On February 6, 2025, Skechers USA Inc (SKX, Financial) released its 8-K filing announcing record annual sales of $8.97 billion for 2024, marking a 12.1% increase from the previous year. The company's fourth-quarter sales reached $2.21 billion, slightly below the analyst estimate of $2.22 billion. However, the diluted earnings per share (EPS) for the quarter was $0.65, which fell short of the estimated $0.74. For the full year, the diluted EPS was $4.16, slightly below the annual estimate of $4.24.
Company Overview
Skechers USA Inc is a global leader in lifestyle footwear, offering a wide range of products under the Skechers GO brand. The company operates through two main segments: Wholesale and Direct-to-Consumer, with the Wholesale segment generating the majority of its revenue. Skechers' products are available in department and specialty stores, athletic and independent retailers, boutiques, and online platforms.
Performance and Challenges
Skechers' performance in 2024 was marked by significant growth in both its Wholesale and Direct-to-Consumer segments, with sales increasing by 13.2% and 10.7% respectively. The company's ability to achieve record sales is attributed to strong global consumer demand and effective marketing strategies. However, challenges such as unfavorable foreign currency exchange rates and persistent market and shipping conditions in certain regions, particularly China, posed difficulties.
Financial Achievements
The company's financial achievements in 2024 are noteworthy, with a gross margin increase to 53.2% from 51.9% in the previous year. This improvement is significant in the Manufacturing - Apparel & Accessories industry, where cost management and pricing strategies are crucial for maintaining profitability. Additionally, Skechers' operating margin increased to 10.1%, reflecting efficient cost management and operational execution.
Key Financial Metrics
In the fourth quarter, Skechers reported a gross profit of $1.18 billion, up from $1.04 billion in the same period last year. Operating expenses rose by 11.2% to $1.01 billion, primarily driven by increased labor and facility costs. The company's net earnings attributable to Skechers were $99.3 million, compared to $87.2 million in the prior year. The effective income tax rate for the quarter was 11.8%, benefiting from a favorable mix of earnings in lower tax jurisdictions.
Skechers delivered exceptional results in 2024 and exceeded our expectations on a constant currency basis with full year sales of $9.04 billion and earnings per share of $4.40," stated John Vandemore, Chief Financial Officer of Skechers.
Analysis and Outlook
Skechers' robust financial performance in 2024 underscores its strong market position and ability to adapt to consumer demands. The company's strategic focus on comfort technology and innovative product offerings has resonated well with consumers globally. Looking ahead, Skechers aims to continue its growth trajectory with plans to expand its distribution centers and enhance its Direct-to-Consumer experience. The company's outlook for 2025 includes projected sales between $9.70 and $9.80 billion and diluted EPS between $4.30 and $4.50, reflecting confidence in its strategic initiatives and market opportunities.
Explore the complete 8-K earnings release (here) from Skechers USA Inc for further details.
