Skechers’ 2023 domestic wholesale challenges seemingly turned a corner in the first quarter of 2024.
According to the Manhattan Beach, Calif.-based footwear company, wholesale net sales increased 9.8 percent year-over-year to $1.42 billion in the first quarter, with growth across all regions. Domestic wholesale sales, which declined 10 percent in Q4 2023, increased 7.7 percent in Q1 versus the same period last year.
The return to wholesale growth was good news on Wall Street, with shares for Skechers up nearly 13 percent in mid-day trading on Friday.
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On the company’s first quarter earnings call on Thursday, chief operating officer David Weinberg told analysts that this return to wholesale sales growth was due to “significant improvement” in the flow of orders including customers taking goods earlier within their shipping windows.
“International wholesale sales also returned to growth, increasing 11 percent and as the inventory congestion impacting certain partners, particularly in Europe, evaded,” Weinberg said. “We were encouraged by our wholesale segment, both domestically and internationally, and continue to expect year-over-year growth as we move through the balance of the year.”
Pressed further by analysts on whether these earlier shipments will impact second quarter wholesale sales, Weinberg noted that Q1’s early deliveries were replenishment-driven due to strong sell-through rates as more retail partners embrace the brand’s comfort technology product assortment.
“What I think we saw more than anything else was not new orders, but an acceleration of existing orders,” the COO said. “Customers are wanting product sooner to fulfill what is sold out. As we said all of last year, we always saw a really good price sustainability. We saw good margins. Inventories were lean. I think we’re starting to finally see the benefit of that as some of the partners out there cleanse themselves of some of the inventory issues they were suffering from last year.”
As for what’s to come in the second quarter, Weinberg said that right now, the company is anticipating that the wholesale segment will grow mid to high single digits.
“We’re seeing really encouraging signs in our wholesale activity, our order book as well as just the sell-through that we’re seeing,” the executive said. “We’re seeing also some really good success with partners who have come to fully embrace our Comfort Technology product suite. And so, I would suggest you that we’re likely to see something between mid- to high single digits. And then beyond the current booking window, we’re starting to receive orders and they all continue to suggest that things will continue to grow, which is a great position for the brand to be in.”
The return to domestic wholesale growth comes at the same time Skechers reported Thursday that net sales grew 12.5 percent to $2.25 billion in Q1, compared to $2.0 billion the same period last year. Net earnings were $206.6 million and diluted earnings per share were $1.33 compared with prior year net earnings of $160.4 million and diluted earnings per share of $1.02.
Looking ahead, Skechers said it expects to achieve sales between $2.175 billion and $2.225 billion and diluted earnings per share of between 85 cents and 90 cents in the second quarter. Further, the company believes that for the fiscal year 2024, it will achieve sales between $8.725 and $8.875 billion and diluted earnings per share of between $3.95 and $4.10.
