Executive Summary

Q2 delivered record second‑quarter sales of $2.16B (+7.2% YoY) and 54.9% gross margin (+220 bps YoY), but revenue came in slightly below company Q2 guidance ($2.175–$2.225B) due to FX and shipment delays into EMEA; EPS of $0.91 was above Q2 EPS guidance ($0.85–$0.90) on strong gross margin mix .
Management raised FY24 guidance to $8.875–$8.975B sales and $4.08–$4.18 EPS (from $8.725–$8.875B and $3.95–$4.10), citing stronger wholesale order visibility and continued international DTC momentum; Q3 guided to $2.30–$2.35B sales and $1.10–$1.15 EPS .
Strategic highlights: new $1B share repurchase authorization (3 years), DTC topped $1B in a quarter for the first time, and ongoing category/athlete expansion (football, global basketball rollout in August; John Deere work/outdoor collection) to support brand demand creation .
Key watch items for 2H: normalization of Europe shipments post-Red Sea/Suez disruptions, FX volatility, domestic store traffic softness offset by e‑commerce, and freight spot rate risk in 2H (partly muted by contracted rates) .

What Went Well and What Went Wrong

What Went Well
- “Record second quarter sales of $2.16 billion driven by strong demand…,” with DTC +9.2% and Wholesale +5.5%; international +6.9% and domestic +7.7% .
- Gross margin expanded 220 bps to 54.9%, primarily from lower freight and favorable DTC mix; wholesale gross margin up 370 bps YoY to 43.9% .
- FY24 guidance raised on “better visibility” in back‑half order books, led by domestic wholesale and improving European flows; Q3 outlook introduced at $2.30–$2.35B and $1.10–$1.15 EPS .
What Went Wrong
- Revenue landed just under company Q2 guidance low end given “severe foreign currency exchange headwinds” and Europe shipment delays; constant‑currency sales +8.7% .
- Operating expense deleverage: opex +340 bps YoY (selling +160 bps on demand creation spend; G&A +180 bps on labor/facilities), compressing operating margin to 9.6% (‑120 bps YoY) .
- China: growth moderated around the 6/18 event amid heightened promotion and FX; APAC wholesale fell 2.6% while China sales grew only 3.4% YoY (cc growth roughly double reported) .

Financial Results

Headline metrics (sequential trend)

Metric	Q4 2023	Q1 2024	Q2 2024
Sales ($B)	$1.961	$2.252	$2.158
Gross Margin %	53.1%	52.5%	54.9%
Operating Margin %	6.6%	13.3%	9.6%
Diluted EPS ($)	$0.56	$1.33	$0.91

Q2 2024 YoY and vs guidance

Metric	Q2 2023	Q2 2024	YoY Δ	Company Q2 Guidance (given in Q1)
Sales ($B)	$2.013	$2.158	+7.2%	$2.175–$2.225
Diluted EPS ($)	$0.98	$0.91	−7.1%	$0.85–$0.90

Consensus vs actual: S&P Global consensus data were unavailable due to temporary access limits; management noted results “were below expectations” on reported currency but in line on a constant‑currency basis, with CC EPS ~$0.97 . Values retrieved from S&P Global were unavailable at this time.*

Segment performance (sequential trend)

Segment	Q4 2023	Q1 2024	Q2 2024
Wholesale Sales ($B)	$0.963	$1.422	$1.132
Wholesale Gross Margin %	40.9%	44.7%	43.9%
DTC Sales ($B)	$0.998	$0.830	$1.026
DTC Gross Margin %	64.9%	65.7%	67.0%

Regional highlights (Q2 YoY)

Region	Q2 2023 Sales ($M)	Q2 2024 Sales ($M)	YoY Δ
Americas	$1,027.0	$1,100.9	+7.2%
EMEA	$433.3	$492.5	+13.7%
APAC	$552.2	$564.2	+2.2%
China	$302.4	$312.7	+3.4%

Select KPIs

KPI	Q1 2024	Q2 2024
DTC sales ($M)	$829.9	$1,025.5
Effective tax rate	19.0%	19.7%
Inventory ($B)	$1.361	$1.515
Cash, cash equivalents & investments ($B)	$1.252	$1.548
Total stores	5,203	5,267

Constant currency (non‑GAAP, informational)

Q2 CC Sales $2.187B (+8.7% YoY); CC EPS $0.97 vs $0.98 LY .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Sales ($B)	FY 2024	$8.725–$8.875 (Apr 25)	$8.875–$8.975 (Jul 25)	Raised
Diluted EPS ($)	FY 2024	$3.95–$4.10 (Apr 25)	$4.08–$4.18 (Jul 25)	Raised
Sales ($B)	Q3 2024	n/a	$2.30–$2.35	New
Diluted EPS ($)	Q3 2024	n/a	$1.10–$1.15	New
Effective tax rate	FY 2024	19–20% (Apr 25)	19–20% (reiterated Jul 25)	Maintained
Capex ($M)	FY 2024	$325–$375 (Apr 25)	$325–$375 (reiterated Jul 25)	Maintained
Share repurchase	Multi‑year	Prior authorization in place	New $1B, 3‑yr program (replaces prior)	Expanded

Note: Q2 actuals vs prior Q2 guidance—Sales below $2.175–$2.225B range; EPS above $0.85–$0.90 range .

Earnings Call Themes & Trends

Topic	Prior 2 Quarters (Q4’23, Q1’24)	Q2’24 (Current)	Trend
Supply chain (Red Sea/Suez)	Improving DC efficiency; European wholesale returning as congestion eased	Transit delays shifted Europe wholesale into 2H; on‑hand EU inventory −40% with in‑transit up >150%	Stabilizing through 2H as flows normalize
FX	FX a headwind but within plan	“Severe FX headwinds” pushed reported results below expectations; CC EPS ~$0.97	Headwind easing vs Q2 spike
China demand	Double‑digit growth and recovery in 2023/early 2024	Softer 6/18 due to heavy promotion; reported +3.4% YoY, cc roughly double; cautious near‑term	Still positive LT; near‑term choppy
India regulation (BIS)	New DC; regulatory uncertainty flagged	Regulatory standards constrained APAC; building local production; expect improvement over 2H	Gradual improvement expected
DTC vs store traffic	DTC strong; e‑com growing	US store traffic down; e‑com strong; intl DTC +15%	Mixed: e‑com offsets traffic softness
Gross margin drivers	Freight normalization; mix accretion	Benefit continued; 2H lift moderates; watch freight spot rates	Positive but moderating tailwind
Product/category expansion	Hands‑Free Slip‑ins, Basketball/Football launch ramp	Global Football launched; Basketball global roll‑out in Aug; John Deere work/outdoor	Expanding categories and ambassadors

Management Commentary

“Record second quarter sales of $2.16 billion… strong demand for our diverse portfolio of comfortable and innovative footwear… growth across all regions including 7% in the Americas; 14% in EMEA; and 2% in APAC… we… raised our full‑year outlook for sales and earnings.” — COO David Weinberg .
“Earnings per share… $0.91—$0.97 on a constant currency basis… results were below expectations due in part to severe foreign currency exchange headwinds… better visibility into the second half… adjusting up our full year guidance.” — CFO John Vandemore .
“New $1 billion share repurchase authorization… continuing to return cash to shareholders in a disciplined manner.” — CFO .
“Football footwear launched globally this month… basketball footwear will be released globally in August.” — CEO Robert Greenberg .
Brand/athlete pipeline expanded (e.g., WNBA’s Rickea Jackson; Skechers x John Deere collection) supporting demand creation and category depth .

Q&A Highlights

Guidance raise drivers: stronger wholesale order book (especially US), deferred Europe shipments now in 2H, continued intl DTC strength; FX assumed to persist but weighted in outlook .
Gross margin outlook: 2H lift smaller than 1H; freight spot increases likely felt in Q3/Q4 but mitigated by contracts; overall GM improvement vs LY continues, mainly mix‑driven .
US demand: store traffic softness offset by e‑commerce; back‑to‑school and holiday are swing factors; promotional environment broadly unchanged .
International: EMEA DTC strength sustained; China to grow in 2H but recovery remains uneven; India capacity/local production ramping to address BIS rules .
Opex: Q2 intentionally over‑invested in demand creation; growth in spend moderates in 2H though marketing remains elevated to protect technology leadership (Hands‑Free Slip‑ins) .

Estimates Context

S&P Global consensus figures were unavailable at time of writing due to temporary access limits. Management indicated Q2 reported results were below expectations on revenue due to FX and timing, while constant‑currency EPS ($0.97) effectively matched internal expectations; FY24 guidance raised on improved visibility. Values retrieved from S&P Global were unavailable at this time.* .

Key Takeaways for Investors

FY24 guidance raised on wholesale order visibility and intl DTC momentum; near‑term catalyst is execution on shifted Europe orders and Q3 guide delivery .
Mix‑led gross margin tailwind continues, but expect moderating benefit and potential freight cost pressure in 2H; inventory health supports fulfillment as flows normalize .
Domestic wholesale strength (+14% in Q2) plus technology adoption at partners points to continued share gain; DTC remains a growth engine despite US traffic softness .
China remains a long‑term growth vector despite near‑term volatility around major events and FX; India improvement (local production) is a 2H swing factor .
$1B buyback provides downside support and signals confidence; balance sheet remains strong ($1.55B cash/investments) .
Watch execution on global basketball/football and John Deere collections for incremental demand and category diversification .
Risk checks: FX volatility, tariff/regulatory developments (India), freight spot rate spikes, and domestic traffic trends; guide already contemplates several headwinds .

Additional detail

Company‑provided Q3 guide: Sales $2.30–$2.35B; EPS $1.10–$1.15 .
Prior Q2 guide vs actual: Sales below $2.175–$2.225B; EPS slightly above $0.85–$0.90 .
Segment mix: Q2 DTC sales surpassed $1B with 67.0% margin; wholesale margin +370 bps YoY to 43.9% .

Footnotes
*Consensus estimates: S&P Global data were not available at the time of analysis due to temporary access limits.

SKECHERS USA INC (SKX)·Q2 2024 Earnings Summary