Skechers U.S.A., Inc. ("Skechers" or the "Company") (NYSE:SKX), The Comfort Technology Company^TM and a global footwear leader, today announced financial results for the second quarter ended June 30, 2024.

Second Quarter Highlights

• Record second quarter sales of $2.16 billion, a 7.2% increase, and constant currency sales of $2.19 billion, an 8.7% increase
• Direct-to-Consumer sales grew 9.2%
• Wholesale sales grew 5.5%
• Diluted earnings per share of $0.91
• New $1 billion share repurchase program

"Skechers achieved a new second quarter sales record of $2.16 billion driven by the strong demand for our diverse portfolio of comfortable and innovative footwear," said David Weinberg, Chief Operating Officer of Skechers. "The growth resulted from sales increases of 9% in Direct-to-Consumer and 6% in Wholesale, as well as increases of 7% internationally and 8% domestically. We continued to achieve growth across all regions including 7% in the Americas; 14% in Europe, the Middle East and Africa; and 2% in Asia Pacific. International direct-to-consumer and domestic wholesale were particularly bright spots, increasing 15% and 14% respectively. These international increases are noteworthy given substantial headwinds from foreign currency, a lackluster 6-18 in China, and supply chain disruptions related to the Suez Canal crisis. That said, we are 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. As we look to the remainder of the year and beyond, we remain focused on enhancing our global infrastructure, managing inventory levels, and driving efficiencies to achieve profitable growth."

"This quarter marked the 25th anniversary of our initial public offering. As we celebrated this event, we also achieved record second quarter sales and further solidified our position as the third largest athletic footwear company in the world by continuing to deliver comfortable, and innovative footwear worldwide," began Robert Greenberg, Chief Executive Officer. "I couldn't be prouder of the accomplishments of the entire Skechers organization and appreciative of our strong partnerships with our customers and growing roster of elite ambassadors, such as the recently signed Philadelphia 76ers basketball star Joel Embiid, as well as collaborations with distinguished brands such as John Deere. Team Skechers now includes numerous athletes competing on global stages, including Golden Boot winner, Euro Cup finalist and Captain of the England football team, Harry Kane; recently announced Skechers ambassador and 2022-2023 NBA most valuable player Joel Embiid, who is playing for the United States; British golfer Matt Fitzpatrick; Canadian golfer Brooke Henderson; Spanish race walker Diego Garcia and newly signed American beach volleyball players Andy Benesh and Miles Partain, who will be playing in Skechers branded uniforms. This diverse team of world class athletes and celebrities, including Martha Stewart and Snoop Dogg, drive awareness and purchase intent for Skechers. Our first commercial featuring Harry Kane aired during the second quarter, and we recently completed several new campaigns featuring him alongside former UK footballer and Skechers ambassador Jamie Redknapp and superstar Snoop Dogg, who will be a broadcast commentator in Paris. Additionally, our football footwear launched globally this month, Skechers x John Deere is launching next month, and basketball footwear will be released globally in August. We are committed to strategically delivering comfort footwear and apparel for all walks of life, supporting our vast offering with targeted marketing, and building our in-store presence globally."

Second quarter sales increased 7.2% as a result of a 6.9% increase internationally and a 7.7% increase domestically. Direct-to-Consumer increased 9.2% and Wholesale increased 5.5%. On a constant currency basis, sales increased 8.7%.

Wholesale sales grew $59.1 million, or 5.5%, including increases in AMER of 10.3% and EMEA of 3.9%, partially offset by a decrease in APAC of 2.6%. Wholesale volume increased 6.4% and average selling price declined 0.8%.

Direct-to-Consumer sales grew $86.0 million, or 9.2%, including increases in EMEA of 40.6%, AMER of 4.1%, and APAC of 5.8%. Direct-to-Consumer volume increased 10.2% and average selling price decreased 1.0%.

Gross margin was 54.9%, an increase of 220 basis points, primarily due to lower costs per unit, driven by lower freight and favorable mix of Direct-to-Consumer volumes.

Earnings from operations decreased $11.2 million, or 5.1%, to $206.5 million.

Net earnings were $140.3 million and diluted earnings per share were $0.91 compared with prior year net earnings of $152.8 million and diluted earnings per share of $0.98.

In the second quarter, the Company's effective income tax rate was 19.7%.

Year-to-date sales increased 9.8%, reflecting an 11.1% increase in international sales and a 7.8% increase domestically. Direct-to-Consumer increased 12.7% and Wholesale increased 7.9%. On a constant currency basis, sales increased 11.0%.

Wholesale sales increased $186.2 million, or 7.9%, due to increases in AMER of 8.0%, EMEA of 8.4%, and APAC of 6.7%. Wholesale volume increased 8.3% and average selling price declined 0.4%.

Direct-to-Consumer sales grew $208.6 million, or 12.7%, due to increases in EMEA of 48.3%, APAC of 10.7%, and AMER of 6.8%. Direct-to-Consumer volume increased 12.5% and average selling price increased 0.2%.

Gross margin was 53.7%, an increase of 290 basis points, due to lower costs per unit, driven by lower freight.

Operating expenses increased $262.9 million or 16.5%. As a percentage of sales, operating expenses increased 240 basis points to 42.2%. Selling expenses increased $76.7 million or 24.3%, primarily due to higher global demand creation expenditures. General and administrative expenses increased $186.3 million or 14.5%, primarily driven by labor and increased facility costs, including rent and depreciation.

Earnings from operations increased $64.0 million to $505.3 million, resulting in an operating margin of 11.5%.

Net earnings were $346.9 million and diluted earnings per share were $2.24, an increase of 12.0% over the prior year.

The Company's effective income tax rate was 19.3%.

Balance Sheet

Cash, cash equivalents and investments totaled $1.55 billion, an increase of $161.4 million, or 11.6% from December 31, 2023, due to earnings and proceeds from borrowings of $63.9 million, partially offset by capital expenditures of $169.5 million and $120.0 million of share repurchases.

Inventory was $1.51 billion, a decrease of $10.9 million or 0.7% from December 31, 2023.

Share Repurchase

During the second quarter, the Company repurchased 0.9 million shares of its Class A common stock at a cost of $60.0 million.

Outlook

For the third quarter of 2024, the Company believes it will achieve sales between $2.30 and $2.35 billion and diluted earnings per share of between $1.10 and $1.15. Further, the Company believes that for the fiscal year 2024, it will achieve sales between $8.875 and $8.975 billion and diluted earnings per share of between $4.08 and $4.18.

Second Quarter 2024 Conference Call

About Skechers U.S.A., Inc.

SKECHERS U.S.A., INC. AND SUBSIDIARIES
Reconciliation of GAAP Earnings Financial Measures to Corresponding Non-GAAP Financial Measures
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Constant Currency Adjustment (Non-GAAP Financial Measure)

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