• Full-Year Revenue: $9.04 billion, a 13% increase on a constant currency basis.
• Full-Year Earnings Per Share (EPS): $4.40, a 26% increase.
• Gross Margin: 53.2% for the full year.
• Operating Margin: 10.1% for the full year.
• Fourth-Quarter Revenue: $2.21 billion, a 13% increase.
• Fourth-Quarter EPS: $0.86 on a constant currency basis, a 54% increase year over year.
• Domestic Sales Growth: 18% in the fourth quarter.
• International Sales Growth: 10% in the fourth quarter.
• Wholesale Sales Growth: 17% in the fourth quarter.
• Direct-to-Consumer Sales Growth: 8.4% in the fourth quarter.
• Store Count: 5,296 Skechers stores worldwide at quarter end.
• Cash and Investments: $1.38 billion at quarter end.
• Inventory: $1.92 billion, a 26% increase year over year.
• Capital Expenditures: $133.4 million in the fourth quarter.
• Share Repurchase: Approximately 5.2 million shares repurchased during the year.

• Warning! GuruFocus has detected 5 Warning Sign with SKX.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Skechers USA Inc (NYSE:SKX) achieved a record annual sales of over $9 billion on a constant currency basis, marking a 13% increase.
• The company reported a strong gross margin of 53.2% and a double-digit operating margin of 10.1%.
• Skechers USA Inc (NYSE:SKX) expanded its product offerings into new categories such as soccer, basketball, and cricket, leveraging partnerships with world-class athletes.
• The company opened 77 company-owned stores in the fourth quarter, including its first stores in the Philippines and Prague, indicating a strategic expansion.
• Skechers USA Inc (NYSE:SKX) maintained a healthy balance sheet with $1.38 billion in cash, cash equivalents, and investments, and repurchased approximately 5.2 million shares during the year.

Negative Points

• The strengthening of the US dollar resulted in unfavorable foreign currency exchange headwinds, significantly impacting reported results.
• Skechers USA Inc (NYSE:SKX) faced challenges in China, with a reported 11% decline in sales due to a difficult macroeconomic environment.
• The company experienced supply chain disruptions, particularly due to the closure of the Suez Canal, leading to increased in-transit inventory.
• Newly implemented global minimum tax regulations are expected to elevate the company's effective tax rate, impacting net earnings.
• Skechers USA Inc (NYSE:SKX) anticipates headwinds from incremental US tariffs on goods from China, which could affect production costs and pricing strategies.

Q & A Highlights

Q: Can you provide guidance on gross margin expectations for fiscal 2025? A: John Vandemore, CFO, explained that while there are many factors at play, including global minimum tax regulations, they do not anticipate a material change in gross margin overall. The business appears balanced in growth, and while there may be some fluctuations due to tariffs, they expect stability overall.

Q: Is there pressure on operating margins for the year, and what is the outlook for US wholesale growth? A: John Vandemore noted that while there are factors like foreign exchange and China that could impact margins, the goal is to sustain the double-digit operating margin achieved. For US wholesale, they expect to gravitate towards mid-single-digit growth, though opportunities for higher growth exist.

Q: What are the expectations for international growth, and how will the new global minimum tax affect the company? A: Vandemore highlighted that China was a drag on international growth, but other regions performed well. The global minimum tax is expected to increase the effective tax rate, impacting earnings, but they are taking measures to mitigate this.

Q: How is Skechers addressing the challenges in China and the impact of tariffs? A: Vandemore stated that they are actively managing inventory in China and focusing on marketing to spur demand. Regarding tariffs, they plan to adjust production origins, negotiate with vendors, and consider pricing strategies to mitigate impacts.

Q: Can you elaborate on the capital expenditure plans and the long-term margin opportunities? A: Vandemore explained that significant investments are being made in distribution centers in China and the US, which are long-term projects. The focus is on sustaining growth and leveraging investments to improve margins as the business continues to expand.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.