Skechers at Raymond James Conference: Strategic Growth Plans Unveiled

On Tuesday, March 4, 2025, Skechers USA Inc. (NYSE: SKX) participated in the Raymond James & Associates’ 46th Annual Institutional Investors Conference. The company outlined strategic initiatives aimed at sustaining its position as a leading global footwear brand. While highlighting robust growth in Europe and the potential in China, Skechers also addressed challenges such as tariffs and capacity constraints.

Key Takeaways

• Skechers is the third-largest footwear brand globally, focusing on style, quality, comfort, and innovation at a reasonable price.
• Europe shows exceptional growth, while China presents long-term potential despite current challenges.
• The company is investing significantly in distribution infrastructure in China, Europe, and the U.S. to support growth.
• High single-digit growth is expected for the year, with a focus on international and direct-to-consumer (DTC) channels.

Financial Results

• Over 60% of Skechers’ sales come from outside the United States.
• Europe has shown strong growth over the last five to six years, while China experienced 13% growth in the first quarter of the previous year.
• Skechers aims to defend its gross margins despite rising tariffs by adjusting pricing and working with vendors.

Operational Updates

• Europe is experiencing rapid growth, necessitating faster capacity expansion to manage processing constraints.
• In China, Skechers is monitoring consumer stability and discretionary spending, with a focus on long-term potential and comfort technologies.
• The DTC channel is expected to grow, balancing between physical stores and digital platforms.
• The Slip-ins franchise continues to expand, with new categories like sandals being introduced.
• Skechers is developing its performance footwear line with new offerings like Skechers FootballSoccer and pickleball shoes.

Future Outlook

• The company plans to focus on international and DTC channels for long-term growth.
• Continued emphasis on the European market is planned, despite capacity challenges.
• Skechers is prioritizing innovation in comfort technologies, particularly for the Slip-ins line.
• Performance footwear development will continue, with market conditions dictating aggressive sales strategies.

Q&A Highlights

• Skechers is evaluating the impact of new tariffs and plans to mitigate effects through vendor negotiations and potential price increases.
• The core customer base is broad, targeting anyone seeking value across various demographics.
• Investments are strategically timed to align with projected growth, aiming for efficiency in distribution.
• Maintaining a strong balance sheet is crucial for navigating market turbulence and supporting future growth, with share repurchases continuing based on market conditions.

Readers are encouraged to refer to the full transcript for more detailed insights into Skechers’ strategic plans.

Full transcript - Raymond James & Associates’ 46th Annual Institutional Investors Conference 2025:

Rick Patel, Research Analyst, Raymond James: All right. Thank you. Good morning, everyone, and thanks for joining us bright and early here at the Raymond James Institutional Investors Conference. I’m Rick Patel, Research Analyst covering soft lines retail, digital commerce and global brands. I’m thrilled to be hosting SKECHERS.

SKECHERS is the third biggest footwear company globally with distribution across stores, e commerce and wholesale. The company is widely known for its comfort technologies and we’re happy to have Chief Financial Officer John Vandemore. So John, thanks so much for being here.

John Vandemore, Chief Financial Officer, SKECHERS: Thank you, Rick. Although I would note the ungodly hour for the West Coast. So if I say anything silly, that’s going to be my excuse.

Rick Patel, Research Analyst, Raymond James: You get extra points for putting in the hard work.

John Vandemore, Chief Financial Officer, SKECHERS: I feel like I should get something. It’s 04:30 a. M. For all. Come

Rick Patel, Research Analyst, Raymond James: on. Well You can

John Vandemore, Chief Financial Officer, SKECHERS: see where you live on this.

Rick Patel, Research Analyst, Raymond James: That’s right. So for investors that are new to the SKECHERS story, can you just provide a high level overview of the business and touch on the financial progress you’ve made over the last year?

John Vandemore, Chief Financial Officer, SKECHERS: Yes, I think the snippet you started with is probably the most important. Many don’t realize that SKECHERS is the third largest footwear brand in the world. We’ve got an incredibly distributed global footprint and I think that’s what sometimes leads people to under appreciate the depth and breadth of the brand, over 60% of our sales derived from outside of The United States. And when you really think about what we do relative to some others in the space, it’s a unique offering beginning with the product. We have a very broad and deep product assortment.

We deliver everything from on the technical side, running, basketball, pickleball, looks like a lot of pickleballers in the room, all the way through to on the other side, leisure and casual products. So it’s a unique position in the market. It’s a unique footprint in the market. But I would also add, we’re aiming strategically to slightly different consumer. We always say that the most important thing for the SKECHERS brand is style, quality, comfort and innovation at a reasonable price.

And when you package all of those value propositions together, I think you understand then why we’re unique. We’re not aiming at the ultra premium end of the market. We’re certainly not aiming at the lowest end of the market. We’re in that middle of demand. But I also think it’s one of the most lucrative opportunities in the market, and it poisons us well to attack many different markets with many different solutions across that extremely broad product array.

Rick Patel, Research Analyst, Raymond James: Could we start by talking about Europe? It’s an area that doesn’t get a whole lot of airtime on the calls, but I feel like it’s very interesting. We’ve seen strong growth out there and it seems that the company has some dry powder. How should we think about the growth potential there?

John Vandemore, Chief Financial Officer, SKECHERS: Yes. Europe has been exceptionally strong for us, really over the last five or six years. Emanating from COVID, I would have told you at the time that I thought Europe was not going to be one of our fastest growing regions. It looked like the market had kind of sorted itself out from a brand perspective. And we thought there was opportunity, but I would have to say we didn’t know there was this much opportunity.

What we’ve really seen in Europe over the last five or six years is one, consumers embracing the brand. Two, our ability to go direct to consumer both in our stores and in e commerce has been much more attractive and lucrative than we had originally anticipated. But probably more than anything else, what we find in Europe is a significant appreciation for the type of product we bring. Europeans very much love function in their footwear. One of the things that we’re most well known for is our Comfort Technologies.

You’ve probably heard us. Well, if anybody here has watched any financial channel in the last year, you have to have seen at least three SKECHERS hands free slip in commercials. If anybody hasn’t, raise your hand, we’ll get you one in a second. But it’s a reflection of what they appreciate in their product. And so when we deliver comfort technologies that perform at the consumer level, we found that it’s extremely resonant in Europe in particular.

So that’s led to some significant growth over the last, pretty much last five years, but even the last couple of years directly. I would say one of the things that is all good things have their non silver linings. It is sometimes a challenge to keep up with that capacity, something we’ve been facing on and off. It’s really the good problem of growing almost too fast in certain instances, but it’s been an incredibly lucrative market for us, one we know will continue to grow well, and will continue to move forward over the long term, but certainly a fantastic region for us and one that’s exceeded even our own expectations.

Rick Patel, Research Analyst, Raymond James: And can you also talk about China? Obviously, very important market, but also a lot of headwinds going on across the industry. So how do we think about the near term versus long term potential? Well, I think that’s the

John Vandemore, Chief Financial Officer, SKECHERS: right way to think about it in all honesty, Rick. You know, near term, I think everybody here has a fairly decent appreciation for the headwinds that we’ve seen and other brands have seen in China. It’s certainly not typical of what we’ve seen over the last decade. I would say for us, China remains a bit of a work in progress. We had anticipated that this year would probably demonstrate some earlier challenges and then hopefully some stability.

I would say that’s still where we’re at. We do have to keep in mind for our business last year in China in the first quarter, we grew pretty nicely, I think about 13%. So we are also kind of facing a difficult comparison in the quarter. But more importantly to us, what we’re looking for is signs of consumer stability, consumer discretionary spend stability in particular. You have seen of late some actions from the government to get the macro environment a little bit more stable.

I wouldn’t say the problem is solved. We’re not yet ready to declare that the market is fully stabilized, but it does seem to be inching in that direction. We’re monitoring the results relative to our, I would say, very modest expectations for the first quarter through a couple of months seems to be in line with that. That’s not to say it’s been fantastic or terrible. It’s just been in line with our expectations.

I think what’s what’s exceptionally important though with China is to look to the long term. You know, it’s a market for us where the brand is extremely strong at the consumer level. We know there is a substantial opportunity to continue to grow the brand. And I would even add for us, we believe there is still incremental opportunity with some of our comfort technology, some of our product that really hasn’t had an opportunity to settle into the market as it has had in other markets. And what we know is when we bring those comfort technologies to a market, eventually it reaches a level of penetration pretty similar across the globe and China for us is still represents that opportunity.

So I think part of the recovery and the consumer will be matched with our own ability to get the right product in from a comfort technology perspective and that when the market heals will poise us well for continued growth. Because what I’d want to make abundantly clear is that despite all the, hubble loo, shall we say, between The U. S. And China right now, we still think it’s a fantastic market, an end user market, for us.

Rick Patel, Research Analyst, Raymond James: And can we shift gears and talk about the opportunity by channel? So in the past, you’ve talked about the importance of the DTC channel, how that should be an outperforming channel over the long term. Should we think that way about the outperformance in 2025 as well and what drives that?

John Vandemore, Chief Financial Officer, SKECHERS: Yes, I know that’s probably giving you guys long term guidance is no sooner do we do that than we have a year that’s slightly off kilter from that. I would actually say this year, our expectation at the moment is that we’re probably going to see more balanced growth. That algorithm for the long term certainly holds true. We believe international and direct to consumer hold for us the biggest opportunities. And that’s certainly where we’ll be putting our investment dollars, both in terms of infrastructure, but also new paths to the consumer.

I would say in the short term, partly because of the some of the headwinds we see in China, we’re probably going to see a bit more of a balanced growth this year, which is still good growth. We still expect it probably sort out to be a kind of a high single digit number when you take into account foreign exchange headwinds. And that just means that this year it will be a bit more balanced than we would expect long term. But like I said, long term that algorithm remains intact, DDC, both e com stores, and then the international wholesale side of things. Those are our most lucrative opportunities.

I would set aside just because in case you don’t ask, it doesn’t mean that we don’t think there’s opportunity in the domestic marketplace. We absolutely do. It’s just not as fast growing, not as robust, not as verdant as I would say we see in international markets.

Rick Patel, Research Analyst, Raymond James: And can you double click on the within D2C, how should we think about the potential between stores versus digital? Yes. That’s a

John Vandemore, Chief Financial Officer, SKECHERS: I would say that’s a constant weighing we do. I think that if anybody were to tell you they know the endpoint evolution of digital commerce relative to brick and mortar commerce today, they’d be being a little bit dishonest in the sense that the consumer continues to evolve. I’ll use the first part of this year as an example. We saw weather become a factor again. It’s been a while since we’ve all talked about weather, but on the retail brick and mortar front, the weather was an impact.

But we saw a lot of that get made up through e commerce. So the consumer today is very quick to pivot to whichever offering solves their need most immediately or most efficiently. And so I would say, you know, we still believe there’s tremendous opportunity domestically to grow our store estate, largely freestanding big box style stores, probably not a lot of mall based stores. And as everybody here knows, the outlet segment is not growing that quickly. There’s a lot of outlet malls out there.

They’re very productive, but they’re not growing as quickly as what you’d see in a freestanding retail solution. And so I think we’ll continue to move the store estate forward, but it will be in conjunction with and combination with what we’re doing from an e commerce perspective. Because again, I think at the end of the day, the consumers often don’t care. They don’t wake up in the morning and think I really want to go shopping for a pair of shoes in a store. They just think they need to go get a pair of shoes.

And so our challenge is to make sure we’re continuing to offer them solutions both digitally and physically that solve whatever needs they have.

Rick Patel, Research Analyst, Raymond James: And let’s talk about margins. Start with gross margins. I’d love to understand the puts and takes as you think about how this year is shaping up. And obviously, we can’t talk about margins this year without talking about the very fluid impact of tariffs. I just love to get your thoughts on that.

John Vandemore, Chief Financial Officer, SKECHERS: Yes. I joked with Rick before, between when I left my hotel room and I came down, I had to check and make sure there were no new tariffs before I answered any questions. So let me caveat all of this. This is based on what I know at this single moment, which isn’t often a long enduring knowledge base. And I do have to say, what we said when we announced our year end results and our fourth quarter results was that if the tariff structures that we were aware of at the time, which was an incremental 10% on China and a potential, you know, 25% on Canada and Mexico, that that we could absorb that, that we had a pretty solid path to absorbing that.

Unfortunately, they didn’t stay stable for long. And I would tell you right now, we’re in the process of assessing, you know, what these incremental tariffs mean. So anything I say is going to have to be caveated with the fact that we have yet to fully assess what that means. I would even point out that some of the rules relative to that increment are still up in the air. That all being said, if I were to strip that effect out, what I would tell you is that over the last five years, we have done a very good job of growing our gross margins through a combination of really focusing on the value we’re delivering to the consumer, emphasizing our comfort technologies and in many instances rationalizing what were kind of the inherent costs built into the system prior to that point in time.

This year, our expectation is generally for kind of a flat mix adjusted gross margin structure prior to this latest announced round of tariffs and anything that comes in the future because that’s the big unknown. And in reality, with all due respect, that’s all we can plan for at the moment. Things are changing so quickly that lack of stability really makes giving any forward perspective difficult because there’s so much uncertainty. What I can tell you is at a product level, we believe we’re delivering an an attractive value proposition for the consumer that’s yielding significant significantly improved gross margins. And we’ll continue to do that.

We’ll continue to focus on that. I anticipate that your next question would be, okay, what are you going to potentially do if there are more tariffs or with this tariffs? And the answer is simply going to be that the same things that we’ve done in the past. Whenever we’re faced with challenges like this, we work very closely with our vendors. We look to them to absorb some of the impact.

Obviously, we have to look at where we’re sourcing goods. That’s not something that can be moved immediately and it’s not cost free, but that’s a solution. But the honest answer at the end of the day is after you take those two options into consideration, you have to look at price. We as a company, we believe our shareholders require and we will be taking to heart that we need to defend the margin that we’ve achieved. And so I think it’s going to be all those arrows are in the quiver, so to speak, but definitely, we’ll have to look at all of them.

Rick Patel, Research Analyst, Raymond James: And help us understand investment spending as well. I think Skechers has a track record of investing ahead of growth and you have a lot of growth ahead of you. So how do we think about the investments you have planned both this year and what you need over the long term?

John Vandemore, Chief Financial Officer, SKECHERS: Yes. I only chuckle because David would say he’s never made an investment on time. He’s either too early or or too late. And the too late is usually means you’re outgrowing your original projections. We do invest heavily in our infrastructure.

That’s everything from distribution to stores to technology to enable stores and digital That’s something we pride ourselves on. Look, I think the good problem to have when you’re outgrowing your infrastructure is that you are constantly chasing on the investment side. I mentioned Europe. Europe right now, we’re a little bit processing constrained. We’re having to add faster than we had anticipated because that market’s growing faster.

We do have projects slated to resolve that long term, but in the near term, that’s going to be a bit of a headwind. So there are situations like that, that materialize from time to time and that’s the one we’re facing in Europe right now. I would say outside of that, we’re looking to invest in our core distribution capabilities for the long term. What we know is when we make those investments, we get more efficient on a distribution cost per pair basis. It does take some time to materialize, but we do make those investments with the eye towards creating greater efficiency.

Today, we’re on the verge of making really three major investment, one of which is pretty sizable in the year from a CapEx perspective. Those three evolve around our distribution infrastructure in China, which is a distribution center capacity enhancement that’s been underway for a year or two and will continue. We’re planning in the next two to three years to begin a pretty significant expansion and consolidation of our distribution capacity in Europe. But what’s most notable this year is we’re adding storage capacity to our U. S.

Distribution center, pretty sizable. It’s a big chunk of CapEx in a given year, but the benefit of that investment over the next twenty years is undeniable. And so we are taking the time at the moment to put some infrastructure into the ground that we know will enable the continued growth of the business for the next ten to twenty years, even though in the year it looks like an exaggerated CapEx amount.

Rick Patel, Research Analyst, Raymond James: So let’s zoom out and talk about customer acquisition opportunities. Maybe starting off with who your core customer is, and we get that question often from investors. So who is your core customer and where do you see the opportunity to capture more?

John Vandemore, Chief Financial Officer, SKECHERS: So if Robert Greenberg were here, I think he would tell you that our core customer is anybody with feet. And he’s not too far off. I would say I do believe there’s a general misperception that we occupy kind of the ends of the consumer spectrum, children clearly, but also more established, more dependable kind of consumers at the other end. But the reality is if you actually look at our demographic spread, it’s more even than that. Certainly, we play very, very well with what we would consult kind of children up until their teen years.

And then we tend to pick consumers up very, very well, you know, when, you know, in all honesty, when people have to pay for their own goods. Before before you pay for your own product, you’re not as concerned about, you know, all all those other qualities we mentioned, style, comfort, quality, innovation. The reasonable price for anybody here who has a teenager, you know that doesn’t enter anybody’s calculus until they start paying for their own stuff, right? So that’s where we tend to pick consumers back up. But even in between, we have a pretty decent base of business.

I would also go as far as to say, just from an income spread, I think there’s also a misperception that we are anchored in lower mid income tiers, but that’s actually not the case at all. What we tend to find is our brand resonates with individuals who seek value, and that is not limited by your income, your average household income or any household income measure. It’s really more of an attitudinal element around, do I feel like I’m getting good value for the money? We have consumers who have incredible household incomes and we have consumers who have more modest. And the brand works very well for those who want value across all those income demographics.

Rick Patel, Research Analyst, Raymond James: And can you tell us where you are with Slip In? So really successful franchise for you. We’ve seen the commercials that are great. So like it’s a couple of years in now, like, you know, where is it in the maturity curve and where are you seeing incremental gains?

John Vandemore, Chief Financial Officer, SKECHERS: Yes. Well, first I’d say, I would be remiss if I didn’t encourage everybody here to try a pair of SKECHERS hands free slip in shoes. If you’re lazy at all, if you don’t feel like bending over to put on your shoes, this is the shoe for you. I would also add it’s actually incredibly comfortable. Some of the technology that adheres to the notion of having the hands free slip in technology actually makes the shoes extraordinarily, you know, comfortable even by our standards.

So, I would encourage you to try it. I would tell you, you know, the honest answer is I don’t know. I don’t know because we’re still seeding the market with awareness. We’re still moving the product design and development along in a way that changes, you know, almost the way the look and feel of the technology appears at the consumer level. And so what I would say is we know it has a long way to go.

I don’t know if that means ultimately that, you know, it’ll be at X, Y or Z level of penetration. I would also caution that sometimes I believe people mistake our technologies, particularly our comfort technologies with, an outsole look. So there are certain brands that do very, very well because they have a unique look, something you can see on the shoe you can appreciate. Skechers Hands Free Slip Ins is not that. There certainly are elements to that, particularly in our early stage designs, but you should think about it as a component of that in a shoe.

And so what it does when it’s a component like that is it can be actually inserted into a lot of different categories. I would tell you today, Sketchers Hands Free Slippin’ as a shoe as a traditional sneaker works very, very well, but we also have have an incredibly successful don’t don’t chuckle because it’s actually legitimate. Sketchers Handsfree Slip In sandal. It’s a sandal. And what it does is it uses the same technology, allows people to get into the sandal more comfortably, and actually positions the straps of the sandal in a way that actually holds your foot better.

And so we’re still deploying the technology in a lot of different areas. And that’s where I think some people don’t realize and even we don’t know where the ultimate resting place is from a penetration standpoint.

Rick Patel, Research Analyst, Raymond James: Can you also talk about your initiatives around performance footwear? As we think about athletic shoes, there’s a lot of competition out there. So where do you see opportunity to add differentiation to the market? Yes.

John Vandemore, Chief Financial Officer, SKECHERS: For those of you who aren’t aware of our recent endeavors, we launched, Sketchers FootballSoccer for all you Americans. About two years ago, we watched basketball. About a year ago, we’re going to relaunch our running program. This coming year, we’ve launched, Sketchers pickleball shoes, and we’re looking at other categories, really focusing on the more technical side of the solution. The honest answer is, though, what we’re attempting to deliver there, quite frankly, is the same thing that we attempt to deliver in every other.

It’s style, comfort and quality with innovation at a reasonable price. We believe there’s an opportunity for a reasonable priced, technical solution in a lot of those categories. But in addition to that, I would make sure that when you think about that, you open your aperture beyond just The United States. I find a lot of times people think about the technical footwear market and they very quickly gravitate to The US model, which is heavily dominated by a couple of brands. But when you actually pull back outside of The U.

S, you actually see a lot more white space opportunity, particularly when you have a solution that offers more value for the consumer. In addition to that, I would tell you also those categories for us allow for an introduction of a consumer that we don’t typically see. It’s not in every instance the same consumer that we’re marketing our leisure shoes to or our athletic, you know, non performance shoes to. And so it also avails us of a consumer touch point that we don’t have today. And we found that that even is opening up eyes because the most difficult sale for any brand, but even ours, is that first sale.

Once we get you into a pair of shoes and you realize how comfortable they are, how high quality they are relative to the price, that opens the door for consideration for other categories. And and the strength of SKECHERS is if we put you into, put you into a golf shoe, say, and you really enjoy it, obviously, it’s comfortable, it’s it’s reasonably priced, but it’s high quality, it does the job. Then Then when you next go to the store and you see a pair of soft toe mocs or some other solution, you’re willing to try it. And when you see that that value proposition is reinforced in that second pair, then you become a very strong consumer for us because you realize that what delivering is consistent across categories and we have so many different categories to solve so many of your footwear needs, that it represents a very unique opportunity. And it’s one of the reasons why we believe our stores, our retail footprint does so well is because that’s where we can personify the assortment the most significantly to the consumer and where they can trial other categories that they may not have been introduced to the brand through.

Rick Patel, Research Analyst, Raymond James: Can you help us understand, the go to market strategy around Performance Footwear? So I believe you spent a bit of time actually creating a product that’s new and differentiated. So you have the product now. At what point are you in the seeding process and when do you pivot to hit the accelerator?

John Vandemore, Chief Financial Officer, SKECHERS: Yes, I think that’s probably not going to be a question that’s answerable by a definitive timeline because the reality is what we know about footwear is sometimes it takes time. Maybe a market takes time, maybe a retail solution takes time. You’re very correct in saying that we are in a bit of a seeding stage. We’ve opened up categories in many markets over the last year, particularly football and basketball, but they’re still very early stage. We’re also very early stage in messaging around the product.

What we want to do is find a nice combination between awareness and availability in markets before we start pushing hard. But that will come. That will certainly come and that will be on the forefront in the next year or two. I would say we’re going to throttle it according to what we sense in the market, not some pre what we sense in the market, not some preordained timeline. In our view, that’s generally where brands get into trouble when you determine that the consumer is going to be appropriately aware of my technology or my solution on this date and that’s when I’m going to launch it.

I think that’s more for us a bit of a qualitative factor that we need to sense in the marketplace, we need to see in consumer feedback. We’ve been showing the product, you know, for a couple of sessions now and when we start to see, you know, kind of that momentum tip that that’s when we’ll prosecute the sales more aggressively. But right now, I’d still say we’re in the seeding phase.

Rick Patel, Research Analyst, Raymond James: And to wrap things up, can you touch on the balance sheet and your priorities for capital allocation?

John Vandemore, Chief Financial Officer, SKECHERS: Well, this year, a lot of capital is going to be spent on some of the projects. As I said, this is a bit of an outsized CapEx year. Traditionally though, our mantra is to maintain a very, very strong balance sheet. We think that’s important in our industry. I think even you’ve seen over the last five or six years, the working capital demands in footwear and apparel can creep up pretty quickly and they can be fairly volatile.

I would say that apart from that, we look to deploy capital in the same way most other brands do. We look for highly accretive investments we can make internally. We do look at inorganic paths to growth, but that’s not been our, our bailiwick really. And we want to be very judicious if we’re ever going to consider something like that. And then our traditional path to returning cash to shareholders is through share repurchases.

I would say that for us right now looks like a continued path. That will be throttled by other factors depending upon price and where we are on our working capital spend for a given period of time. But that will be our primary means over the long term. And we have a share repurchase authorization that we put in place last year for $1,000,000,000 That’s what we’ll continue to use for the time being. But I would say the most important priority for us is maintaining a really solid balance sheet, especially when you start to look at anything approaching turbulence in the, in the, in the marketplace because that’s when we feel like it’s most important to have that extra muscle.

It helped us in ’twenty two and ’twenty three when we had to absorb incremental inventory investments. And we don’t ever want to be at a loss for the ability to do that on our own. And so that is our far and away number one priority.

Rick Patel, Research Analyst, Raymond James: Great. Well, that’s all the time we have. So thank you so much, John, for joining us. And thank you all for your interest.

John Vandemore, Chief Financial Officer, SKECHERS: Yes. Thank you.

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