Skechers USA Inc ((SKX)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Skechers USA Inc. recently held its earnings call, showcasing a robust overall performance with record revenue and EPS growth. This impressive outcome was largely fueled by the company’s strategic expansion into new markets and regions. However, despite these achievements, challenges such as declining sales in China and the negative impact of foreign exchange rates were noted as areas of concern.
Record Revenue and EPS Growth
Skechers reported record sales of over $9 billion, marking a 13% increase from the previous year. This impressive growth translated into a 26% rise in diluted earnings per share, reaching $4.40. This demonstrates the company’s ability to capitalize on market opportunities and effectively manage its operations.
Strong Fourth Quarter Performance
The fourth quarter proved to be a benchmark period for Skechers, with sales hitting $2.24 billion. Earnings per share for the quarter were reported at $0.86. This success was driven by a 17% growth in wholesale operations and an 8% rise in direct-to-consumer sales, highlighting the company’s strength across different business segments.
Expansion into New Markets
Skechers’ entry into the soccer and basketball markets, along with the introduction of cricket footwear and apparel in India, represents a strategic push into new sports territories. This move is complemented by collaborations with elite athletes globally, positioning the brand as a versatile player in the sports industry.
EMEA Region Growth
A significant highlight was the 25% increase in sales within the EMEA region, attributed to strong performances across nearly all markets. This growth reflects the effectiveness of Skechers’ regional strategies and its ability to leverage market-specific opportunities.
Healthy Balance Sheet and Share Repurchase
Skechers maintains a healthy balance sheet, with $1.38 billion in cash reserves. The company also executed a share repurchase of approximately 5.2 million shares, indicating confidence in its financial stability and future prospects.
Decline in China Sales
One of the challenges noted was the 11% decline in sales in China during the fourth quarter. This decrease is attributed to challenging macroeconomic conditions, suggesting potential hurdles in this key market.
Foreign Exchange Impact
Unfavorable foreign currency changes led to a $34.7 million impact on other expenses in the fourth quarter. This highlights the vulnerability of multinational operations to currency fluctuations.
Increased Inventory Levels
Inventory levels increased by 26% year-over-year, primarily due to elevated in-transit inventory in the EMEA region caused by shipping delays. This situation underscores the ongoing global supply chain challenges affecting businesses worldwide.
Forward-Looking Guidance
Looking ahead, Skechers provided guidance for fiscal year 2025, projecting sales between $9.7 billion and $9.8 billion. Despite potential headwinds from foreign currency fluctuations and new tax regulations, earnings per diluted share are expected to range from $4.30 to $4.50. The company plans significant capital expenditures, mainly to expand distribution centers in the U.S. and China, reflecting its commitment to growth.
In conclusion, Skechers USA Inc.’s earnings call depicted a company on a strong trajectory, marked by record financial achievements and strategic market expansions. While challenges such as declining China sales and foreign exchange impacts persist, the company’s forward-looking guidance suggests continued optimism and strategic investments for future growth.
