Skechers Is Moving Full Steam Ahead Despite Stock Setback After Q4 Earnings Miss

Stephen Garner
·4-min read

A challenging retail environment and unfavorable foreign currency exchange rates might have hit Skechers stock price this week, but the footwear company is not concerned about business moving into 2025.

According to the Manhattan Beach, Calif.-based footwear company, which ended the year with record sales, near-term headwinds aren’t a concern for the long-term.

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The company noted that China continues to navigate a challenging macroeconomic environment, resulting in its fourth quarter sales declining 11 percent in the country.

“[Looking at China], I think the team is working very diligently there to address what they can in the market,” John Vandemore, chief financial officer at Skechers, told an analyst on the company’s fourth quarter 2024 earnings call on Thursday. “But stepping back, we should all recognize this is a macroeconomic event. This is not particular to one brand or one category of brands or one category of shoes or styles. And so, some of this is going to be beholden to the overall improvement over the course of time in that market.”

Skechers chief operating officer David Weinberg added that the company is bolstering its position in China despite the slowdown. “While it would be an easy place to cut because volumes are coming down, we think it’s important to go and reinforce our position there as we develop new product for China specifically and new advertising and look to move it on and continue to support around the world where we’re growing,” Weinberg told analysts.

As far as Trump’s further 10 percent tariffs on China-made goods, Weinberg said that the company is examining ways to work through the situation — and is well prepared.

“We’ve been dealing with tariff situations in other parts of the world as we are one of the larger businesses outside the United States,” the chief operating officer noted. “In our international business, there has been changes in India, Mexico, South America, Europe, where we’ve had a change in midstream, and we’ve always come out better than we went in. So, I would tell you that while you never know when the situation is going to end, it is one of our core competencies.”

Weinberg added that Skechers has moved production and adjusted prices before due to tariffs and can do it again. “We continue to develop product on a regular basis that have more features that can carry that increase [in price],” the exec said. “So, we think this is not one of the worst ones we’ve seen, and we’ll come through it quite well.”

This comes as the company reported net sales in the fourth quarter of fiscal 2024 of $2.21 billion, a 12.8 percent increase from $1.96 billion the same time last year. As for the full year, the company reported net sales of $8.97 billion, a 12.1 percent increase from $8.0 billion in fiscal 2023.

Looking ahead, Weinberg said that Skechers faces several headwinds and uncertainties – including unfavorable foreign currency exchange rates, the emergence of global minimum tax regulations and the depth and length of the continuing macroeconomic weakness in China – but the company is moving ahead with is plans for continued growth.

During the call, Weinberg said Skechers is doubling down on its shopping experience in an “impactful manner” as it looks to grow both its direct-to-consumer business, most notably with the brand’s first interactive performance store in Canada, as well as its wholesale segment with shop-in-shops and brand takeovers.

“We are focused on enhancing our distribution network for greater efficiency and reach, enabling us to deliver more innovation, drive purchase intent and ensure that our products are available globally,” Weinberg said.

The company ended the quarter with 5,296 Skechers stores worldwide, of which 1,787 are company-owned locations, including 610 in the United States. Skechers noted that it expects to open an additional 180 to 200 company-owned stores worldwide in 2025.

In fiscal 2025, Skechers expects it will achieve sales between $9.70 billion and $9.80 billion and diluted earnings per share between $4.30 and $4.50 for the full year.

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