Executive Summary

Skechers delivered record Q1 2024 sales of $2.25B (+12.5% YoY) and diluted EPS of $1.33 (+30% YoY), with gross margin at 52.5% (+360 bps) and operating margin at 13.3% (+210 bps), driven by strength in both Wholesale (+9.8%) and Direct‑to‑Consumer (+17.3%) and broad-based regional growth (EMEA +17%, APAC +16%, Americas +8%) .
Management raised full‑year 2024 guidance: sales to $8.725–$8.875B (from $8.60–$8.80B) and EPS to $3.95–$4.10 (from $3.65–$3.85), citing stronger-than-expected demand and wholesale recovery; Q2 sales guided to $2.175–$2.225B and EPS to $0.85–$0.90 given heavier demand-creation spending in Q2 .
Domestic wholesale returned to growth (+7.7%); international wholesale grew 10.9%; DTC rose 24.1% internationally and 8.0% domestically, underscoring category leadership in comfort technologies (notably Hands‑Free Slip‑ins) and robust omni-channel execution .
Mix and lower freight drove margin gains; management expects freight tailwinds to fade post-Q1, with future gross margin support from product/channel mix and DTC growth; elevated marketing in Q2 aims to cement Skechers’ ownership of Slip‑ins technology, impacting quarterly EPS phasing but supporting full‑year performance .

What Went Well and What Went Wrong

What Went Well
- Broad-based growth with record quarterly sales and strong profitability: “Record sales of $2.25 billion, EPS of $1.33, gross margins of 52.5% and an operating margin of 13.3%” (COO) . Wholesale rebounded (+9.8%) with domestic wholesale +7.7%, and DTC grew +17.3% .
- International strength with EMEA +17.4%, APAC +15.9%, China +13.3%; international represented ~65% of total sales (CFO/COO remarks) .
- Guidance raised for FY24 (sales and EPS), reflecting stronger order books and robust sell-through; management reiterates confidence in $10B 2026 sales goal .
What Went Wrong
- Operating expenses deleveraged 150 bps YoY to 39.2% on higher marketing, labor, and facility costs (selling +50 bps; G&A +100 bps), partially offsetting gross margin gains .
- Q2 EPS guided below Q1 due to heavier demand creation spending timing (seasonal advertising cadence; intention to “own” Slip‑ins technology in consumers’ minds) .
- India remains a watch item: near-term regulatory uncertainty around import restrictions and local manufacturing capacity constraints; management remains long‑term optimistic .

Financial Results

Overall performance (sequential comparison)

Metric	Q3 2023	Q4 2023	Q1 2024
Revenues ($USD Millions)	$2,025.0	$1,960.9	$2,251.6
Gross Margin %	52.9%	53.1%	52.5%
Operating Margin %	10.5%	6.6%	13.3%
Diluted EPS ($)	$0.93	$0.56	$1.33

Q1 YoY comparison

Metric	Q1 2023	Q1 2024
Sales ($USD Millions)	$2,001.9	$2,251.6
Gross Profit ($USD Millions)	$978.6	$1,181.6
Gross Margin %	48.9%	52.5%
Operating Expenses ($USD Millions)	$755.0	$882.8
Operating Margin %	11.2%	13.3%
Net Earnings Attributable to SKX ($USD Millions)	$160.4	$206.6
Diluted EPS ($)	$1.02	$1.33

Non-GAAP constant currency (Q1 2024 vs Q1 2023)

Constant currency Q1 2024: Sales $2,269.8M; EPS $1.37 vs reported $1.33; illustrates FX headwind in the quarter .

Segment breakdown (Q1 YoY)

Segment	Q1 2023 Sales ($M)	Q1 2024 Sales ($M)	YoY %	Gross Margin Q1 2023	Gross Margin Q1 2024
Wholesale	$1,294.6	$1,421.7	9.8%	39.6%	44.7%
Direct-to-Consumer	$707.3	$829.9	17.3%	66.0%	65.7%
Total	$2,001.9	$2,251.6	12.5%	48.9%	52.5%

Geography/channel (Q1 YoY)

Geography/Channel	Q1 2023 ($M)	Q1 2024 ($M)	YoY %
Domestic Wholesale	$441.9	$476.0	7.7%
Domestic Direct-to-Consumer	$299.0	$322.8	8.0%
Total Domestic	$740.9	$798.8	7.8%
International Wholesale	$852.6	$945.7	10.9%
International Direct-to-Consumer	$408.4	$507.1	24.1%
Total International	$1,261.0	$1,452.8	15.2%
EMEA	$534.5	$627.6	17.4%
APAC	$521.5	$604.5	15.9%
Americas	$945.9	$1,019.5	7.8%
China Sales	$282.0	$319.5	13.3%
Distributor Sales	$103.9	$125.9	21.2%

KPIs and balance sheet

KPI	Q4 2023	Q1 2024
Total Stores (Company + 3rd party)	5,168	5,203
Company‑Owned Domestic Stores	563	565
Company‑Owned International Stores	1,085	1,106
Distributor/Licensee/Franchise Stores	3,520	3,532
Cash, Cash Equivalents & Investments	$1.39B (at 12/31/23)	$1.25B (at 3/31/24)
Inventory	$1.53B (12/31/23)	$1.36B (3/31/24)
Share Repurchases	$60M in Q4	$60M in Q1

Drivers and context

Margin expansion was primarily due to lower unit costs (freight normalization) and higher ASPs/product mix; opex rose with brand demand creation and higher labor/facility costs .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Sales	FY 2024	$8.60–$8.80B	$8.725–$8.875B	Raised
Diluted EPS	FY 2024	$3.65–$3.85	$3.95–$4.10	Raised
Sales	Q2 2024	—	$2.175–$2.225B	New
Diluted EPS	Q2 2024	—	$0.85–$0.90	New
Effective Tax Rate	FY 2024	20%–21%	19%–20%	Lowered
Capital Expenditures	FY 2024	$350–$400M	$325–$375M	Lowered
Long‑term Target	2026	$10B sales goal	$10B sales goal reaffirmed	Maintained

Management also noted Q2 EPS will be lower sequentially due to timing of demand creation spend focused on brand building and Slip‑ins technology; spend benefits the full‑year trajectory .

Earnings Call Themes & Trends

Topic	Q3 2023 (Q‑2)	Q4 2023 (Q‑1)	Q1 2024 (Current)	Trend
Wholesale recovery/order book	Wholesale −1.4% YoY; EMEA congestion at some retailers .	Wholesale −8.3%; mgmt optimistic on H1’24 bookings; domestic restock expected .	Wholesale +9.8%; domestic +7.7%; strong order flow and earlier deliveries; mid‑to‑high single‑digit wholesale growth for year .	Improving momentum
DTC momentum	DTC +23.8% .	DTC +20.3%; >50% of sales for first time .	DTC +17.3%; intl +24.1%, US +8% .	Strong, moderating growth
Gross margin drivers	52.9% on mix and lower freight .	53.1% on mix and lower freight .	52.5% on lower freight and tech‑heavy mix; freight tailwinds fade post‑Q1 .	Sustained high GM; freight normalization
China	+18% to $267.6M .	+22% in Q4; full‑year +15% .	$319.5M (+13.3%); cautious optimism on runway .	Recovery continues
Supply chain/logistics	—	New DCs (India, Canada, Panama) to cut time/cost .	Panama DC to be online Q2; company‑operated DC in Colombia; second China DC capex ; Red Sea impact limited .	Capacity build; minor disruptions
Marketing/demand creation	Higher demand creation spend y/y .	Elevated selling expense; over‑investing to build tech brands .	Heaviest spend in Q2 to own Slip‑ins technology narrative .	Proactive brand investment
India/regulatory	—	New Mumbai DC; shipment delays in 2023 .	Regulatory uncertainty on imports; building local mfg capacity; long‑term positive .	Watch item; long‑term upside
Product/technology	—	Consumers trading up to comfort tech; mix aiding margins .	Slip‑ins, Arch Fit, Max Cushioning; tech increasingly pervasive; wholesale catching up .	Deepening tech adoption

Management Commentary

“We saw growth of 17% in our Direct‑to‑Consumer segment and 10% in Wholesale… domestic wholesale business returned to growth, increasing 8% over last year.” – David Weinberg, COO .
“Wholesale sales increased 9.8%… seeing a recovery in domestic wholesale… International wholesale sales also returned to growth… inventory congestion… abated.” – John Vandemore, CFO .
“Gross margin was 52.5%, up 360 bps… driven by lower freight costs and a favorable product mix as consumers sought out our higher‑margin technology‑infused products.” – CFO .
“For the second quarter, we expect… EPS $0.85–$0.90… down slightly… due primarily to the timing of demand creation spending… critical to driving growth on a full‑year basis.” – CFO .
“We remain confident in our objective of achieving $10 billion in sales by 2026.” – CFO .

Q&A Highlights

Domestic wholesale rebound: Stronger-than-expected rebound driven by broader embrace of comfort technologies and earlier shipments; expectation for similar domestic wholesale growth in Q2 with timing variability around back‑to‑school .
Gross margin outlook: Freight tailwind largely exhausted after Q1; forward GM supported by product/channel mix and DTC outgrowth; distributor growth could modestly dilute GM but benefits operating margin .
Marketing cadence: Q2 is peak demand‑creation quarter (several hundred bps higher than average) to cement Slip‑ins brand ownership; benefits accrue through H2 .
China trajectory: Continued recovery with double‑digit growth; ample runway as newer tech products roll out; second DC in China targeted to improve efficiency (start‑up costs mainly 2025–2026) .
ASP/units: 2024 growth to be more unit‑driven; modest ASP lift from mix as consumers choose higher‑value tech products .

Estimates Context

We attempted to retrieve S&P Global consensus for Q1 2024 and forward periods, but S&P Global access limits prevented retrieval at this time. As a result, we cannot quantify beats/misses versus Wall Street consensus for revenue/EPS in this report (S&P Global consensus data unavailable due to request limit) [SPGI error in tool].

Management indicated results exceeded internal expectations and drove a full‑year guidance raise, but that is not a substitute for Street consensus comparisons .

Key Takeaways for Investors

Momentum inflection: Wholesale recovery combined with sustained DTC strength drove record Q1 revenue and margin expansion; broad geography participation de‑risks the growth profile .
Guidance raised: FY24 sales and EPS both raised; Q2 EPS guide reflects upfront brand spend to solidify tech leadership, supporting full‑year numbers despite quarterly phasing .
Margin quality: Freight tailwinds fade, but product/channel mix and DTC outgrowth should support structurally higher gross margins; watch for distributor mix effects on GM but favorable OM .
International engine: EMEA/APAC are key growth drivers; China recovery remains intact; India is a medium‑term opportunity pending regulatory clarity and local capacity build .
Capacity/readiness: New DCs (Panama Q2, Colombia 2024, second China DC) enhance logistics and scalability ahead of peak seasons and long‑term growth .
Tech differentiation: Hands‑Free Slip‑ins, Arch Fit, Max Cushioning continue to drive mix and pricing power; proactive marketing aims to entrench Skechers’ tech brand equity .
Capital allocation: Share repurchases continue; capex trimmed to $325–$375M while funding growth priorities; strong liquidity preserved .

Additional Notes

Q1 2024 outperformed the Q1 guidance issued on Feb 1: actual sales $2.252B vs $2.175–$2.225B; EPS $1.33 vs $1.05–$1.10, reflecting stronger demand and wholesale rebound .
Store base expanded to 5,203 (+35 QoQ), with 147 openings and 112 closures across company-owned and partner doors in Q1 .

Citations

Q1 2024 8‑K press release and exhibits .
Q1 2024 earnings call transcript (prepared remarks and Q&A) .
Q4 2023 8‑K press release and Q4 2023 earnings call transcript for prior‑quarter context and initial FY24/Q1 guidance .
Q3 2023 8‑K press release for two‑quarters‑back trend context .

SKECHERS USA INC (SKX)·Q1 2024 Earnings Summary