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SKECHERS USA INC (SKX)·Q4 2024 Earnings Summary

Executive Summary

  • Record Q4 sales of $2.21B (+12.8% YoY) on strong Wholesale (+17.5%) and DTC (+8.4%) growth; gross margin expanded 20 bps to 53.3% on favorable channel mix . EPS was $0.65 (+16.1% YoY) but below the prior quarter’s $1.26 and below Q4 guidance due to a significant FX headwind; constant-currency EPS was $0.86 (+53.6% YoY) .
  • FY2024 delivered record sales of $8.97B (+12.1%) and EPS of $4.16; constant currency sales $9.04B (+13.0%) and EPS $4.40 (+26.1%) .
  • 2025 guidance: sales $9.70–$9.80B, EPS $4.30–$4.50, tax rate 22–23%, capex $600–$700M; Q1 2025 sales $2.40–$2.43B, EPS $1.10–$1.15. Management flagged FX, global minimum tax, China macro, and potential incremental U.S. tariffs as key headwinds, with mitigation planned across sourcing, vendor concessions, and pricing .
  • Catalysts: continued EMEA strength (+25% in Q4), domestic wholesale momentum (+31% in Q4), performance category expansion (basketball/soccer/cricket), and demand creation (Big Game ad with Andy Reid) vs. risks (FX, China weakness, tariffs, elevated capex) .

What Went Well and What Went Wrong

What Went Well

  • Broad-based growth: Q4 sales up 12.8% with Wholesale +17.5%, DTC +8.4; AMER +14%, EMEA +24.8%, APAC +3.3; domestic +18%, international +9.8% .
  • Margin resilience: Q4 gross margin +20 bps to 53.3% on favorable channel mix; operating margin +80 bps to 7.5% .
  • Strategic product/marketing: Comfort technologies (Hands Free Slip-ins, Arch Fit) drove demand; performance categories expanding globally. “We are confident…will result in notable achievements and continued growth in the coming year.” – CEO Robert Greenberg .

What Went Wrong

  • FX impact: “Unfavorable foreign currency exchange rates…totaled $34.7M” in Q4, depressing EPS to $0.65 vs constant currency $0.86; EPS below prior Q4 guidance range .
  • China weakness: Q4 China sales -11.5% YoY; management expects improvement later in 2025 but near-term remains challenged .
  • Elevated inventories/in-transit: Inventory +25.8% YoY, driven by elevated merchandise in-transit (Suez disruption) and distribution expansions; management views inventory as healthy and order-backed .

Financial Results

Revenue, EPS, Margins (YoY, QoQ, vs. Guidance)

MetricQ4 2023Q3 2024Q4 2024YoY ChangeQoQ ChangeQ4 2024 GuidanceOutcome vs Guidance
Revenue ($B)$1.961 $2.348 $2.212 +12.8% -5.8% $2.165–$2.215 Near top end
Gross Margin (%)53.1% 52.1% 53.3% +20 bps +120 bps ——
Operating Margin (%)6.6% 9.9% 7.5% +80 bps -240 bps ——
Diluted EPS ($)$0.56 $1.26 $0.65 +16.1% -48.4% $0.70–$0.75 Miss; FX headwind
Diluted EPS (CC) ($)——$0.86 ———Above guidance constant currency
Effective Tax Rate (%)20.3% 14.7% 11.8% -850 bps -290 bps ——

Notes: CC = constant currency. Guidance from Q3 press release .

Segment Breakdown (Q4)

SegmentQ4 2023 Sales ($B)Q4 2024 Sales ($B)YoYQ4 2023 GM (%)Q4 2024 GM (%)
Wholesale$0.963 $1.131 +17.5% 40.9% 41.5%
Direct-to-Consumer$0.998 $1.082 +8.4% 64.9% 65.6%
Total$1.961 $2.212 +12.8% 53.1% 53.3%

Geographic and Regional KPIs (Q4)

KPIQ4 2023Q4 2024YoY
Domestic Sales ($B)$0.713 $0.842 +18.0%
International Sales ($B)$1.248 $1.371 +9.8%
AMER Sales ($B)$0.955 $1.091 +14.2%
EMEA Sales ($B)$0.384 $0.479 +24.8%
APAC Sales ($B)$0.622 $0.642 +3.3%
China Sales ($B)$0.377 $0.334 -11.5%
Distributor Sales ($B)$0.140 $0.143 +2.4%

Balance Sheet & Store Count (FY End)

Metric12/31/202312/31/2024
Cash, Cash Equivalents & Investments ($B)$1.38 $1.38 (-0.3%)
Inventory ($B)$1.53 $1.92 (+25.8%)
Total Stores5,168 5,296
Domestic Stores563 610
International Stores1,085 1,177
Distributor/Licensee/Franchise Stores3,520 3,509

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance / ActualChange
Revenue ($B)Q4 2024$2.165–$2.215 $2.212 (actual) Achieved near high end
Diluted EPS ($)Q4 2024$0.70–$0.75 $0.65 (actual); $0.86 CC Miss as-reported; beat on CC (FX headwind)
Revenue ($B)FY 2024$8.925–$8.975 $8.969 (actual) In range
Diluted EPS ($)FY 2024$4.20–$4.25 $4.16 (actual); $4.40 CC Slight miss as-reported; beat on CC
Revenue ($B)Q1 2025—$2.40–$2.43 New
Diluted EPS ($)Q1 2025—$1.10–$1.15 New
Revenue ($B)FY 2025—$9.70–$9.80 New
Diluted EPS ($)FY 2025—$4.30–$4.50 New
Tax Rate (%)FY 2025—22–23 (global minimum tax) Higher vs 2024 16.9%
Capex ($B)FY 2025—$0.60–$0.70 Higher YoY (DC expansions)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
Gross margin outlookExpected smaller lift H2; freight spot rates rising; mix supportive “Not anticipating a material change”; stability overall; some quarterly variability from tariffs/freight Stable to slightly variable
FX headwindsQ2: severe FX headwinds hurt reported results Q4: $34.7M other expense; EPS hit ~$0.21; 2025 FX headwind ~$0.15–$0.20 EPS Elevated in Q4; expected headwind into 2025
China macroQ2: challenged; expected H2 improvement; CC growth Q4: -11% sales; management expects improvement after Q1 compares; marketing/demand creation to support Weak near-term; gradual recovery later
TariffsQ2: sourcing diversified; ready to react Mitigation: reallocate origin, vendor concessions, pricing; inventory on hand not subject to higher rates Manageable via tactics
Supply chain/SuezQ2/Q3: delays shifted orders to H2; in-transit elevated Q4: in-transit inventory elevated esp. EMEA; Q1 expects timely processing Improving flow; timing shifts persist
Domestic wholesaleQ2: strong rebound +14% Q4: +31%; 2025 expectation mid-single-digit growth normalization Strong in Q4; normalizes in 2025
Demand creationQ2: heavier spend for brand building Q1 2025 heavier demand creation (Big Game ad with Andy Reid) Elevated near-term
Capex/DC expansionQ2: investment in DCs 2025 capex $600–$700M; NA DC +1M sqft by early 2026; China DC operational end-2026 Elevated for capacity building
Performance categoriesQ2: global rollout basketball/soccer; athlete signings Continued expansion; more sports; basketball not a major 2025 push yet; added athletes (e.g., Norman Powell) Building awareness; measured rollout

Management Commentary

  • “Skechers delivered…constant currency sales of $9.04 billion…EPS of $4.40…strong gross margin of 53.2% and…operating margin of 10.1%” – COO David Weinberg .
  • “We are focused on building successful signature technologies, including Skechers Hands Free slip-ins and Arch Fit…pursuing unique partnerships…John Deere…Rolling Stones” – COO David Weinberg .
  • “Unfavorable foreign currency exchange…significantly impacted reported results…we obtained a double-digit operating margin of 10.1%” – CFO John Vandemore .
  • “For the full year 2025, we expect sales…$9.7–$9.8 billion…EPS…$4.30–$4.50…tax rate…22% to 23%” – CFO John Vandemore .
  • “Tariff mitigation…redirecting origin and manufacturing…vendor concessions…and pricing” – CFO John Vandemore .

Q&A Highlights

  • Gross margin: Management expects overall stability with quarterly variability from tariffs/freight; mix balanced across channels/geographies .
  • Operating margin: Aim to sustain double-digit FY margin; near-term SG&A deleverage in Q1/Q2 could be 150–250 bps, offset later in year .
  • FX: EPS headwind ~$0.15–$0.20 in 2025; Q4 other expense $34.7M; constant currency metrics materially higher .
  • China: Weak Q4; expect improvement after Q1 comps; increased marketing/demand creation to support .
  • Capex: $600–$700M in 2025 driven by NA and China DC projects; normalization after large projects; benefits include efficiency and consolidation of offsite buildings .
  • Domestic wholesale: Exceptional +31% in Q4; 2025 expected to normalize toward mid-single-digit growth .

Estimates Context

  • Wall Street consensus comparisons via S&P Global were unavailable due to data access limits at time of analysis (SPGI daily request limit exceeded). As a result, estimate vs. actual comparisons are not provided. Where relevant, we benchmarked against company guidance from prior quarter disclosures . Values retrieved from S&P Global were unavailable; if provided, we would anchor comparisons on S&P Global consensus.

Key Takeaways for Investors

  • Core fundamentals remain solid: broad-based growth, margin resilience, and robust EMEA/domestic wholesale momentum underpin the model despite FX and China headwinds .
  • EPS optics are FX-distorted: constant currency EPS suggests operational upside; as FX stabilizes, reported earnings should better reflect underlying strength .
  • 2025 setup includes known headwinds (global minimum tax, FX, tariffs) but clear mitigation playbook and elevated capex to expand capacity; model for near-term SG&A deleverage and back-half catch-up .
  • China is the swing factor: management does not assume significant growth in 2025 H1, expects improvement later; watch inventory actions and demand creation in the region .
  • DTC and performance categories are strategic levers: measured investment in marketing (Andy Reid Big Game spot) and athlete partnerships should support brand equity and mix over time .
  • Near-term trading lens: Potential volatility around FX prints, tariff headlines, and Q1 SG&A deleverage; upside skew if EMEA strength and domestic wholesale persist and FX normalizes .
  • Medium-term thesis: Capacity expansions (DCs), product innovation, and diversified geography/channels support pursuing $10B+ sales and sustaining double-digit operating margin with improved efficiency post-capex cycle .