Dive Brief:
- Skechers reported third quarter sales of $2.35 billion, a nearly 16% increase from the prior year and a new record, the company said in a Thursday earnings announcement. Net earnings were $209.3 million, up 26% from $166 million year over year.
- Direct-to-consumer sales grew 9.6% to $931.7 million, led by a 28% rise in DTC in the company’s Europe, Middle East and Africa region. Total wholesale sales grew 21% to $1.4 billion for the quarter that ended Sept. 30 with the company’s Americas region posting nearly 22% growth in that segment.
- Skechers founder and CEO Robert Greenberg attributed the company’s current success in part to its partnerships with brand ambassadors and professional athletes. The company’s partner roster includes Snoop Dogg and Philadelphia 76ers basketball player Joel Embiid, who sported Skechers during the Paris Olympics this summer. Skechers also recently signed TV host Howie Mandel.
Dive Insight:
For the first nine months of the year, Skechers has achieved nearly $6.8 billion sales, a 12% increase from a year ago. The latest results support the company’s confidence in its previously stated goal of $10 billion in sales by 2026, Chief Financial Officer John Vandemore said.
Greenberg also credited the company’s Q3 growth and performance to a good value proposition and a strong, consistent omnichannel presence through DTC and through a network of key retailers.
DTC in particular “continues to be a key indicator of consumer sentiment,” Chief Operating Officer, David Weinberg said during an earnings call, according to a transcript. Weinberg said domestic DTC sales improved 3.7% on top of last year’s 14% increase due chiefly to strong e-commerce growth as more consumers chose to shop online.
“As more consumers view our comfort features as essential, the importance of newness and advancing our designs with our signature technologies across core and new product offerings remains vital,” Greenberg said in an earnings announcement. Greenberg said the company is raising consumer product awareness with technology-focused marketing campaigns and through partnerships with brand ambassadors and professional athletes.
Skechers is still in the early stages of advancing deeper into team sports through its ongoing introduction of court, soccer, basketball and cleated footwear offerings, and by growing its roster of athletes who compete in Skechers shoes, Greenberg said. In August, the company also introduced a footwear collection in collaboration with John Deere, the farm and construction equipment maker.
For Q4, the company’s outlook is for sales ranging from $2.17 billion and $2.22 billion. For the full year, Skechers expects to achieve sales ranging from about $8.93 billion to $8.98 billion, up slightly from earlier guidance of $8.88 billion to $8.98 billion.
That guidance could be conservative, given the company’s overall performance, TD Cowen analysts led by John Kernan said in a Friday note. The analysts forecast that Skechers’ wholesale channel is likely to see positive mid-to-high teens year over year growth in Q4, while DTC performance is expected to be similar to Q3.
Additionally, the analysts said, while Skechers’ average selling prices could support sales and gross margin in each channel, DTC appears to be moderating, especially internationally, from an omnichannel same store sales perspective considering strong door growth over the previous 24 months for both domestic and international direct to consumer sales.
