Skechers posted a decline in wholesale revenues for 2023. But that’s not stopping the comfort shoe maker — and analysts that cover the stock — from projecting a strong 2024.
The Los Angeles-based footwear company on Thursday reported an 8 percent drop in wholesale sales in Q4 “due to some retailers conservatively managing inventory levels and taking goods closer to season,” chief operating officer David Weinberg said in a call with analysts. Domestic wholesale declined 10 percent in Q4, though the company noted that sell-through rates in major retail accounts were up single digits. International wholesale revenues declined 7 percent in the quarter, largely due to inventory congestion in EMEA.
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For the full year, wholesale sales dropped 2.8 percent while direct-to-consumer sales grew 24.3 percent.
Despite the wholesale dip, Skechers‘ management said recovery in the sector is forthcoming and early reads from January suggest better order trends on the horizon for 2024.
“In all, 2023 was a challenging year for wholesale, particularly in the United States,” Weinberg said in a call with investors. “But our key indicators give us optimism that our wholesale business will return to growth in the first half of 2024.”
Skechers’ chief financial officer John Vandemore also noted that the demand for Skechers is present, given the company’s strong DTC sales.
Analysts were also upbeat about Skechers’ potential to pick up its wholesale performance in 2024.
In a Friday note to investors, Williams Trading analyst Sam Poser said that he expects Skechers’ “wholesale demand to recover better than what’s implied in the guidance.” Even amid this expected wholesale recovery, Poser said he expects DTC revenue growth to outpace wholesale.
Wedbush analyst Tom Nikic also echoed the positivity in a Thursday note, in which he described seeing a “light at the end of the tunnel” for Skechers’ wholesale issues in 2023. In a note earlier this month, Nikic explained how Skechers will likely benefit from retail companies looking to restock inventories later this year.
“Skechers was one of the best stocks in our coverage in 2023 and we believe it’s poised for another strong year in 2024,” Nikic wrote. “We believe the brand continues to exhibit solid momentum, there’s a restocking opportunity in the wholesale channel, margins can keep moving higher, and FX trends have turned more favorable.”
UBS analyst Jay Sole also said in a Friday note that Skechers’ comments about strong January wholesale bookings and recovery in Europe were a good sign.
“Based on these positive indicators, we think Skechers’ wholesale business should return to growth in [the first quarter of 2024],” he wrote.
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