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Skechers Sees ‘Positive Signals’ Emerging in U.S. Wholesale Segment

Skechers has entered the performance basketball market.

Although it’s being cautious about its Q4 prospects, given the macroeconomic environment and ongoing uncertainty about consumer spending, Skechers says it’s beginning to see positive signs for its domestic wholesale business that came in flat but above expectations in Q3 due to accelerated deliveries. The company, which sees the direct-to-consumer channel as “a key driver” to its long-term growth strategy, is anticipating a “return to growth” for its domestic wholesale business in 2024 that will be fueled by its broader product portfolio.

That new line-up includes the brand’s new entries in soccer boots and basketball shoes in recent months, with the latter being worn and endorsed by NBAers Julius Randle and Terance Mann, and its hands-free slip-ins and pickleball shoes among others.

In Q3, Skechers beat EPS guidance by $0.14 a share but missed on revenue forecasts by just of $3.8 million. Still, the company reported record quarterly sales of $2.025 billion and a strong gross margin of 52.9 percent. Direct-to-consumer sales rose 24 percent year-over-year to $850.4 million with the U.S. component rising by 14 percent and international up by 33 percent.

Senior management cited requests for early deliveries, solid sell through rates, healthier inventory levels and booking trends for optimism about 2024. The brand’s inventory level was down by 24 percent at Q3 end from the end of FY22.

“The sell-through has definitely been stronger than the sell-in,” commented CFO John Vandemore. “And as we have said, the prices are strong. The margin contribution of retailers is good. The inventories are lean. At some point, they’ve got to catch up.”