecasted that sales would arrive between $2.165 and $2.215 billion for the fourth quarter and diluted earnings per share between 70 cents and 75 cents.

“Skechers delivered exceptional results in 2024 and exceeded our expectations on a constant currency basis with full-year sales of $9.04 billion and earnings per share of $4.40,“ stated John Vandemore, chief financial officer of Skechers. “Rooted in our innovative comfort technology products and compelling value proposition, our financial performance illustrates the strength of our global diversification and compelling product offering.”

Full Year 2024 Financial Results
Full-year sales increased 12.1 percent to $8.97 billion, reflecting 12.1 percent increases in both international and domestic sales. Wholesale increased 13.2 percent and DTC increased 10.7 percent. On a constant-currency basis, sales increased 13.0 percent.

Wholesale sales increased $595.7 million, or 13.2 percent, due to increases in AMER of 14.5 percent, EMEA of 16.7 percent, and APAC of 5.7 percent. Wholesale volume increased 13.7 percent, and average selling price declined 0.4 percent.

DTC sales grew $373.4 million, or 10.7 percent, due to increases in EMEA of 38.3 percent, AMER of 6.6 percent, and APAC of 8.0 percent. DTC volume increased 11.2 percent and average selling price declined 0.5 percent.

Gross margin was 53.2 percent, an increase of 120 basis points, due to lower costs per unit, driven by lower freight.

Operating expenses increased $495.5 million or 14.7 percent. As a percentage of sales, operating expenses increased 100 basis points to 43.1 percent. Selling expenses increased $123.7 million or 18.3 percent, primarily due to higher global demand creation expenditures. General and administrative expenses increased $371.8 million or 13.8 percent, primarily driven by labor and facility costs, including rent and depreciation.

Earnings from operations increased $119.5 million to $904.3 million, resulting in an operating margin of 10.1 percent.

Net earnings attributable to Skechers were $639.5 million and diluted earnings per share were $4.16, an increase of 19.2 percent over the prior year. The current year was impacted by unfavorable foreign currency exchange rates. On a constant currency basis, diluted earnings per share were $4.40, or an increase of 26.1 percent.

The company’s effective income tax rate was 16.9 percent. Compared to the prior year, the decrease was due to a favorable mix of earnings in lower tax jurisdictions, the release of certain allowances and other provision adjustments.

Balance Sheet
Cash, cash equivalents and investments totaled $1.38 billion, a decrease of $4.8 million, or 0.3 percent from December 31, 2023, due to capital expenditures of $416.8 million and $330.1 million share repurchases, partially offset by earnings.

Inventory was $1.92 billion, an increase of $394.0 million or 25.8 percent from December 31, 2023, due to growth in our business, which included elevated merchandise in transit, partially attributable to the Suez Canal disruption.

Share Repurchases
During the fourth quarter, the company repurchased 1.9 million shares of its Class A common stock at a cost of $120.0 million. In 2024, the company repurchased 5.2 million shares of its Class A common stock at a cost of $330.1 million. As of December 31, 2024, $789.9 million remained available under the company’s share repurchase program.

Outlook
For the fiscal year 2025, the company believes it will achieve sales between $9.70 billion and $9.80 billion and diluted earnings per share between $4.30 and $4.50. The company believes that for the first quarter of 2025, it will achieve sales between $2.40 billion and $2.43 billion and diluted earnings per share between $1.10 and $1.15. The company believes the income tax rate for fiscal year 2025 will be between 22 percent and 23 percent, reflecting the impact of global minimum tax regulations. Further, the company believes that total capital expenditures will be between $600 million and $700 million in 2025, which includes investment in expanding its distribution centers in the U.S. and China for future growth.

Image courtesy Skechers