Skechers, an American footwear and apparel company, has reported a 10 per cent year-on-year (YoY) increase in sales to a record high of $2 billion for the first quarter (Q1) of fiscal 2023 (FY23), driven by a 21.1 per cent YoY increase internationally and a 4.8 per cent YoY decrease domestically. Both segments experienced growth, with direct-to-consumer increasing 24.5 per cent YoY and wholesale increasing 3.5 per cent YoY. On a constant currency basis, sales increased 13.3 per cent YoY.

The company wholesale sales growth in Q1 FY23 increased by $43.3 million, which includes increases in Europe, the Middle East, and Africa (EMEA) of 20.1 per cent YoY and Asia-Pacific (APAC) of 24.1 per cent YoY, partially offset by a decrease in Americas (AMER) of 13.2 per cent YoY. Wholesale average selling price increased by 5.3 per cent YoY, while volume decreased by 1.9 per cent YoY, Skechers said in a press release.

Direct-to-consumer sales growth in Q1 FY23 increased by $139 million, which includes increases in AMER of 28.6 per cent YoY, APAC of 17.9 per cent YoY, and EMEA of 29.5 per cent YoY. Direct-to-consumer volume increased by 27.2 per cent YoY, while average selling price decreased by 2.2 per cent YoY.

The gross margin was 48.9 per cent YoY in Q1 FY23, an increase of 360 basis points, due to higher average selling prices in wholesale and a greater mix of direct-to-consumer sales.

In Q1 FY23, operating expenses increased by $106.7 million, or 16.5 per cent YoY, and as a percentage of sales increased 210 basis points to 37.7 per cent. Selling expenses increased by $20.4 million, or 18.8 per cent YoY, and as a percentage of sales increased 50 basis points to 6.4 per cent. General and administrative expenses increased by $86.4 million, or 16 per cent YoY, and as a percentage of sales increased 160 basis points to 31.3 per cent.

Earnings from operations in Q1 FY23 increased by $47.7 million, or 27.1 per cent YoY, to $223.6 million, while net earnings were $160.4 million, and diluted earnings per share were $1.02, compared with prior year net earnings of $121.2 million and diluted earnings per share of $0.77.

The company reported that inventory was $1.50 billion, a decrease of $315.8 million or 17.4 per cent YoY from December 31, 2022.

For the second quarter of 2023, Skechers believes it will achieve sales between $1.85 billion and $1.90 billion and diluted earnings per share of between $0.40 and $0.50. Further, the company believes that for the fiscal 2023, it will achieve sales between $7.9 billion and $8.1 billion and diluted earnings per share of between $3.00 and $3.20, the release added.

David Weinberg, chief operating officer of Skechers, said: “Our first quarter 2023 marks a new milestone with quarterly sales of over $2 billion. The 10 per cent, or $182 million, sales increase was the result of broad strength in most markets globally, including regional sales improvements of 21 per cent in both EMEA and APAC, which includes growth of 3 per cent in China.

“With an increase of 24.5 per cent worldwide, direct-to-consumer performed particularly well due to the improved inventory availability in stores and strong demand for our fresh comfort product offering. Our record sales, expanded gross margins of 48.9 per cent, and meaningfully improved inventory levels are an indication of the strength of our comfort technology products and impactful marketing worldwide. With plans to reach $10 billion in annual sales by 2026, we couldn’t be more positive about the many meaningful growth opportunities we see ahead.”

Fibre2Fashion News Desk (DP)

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