Gross margin of the company was 52.1 per cent, a decrease of 80 basis points from same period last year, due to lower average selling prices, Skechers said in a press release.
Skechers reported a 15.9 per cent YoY sales increase in Q3 2024 to $2.347 billion, with international and domestic growth.
Gross profit rose 14.1 per cent, while the gross margin decreased slightly due to lower average selling prices.
The company expects Q4 sales of $2.165–$2.215 billion and aims for $8.925–$8.975 billion for FY 2024, targeting $10 billion by 2026.
The wholesale sales grew $241.4 million, or 20.6 per cent, including increases in North, Central, and South America (AMER) of 21.6 per cent, Europe, the Middle East and Africa (EMEA) of 30.9 per cent, and Asia–Pacific (APAC) of 5.1 per cent. Wholesale volume increased 21.2 per cent and average selling price declined 0.5 per cent.
Direct-to-consumer (DTC) sales grew $81.3 million, or 9.6 per cent, including increases in EMEA of 28.0 per cent, APAC of 10.0 per cent, and AMER of 5.0 per cent. DTC volume increased 10.7 per cent and average selling price declined 1.0 per cent.
The operating expenses increased $130.9 million, or 15.2 per cent (YoY) in Q3 2024 and as a percentage of sales decreased 30 basis points to 42.2 per cent. Selling expenses increased $32.9 million, or 18.4 per cent, and as a percentage of sales increased 20 basis points to 9.0 per cent. The increase was due to higher demand creation expenditures, stated the press release.
General and administrative expenses increased $98.0 million, or 14.4 per cent, and as a percentage of sales decreased 40 basis points to 33.2 per cent. Increased expenses were primarily driven by increased labour and facility costs, including rent and depreciation.
Earnings from operations increased $20.2 million, or 9.5 per cent, to $233.4 million. Net earnings were $193.2 million and diluted earnings per share were $1.26 compared with prior year net earnings of $145.4 million and diluted earnings per share of $0.93.
The company’s effective income tax rate in the third quarter was 14.7 per cent. The decrease was due to the release of certain allowances and other provision adjustments.
“Skechers’ record third-quarter financial performance underscores the strength of our global diversification and demand for our distinctive value proposition. We delivered impressive international sales growth coupled with continued momentum in our domestic wholesale business. These results reinforce our confidence in achieving our goal of $10 billion in sales by 2026 and continued growth thereafter. As we move forward, we remain committed to investing in our brand, expanding our global presence, and meeting the evolving needs of our consumers,” stated John Vandemore, chief financial officer (CFO) of Skechers.
“Skechers’ significant growth in the third quarter can be attributed to offering the right product at the right price and ensuring availability at locations where consumers want to shop – whether it’s in our own direct-to-consumer channels or with our network of key retailers,” said Robert Greenberg, chief executive officer (CEO) of Skechers.
“Strong consumer demand for Skechers across all distribution channels resulted in a new quarterly sales record of $2.35 billion. By region, sales grew 30 per cent in EMEA driven by double-digit growth across all countries; 14 per cent in the Americas, reflecting particularly strong sales in the United States and Canada; and 7 per cent in Asia Pacific with double-digit increases in many countries,” stated David Weinberg, chief operating officer (COO) of Skechers.
Nine months 2024 financial results
Skechers’ year-to-date (YTD) sales, covering the 9 months (9M) ended September 30, increased 11.9 per cent in 2024 as compared to same period last year, reflecting a 12.9 per cent increase in international sales and a 10.3 per cent increase domestically. Gross profit for 9M period reached $3,589 million in 2024 as compared to $3,111 million in the same period last year, an increase of 15.4 per cent. Meanwhile the gross margin was 53.1 per cent, an increase of 160 basis points in the first 9 months of 2024, due to lower costs per unit, driven by lower freight.
Wholesale sales increased $427.6 million, or 12.1 per cent, due to increases in AMER of 12.5 per cent, EMEA of 15.5 per cent, and APAC of 6.1 per cent. Wholesale volume increased 12.5 per cent and average selling price declined 0.3 per cent.
DTC sales grew $289.9 million, or 11.6 per cent, due to increases in EMEA of 40.3 per cent, APAC of 10.5 per cent, and AMER of 6.2 per cent. DTC volume increased 11.8 per cent and average selling price declined 0.2 per cent.
Skechers’ operating expenses in the 9M period increased $393.9 million or 16.0 per cent YoY. As a percentage of sales, operating expenses increased 150 basis points to 42.2 per cent. Selling expenses increased $109.6 million or 22.2 per cent, primarily due to higher global demand creation expenditures. General and administrative expenses increased $284.3 million or 14.5 per cent, primarily driven by labour and increased facility costs, including rent and depreciation.
Earnings from operations increased $84.3 million to $738.8 million, resulting in an operating margin of 10.9 per cent in the 9M period of 2024.
Net earnings in the 9M period were $540.1 million and diluted earnings per share were $3.50, an increase of 19.5 per cent over the prior year. The company’s effective income tax rate was 17.8 per cent, added the release.
Outlook
For the fourth quarter (Q4) 2024, Skechers believes it will achieve sales between $2.165 and $2.215 billion and diluted earnings per share of between $0.70 and $0.75. Further, the company believes that for the fiscal 2024, it will achieve sales between $8.925 and $8.975 billion and diluted earnings per share of between $4.20 and $4.25.
Fibre2Fashion News Desk (SG)
