Skechers Named Company of the Year by Footwear Plus

by Zach | Feb 13, 2023 | Press Release

Feb 13, 2023 • 9:00 am EST

The 2022 Plus Award Marks the Tenth Time Skechers Has Earned Top Honor

LOS ANGELES–(BUSINESS WIRE)–
Skechers U.S.A., Inc. (NYSE:SKX), The Comfort Technology Company™, has been honored as Company of the Year by Footwear Plus for the tenth time. Skechers was also recently recognized by Footwear News with their Company of the Year award—marking the second time the brand has earned top honors from both industry publications for the same year. In addition, Skechers Kids received the Excellence in Children’s Design Award, the sixth such accolade from Footwear Plus that the Company has won for its popular kids’ styles.

“We always knew 2022 would be an extraordinary year for Skechers as we celebrated our 30^th anniversary, so to be recognized with multiple Company of the Year awards is truly special. Receiving the award for our Skechers Kids collection further validates the innovation and relevancy of our children’s collections,” began Michael Greenberg, president of Skechers. “Our teams around the globe have worked tirelessly to navigate one of the most difficult economic environments in our history and found a way to execute and continue growing the brand. Innovative comfort technology products like Skechers Hands Free Slip-ins for men, women and kids, stylish designs like our Skechers Uno fashion sneakers, and buzzworthy collaborations resonate with consumers to build the brand across each demographic. I’m proud of all we achieved in our 30^th year in business, and our pipeline is filled with new products, partnerships and initiatives that will keep us on this positive trajectory.”

“After 30 years in business, Skechers is as strong a player in the market as ever with an innovative product range that offers something for every consumer,” said Greg Dutter, editorial director for Footwear Plus. “While their Kids collection deservedly received separate recognition from voters, Skechers is a top-to-bottom industry leader, and that’s why they earned the 2022 Plus Award for Company of the Year.”

“It’s a great honor for Skechers to be selected by Footwear Plus voters as Company of the Year for an incredible tenth time,” said Skechers CEO Robert Greenberg. “We’re where we are today because of the dedication, creativity and insight of Skechers global team members who have each played a part in uniquely positioning us as a trusted brand with the global infrastructure and product range to deliver what consumers want—comfort, style, innovation, and quality at a reasonable price. And as great as 2022 has been for Skechers, we’re kicking it into overdrive with so much to come in the year ahead.”

Skechers’ previous Footwear Plus awards include the Company of the Year Award in 2005, 2006, 2008, 2009, 2010, 2014, 2015, 2019, and 2020 and Plus Awards for Design Excellence in 2000 for Young Women’s Fashion; 2001 for Women’s Streetwear; 2002 for Children’s; 2005 and 2006 for Men’s Streetwear; 2013 for the Running and Children’s categories; 2014 for Running; 2015 for Athleisure; and 2016, 2019 and 2020 for its Skechers Kids product.

Plus Award nominees are determined by market research, Footwear Plus staff, and select industry experts. Winners are determined by online voting open to industry members and consumers.

From fashion styles to lifestyle product and performance shoes for sport enthusiasts, Skechers’ offering is enhanced with the Company’s signature comfort innovations—including its Skechers Hands Free Slip-ins® Technology, Massage Fit® Technology, Skechers Arch Fit® Technology, Skechers Max Cushioning® Technology, Skechers Hyper Burst® Technology, Skechers Air-Cooled Memory Foam®, Skechers Relaxed Fit® Technology and Skechers Stretch Fit® Technology.

Skechers features a roster of global ambassadors in its campaigns including music icons Snoop Dogg and Chesca; television personalities Martha Stewart, Amanda Kloots and Brooke Burke; and a slate of retired sports stars such as football players and broadcasters Tony Romo and Howie Long, plus iconic boxer Sugar Ray Leonard, among other regional endorsees. Among the professional athletes currently competing in Skechers are golfers Brooke Henderson and Matt Fitzpatrick, who both won major championships in 2022; Dodgers pitcher Clayton Kershaw; and pickleball pros Catherine Parenteau and Tyson McGuffin.

The Company’s footwear and apparel collections are available in Skechers retail stores as well as at skechers.com, plus department stores and footwear retailers around the globe.

About SKECHERS U.S.A., Inc.

Skechers U.S.A., Inc., The Comfort Technology Company™ based in Southern California, designs, develops and markets a diverse range of lifestyle and performance footwear, apparel and accessories for men, women and children. The Company’s collections are available in over 180 countries and territories through department and specialty stores, and direct to consumers through digital stores and 4,537 Company- and third-party-owned physical retail stores. The Company manages its international business through a network of wholly-owned subsidiaries, joint venture partners, and distributors. For more information, please visit about.skechers.com and follow us on Facebook, Instagram, Twitter, and TikTok.

This announcement contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may include, without limitation, Skechers’ future domestic and international growth, financial results and operations including expected net sales and earnings, its development of new products, future demand for its products, its planned domestic and international expansion, opening of new stores and additional expenditures, and advertising and marketing initiatives. Forward-looking statements can be identified by the use of forward-looking language such as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “plan,” “project,” “will,” “could,” “may,” “might,” or any variations of such words with similar meanings. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in forward-looking statements. Factors that might cause or contribute to such differences include the disruption of business and operations due to the COVID-19 pandemic; delays or disruptions in our supply chain; international economic, political and market conditions including the effects of inflation and foreign currency exchange rate fluctuations around the world, the challenging consumer retail markets in the United States and the impact of Russia’s recent invasion of Ukraine; sustaining, managing and forecasting costs and proper inventory levels; losing any significant customers; decreased demand by industry retailers and cancellation of order commitments due to the lack of popularity of particular designs and/or categories of products; maintaining brand image and intense competition among sellers of footwear for consumers, especially in the highly competitive performance footwear market; anticipating, identifying, interpreting or forecasting changes in fashion trends, consumer demand for the products and the various market factors described above; sales levels during the spring, back-to-school and holiday selling seasons; and other factors referenced or incorporated by reference in Skechers’ annual report on Form 10-K for the year ended December 31, 2021 and its quarterly reports on Form 10-Q in 2022. Taking these and other risk factors associated with the COVID-19 pandemic into consideration, the dynamic nature of these circumstances means that what is stated in this press release could change at any time, and as a result, actual results could differ materially from those contemplated by such forward-looking statements. The risks included here are not exhaustive. Skechers operates in a very competitive and rapidly changing environment. New risks emerge from time to time and we cannot predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, you should not place undue reliance on forward-looking statements as a prediction of actual results. Moreover, reported results should not be considered an indication of future performance.

Jennifer Clay

SKECHERS U.S.A., Inc.

[email protected]

(310) 937-1326

Source: Skechers U.S.A., Inc.

Skechers Announces Record Fourth Quarter Sales and Full Year 2022 Financial Results

by Zach | Feb 2, 2023 | Press Release

Feb 2, 2023 • 4:05 pm EST

LOS ANGELES–(BUSINESS WIRE)–
Skechers U.S.A., Inc. (“Skechers” or the “Company”) (NYSE:SKX), The Comfort Technology Company^TM and a global footwear leader, today announced financial results for the fourth quarter and year ended December 31, 2022.

Fourth Quarter Highlights

“2022 was another milestone year for Skechers as we achieved record annual sales of $7.4 billion. This increase of $1.1 billion, or 18%, from the prior year was the result of four quarterly sales records, including fourth quarter sales of $1.88 billion,” began David Weinberg, Chief Operating Officer of Skechers. “Fourth quarter growth was driven by increases of 16% in Wholesale combined with 11% in Direct-to-Consumer. Wholesale results were driven by double-digit growth in the U.S., international distributors, Germany, India, Mexico, and Spain. The strength in our Direct-to-Consumer business was primarily driven by domestic sales. The growth within the quarter was partially offset by a 23% decrease in our China sales, which were impacted by COVID-related restrictions, including the temporary closure of more than 1,000 Skechers stores in November. With the recent elimination of the zero-COVID policy, we believe that our business in China will improve throughout 2023. In addition, while the inventory challenges at our domestic distribution center have been difficult to navigate, we are seeing improvements and remain confident in the strength of our brand and the demand for our products. We ended the year strong and expect to see continued growth in 2023.”

“Starting our fourth decade of business as a $7.4 billion company that grew over $1 billion this past year is a phenomenal achievement and one that leaves me with overwhelming pride for the dedication, creativity and insight of the global Skechers team. With their flexibility and drive, along with the support of both our loyal partners and consumers, we expect to achieve continued success across all areas of the business,” added Robert Greenberg, Chief Executive Officer of Skechers. “With the goal of $10 billion in sales by 2026, our aim is high, but we believe attainable due to several factors. Our range of comfort technology products is broader and more appealing than ever, and many new attention-grabbing collaborations are planned throughout this year. We are committed to our marketing strategy and will be revealing even more surprising star power in 2023, which we expect will enable us to reach a more diverse audience. And we have the global infrastructure and talented teams in place to deliver what consumers want – comfort, style, innovation, and quality at a reasonable price from a brand they trust. 2022 was an incredible year for us, and I’m looking forward to what 2023 will bring.”

Fourth Quarter 2022 Financial Results

Three Months Ended December 31,

Change

(in millions, except per share data)

2022

2021

$

%

Sales

$

1,878.8

$

1,655.4

223.4

13.5

Gross profit

909.7

808.2

101.5

12.6

Gross margin

48.4

%

48.8

%

(40

)bps

Operating expenses

823.0

715.1

107.9

15.1

As a % of sales

43.8

%

43.2

%

60

bps

Earnings from operations

86.6

93.1

(6.5

)

(6.9

)

Operating margin

4.6

%

5.6

%

(100

)bps

Net earnings

75.5

402.4

(326.9

)

(81.2

)

Diluted earnings per share

$

0.48

$

2.56

(2.08

)

(81.3

)

Adjusted diluted earnings per share

$

0.48

$

0.43

0.05

11.6

Fourth quarter sales increased 13.5% as a result of a 22.3% increase domestically and an 8.7% increase internationally, led by strength in wholesale sales. All segments experienced growth, with Wholesale increasing 15.7% and Direct-to-Consumer increasing 10.8%. On a constant currency basis, sales increased 19.1%.

Wholesale sales growth of $142.4 million, or 15.7%, was led by increases in EMEA of 31.1% and AMER of 18.6%. Wholesale volume increased 9.4% and average selling price increased 6.3%.

Direct-to-Consumer sales growth of $81.0 million, or 10.8%, was led by increases in AMER of 27.0% and EMEA of 19.1%. Direct-to-Consumer volume increased 14.8% and average selling price decreased 3.5%.

Gross margin was 48.4%, a decrease of 40 basis points, primarily the result of higher cost per unit and increased promotions, partially offset by average selling price increases.

Operating expenses increased $107.9 million, or 15.1%, and as a percentage of sales increased 60 basis points to 43.8%. Selling expenses increased $19.0 million, or 13.7%, due to higher global digital and brand demand creation expenditures. General and administrative expenses increased $88.9 million, or 15.4%, and as a percentage of sales increased 60 basis points to 35.4%. Increased expenses were primarily driven by volume-driven labor and distribution expenses in addition to higher costs at the domestic distribution center due to supply chain and logistics challenges.

Earnings from operations decreased $6.5 million, or 6.9%, to $86.6 million.

Net earnings were $75.5 million and diluted earnings per share were $0.48 compared with prior year net earnings of $402.4 million and earnings per share of $2.56. Adjusted diluted earnings per share were $0.48 compared with prior year adjusted diluted earnings per share of $0.43, excluding certain items related to tax benefit and legal settlements.

In the fourth quarter, the Company’s effective income tax rate was 9.6%.

“Skechers’ record fourth quarter and full year sales, demonstrate the strength of our brand as the comfort technology leader and the robust demand for our innovative product portfolio, which drove global growth across channels despite volatile economic conditions,” stated John Vandemore, Chief Financial Officer of Skechers. “We are making considerable progress on addressing the short-term challenges from elevated inventory levels and congestion in the supply chain, while staying keenly focused on executing against and investing in our long-term growth strategy.”

Full Year 2022 Financial Results

Year Ended December 31,

Change

(in millions, except per share data)

2022

2021

$

%

Sales

$

7,444.5

$

6,310.2

1,134.3

18.0

Gross profit

3,515.4

3,124.4

391.0

12.5

Gross margin

47.2

%

49.5

%

(230

)bps

Operating expenses

2,968.7

2,526.2

442.5

17.5

As a % of sales

39.9

%

40.0

%

(20

)bps

Earnings from operations

546.7

598.2

(51.5

)

(8.6

)

Operating margin

7.3

%

9.5

%

(210

)bps

Net earnings

373.0

741.5

(368.5

)

(49.7

)

Diluted earnings per share

$

2.38

$

4.73

(2.35

)

(49.7

)

Adjusted diluted earnings per share

$

2.38

$

2.59

(0.21

)

(8.1

)

Full year sales increased 18.0% reflecting a 20.0% increase domestically and a 16.6% increase internationally with the largest contribution derived from wholesale sales. Both segments experienced increases, with Wholesale increasing 23.2% and Direct-to-Consumer increasing 10.2%. On a constant currency basis, the Company’s sales increased 22.6%.

Wholesale sales growth of $873.8 million, or 23.2%, was led by increases in AMER of 28.7% and EMEA of 33.9%. Wholesale volume increased 18.2% and average selling price increased 4.8%.

Direct-to-Consumer sales growth of $260.5 million, or 10.2%, was led by increases in AMER of 13.8% and EMEA of 25.3%. Direct-to-Consumer volume increased 6.6% and average selling price increased 3.4%.

Gross margin was 47.2%, a decrease of 230 basis points, primarily the result of higher freight and logistics costs, partially offset by average selling price increases.

Operating expenses increased $442.5 million or 17.5%. As a percentage of sales, operating expenses improved 20 basis points to 39.9%. Selling expenses increased $84.1 million or 16.8%, primarily due to higher global demand creation expenditures. General and administrative expenses increased $358.4 million or 17.7%, primarily due to supply chain and logistics challenges at the domestic distribution center in addition to increased labor and warehouse and distribution expenses, driven by higher unit volume.

Earnings from operations decreased $51.5 million to $546.7 million.

Net earnings were $373.0 million and diluted earnings per share were $2.38 compared with prior year net earnings of $741.5 million and earnings per share of $4.73. Adjusted diluted earnings per share were $2.38 compared with prior year adjusted diluted earnings per share of $2.59, excluding certain items related to tax benefit and legal settlements.

The Company’s effective income tax rate was 17.8%.

Balance Sheet

Cash, cash equivalents and investments totaled $788.4 million, a decrease of $252.1 million, or 24.2% from December 31, 2021, primarily as a result of working capital investments, particularly inventory, capital expenditures, and completing $74.2 million of share repurchases during 2022.

Inventory was $1.82 billion, an increase of $347.0 million or 23.6% from December 31, 2021. Increased inventory levels primarily reflect growth in AMER and EMEA.

Share Repurchase

In 2022, the Company repurchased 1.9 million shares of its Class A common stock at a cost of $74.2 million. At December 31, 2022, approximately $425.8 million remained available under the Company’s share repurchase program.

Outlook

For the fiscal year 2023, the Company believes it will achieve sales between $7.75 billion and $8.0 billion and diluted earnings per share of between $2.80 and $3.00. The Company believes that for the first quarter of 2023, it will achieve sales between $1.80 billion and $1.85 billion and diluted earnings per share of between $0.55 and $0.60. Further, the Company believes that total capital expenditures will be between $300 million and $350 million in 2023.

This guidance considers but may not fully represent the significant uncertainty surrounding 2023.

Store Count

Number of Stores

December 31, 2021

Opened

Closed⁽¹⁾

December 31, 2022

Domestic stores

515

43

(19

)

539

International stores

845

172

(112

)

905

Distributor, licensee and franchise stores

2,946

529

(382

)

3,093

Total Skechers stores

4,306

744

(513

)

4,537

(1) Does not reflect temporary closures due to the COVID-19 pandemic.

Fourth Quarter 2022 Conference Call

The Company will host a conference call today at 4:30 p.m. ET / 1:30 p.m. PT to discuss its fourth quarter 2022 financial results. The call can be accessed on the Investor Relations section of the Company’s website at investors.skechers.com. For those unable to participate during the live broadcast, a replay will be available beginning February 2, 2023 at 7:30 p.m. ET, through February 16, 2023, at 11:59 p.m. ET. To access the replay, dial 844-512-2921 (U.S.) or 412-317-6671 (International) and use passcode: 13735418.

About Skechers U.S.A., Inc.

Skechers U.S.A., Inc., The Comfort Technology Company™ based in Southern California, designs, develops and markets a diverse range of lifestyle and performance footwear, apparel and accessories for men, women and children. The Company’s collections are available in over 180 countries and territories through department and specialty stores, and direct to consumers through digital stores and 4,537 Company- and third-party-owned physical retail stores. The Company manages its international business through a network of wholly-owned subsidiaries, joint venture partners, and distributors. For more information, please visit about.skechers.com and follow us on Facebook, Instagram, Twitter and TikTok.

Reference in this press release to “Sales” refers to Skechers’ net sales reported under GAAP. This announcement contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may include, without limitation, Skechers’ future domestic and international growth, financial results and operations including expected net sales and earnings, its development of new products, future demand for its products, its planned domestic and international expansion, opening of new stores and additional expenditures, and advertising and marketing initiatives. Forward-looking statements can be identified by the use of forward-looking language such as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “plan,” “project,” “will,” “could,” “may,” “might,” or any variations of such words with similar meanings. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in forward-looking statements. Factors that might cause or contribute to such differences include the disruption of business and operations due to the COVID-19 pandemic; delays or disruptions in our supply chain; international economic, political and market conditions including the effects of inflation and foreign currency exchange rate fluctuations around the world, the challenging consumer retail markets in the United States and the impact of Russia’s invasion of Ukraine; sustaining, managing and forecasting costs and proper inventory levels; losing any significant customers; decreased demand by industry retailers and cancellation of order commitments due to the lack of popularity of particular designs and/or categories of products; maintaining brand image and intense competition among sellers of footwear for consumers, especially in the highly competitive performance footwear market; anticipating, identifying, interpreting or forecasting changes in fashion trends, consumer demand for the products and the various market factors described above; sales levels during the spring, back-to-school and holiday selling seasons; and other factors referenced or incorporated by reference in Skechers’ annual report on Form 10-K for the year ended December 31, 2021 and its quarterly reports on Form 10-Q in 2022. Taking these and other risk factors associated with the COVID-19 pandemic into consideration, the dynamic nature of these circumstances means that what is stated in this press release could change at any time, and as a result, actual results could differ materially from those contemplated by such forward-looking statements. The risks included here are not exhaustive. Skechers operates in a very competitive and rapidly changing environment. New risks emerge from time to time and we cannot predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, you should not place undue reliance on forward-looking statements as a prediction of actual results. Moreover, reported results should not be considered an indication of future performance.

SKECHERS U.S.A., INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

As of

As of

(in thousands)

December 31, 2022

December 31, 2021

ASSETS

Current assets

Cash and cash equivalents

$

615,733

$

796,283

Short-term investments

102,166

98,580

Trade accounts receivable, net

848,287

732,793

Other receivables

86,036

80,043

Inventory

1,818,016

1,470,994

Prepaid expenses and other

176,035

193,547

Total current assets

3,646,273

3,372,240

Property, plant and equipment, net

1,345,370

1,128,909

Operating lease right-of-use assets

1,200,565

1,224,580

Deferred tax assets

454,190

451,355

Long-term investments

70,498

145,590

Goodwill

93,497

93,497

Other assets, net

83,094

75,109

Total non-current assets

3,247,214

3,119,040

TOTAL ASSETS

$

6,893,487

$

6,491,280

LIABILITIES AND EQUITY

Current liabilities

Accounts payable

$

957,384

$

876,342

Accrued expenses

294,143

265,420

Operating lease liabilities

238,694

225,658

Current installments of long-term borrowings

103,184

76,967

Short-term borrowings

19,635

1,195

Total current liabilities

1,613,040

1,445,582

Long-term operating lease liabilities

1,063,672

1,094,748

Long-term borrowings

216,488

263,445

Deferred tax liabilities

8,656

11,820

Other long-term liabilities

120,045

133,613

Total non-current liabilities

1,408,861

1,503,626

Total liabilities

3,021,901

2,949,208

Stockholders’ equity

Preferred Stock

—

—

Class A Common Stock

134

135

Class B Common Stock

21

21

Additional paid-in capital

403,799

429,608

Accumulated other comprehensive loss

(84,897

)

(48,323

)

Retained earnings

3,250,931

2,877,903

Skechers U.S.A., Inc. equity

3,569,988

3,259,344

Noncontrolling interests

301,598

282,728

Total stockholders’ equity

3,871,586

3,542,072

TOTAL LIABILITIES AND EQUITY

$

6,893,487

$

6,491,280

SKECHERS U.S.A., INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings

(Unaudited)

Three Months Ended December 31,

Year Ended December 31,

(in thousands, except per share data)

2022

2021

2022

2021

Sales

$

1,878,785

$

1,655,385

$

7,444,550

$

6,310,187

Cost of sales

969,105

847,228

3,929,193

3,185,816

Gross profit

909,680

808,157

3,515,357

3,124,371

Operating expenses

Selling

157,951

138,892

583,626

499,532

General and administrative

665,092

576,203

2,385,061

2,026,652

Total operating expenses

823,043

715,095

2,968,687

2,526,184

Earnings from operations

86,637

93,062

546,670

598,187

Other income (expense)

15,731

(8,365

)

(24,413

)

(28,430

)

Earnings before income taxes

102,368

84,697

522,257

569,757

Income tax expense (benefit)

9,866

(337,902

)

93,095

(245,875

)

Net earnings

92,502

422,599

429,162

815,632

Less: Net earnings attributable to noncontrolling interests

16,987

20,177

56,134

74,129

Net earnings attributable to Skechers U.S.A., Inc.

$

75,515

$

402,422

$

373,028

$

741,503

Net earnings per share attributable to Skechers U.S.A., Inc.

Basic

$

0.49

$

2.58

$

2.40

$

4.77

Diluted

$

0.48

$

2.56

$

2.38

$

4.73

Weighted-average shares used in calculating net earnings per share attributable to Skechers U.S.A., Inc.

Basic

155,162

155,909

155,627

155,539

Diluted

156,278

157,340

156,608

156,794

SKECHERS U.S.A., INC. AND SUBSIDIARIES

Supplemental Financial Information

(Unaudited)

Segment Information

Three Months Ended December 31,

Change

(in millions)

2022

2021

$

%

Wholesale sales

$

1,049.2

$

906.8

142.4

15.7

Gross profit

375.2

326.7

48.5

14.9

Gross margin

35.8

%

36.0

%

(30

)bps

Direct-to-Consumer sales

$

829.6

$

748.6

81.0

10.8

Gross profit

534.4

481.5

52.9

11.0

Gross margin

64.4

%

64.3

%

10

bps

Total sales

$

1,878.8

$

1,655.4

223.4

13.5

Gross profit

909.7

808.2

101.4

12.6

Gross margin

48.4

%

48.8

%

(40

)bps

Year Ended December 31,

Change

(in millions)

2022

2021

$

%

Wholesale sales

$

4,632.4

$

3,758.6

873.8

23.2

Gross profit

1,669.3

1,437.5

231.8

16.1

Gross margin

36.0

%

38.2

%

(220

)bps

Direct-to-Consumer sales

$

2,812.1

$

2,551.6

260.5

10.2

Gross profit

1,846.1

1,686.9

159.2

9.4

Gross margin

65.6

%

66.1

%

(50

)bps

Total sales

$

7,444.5

$

6,310.2

1,134.3

18.0

Gross profit

3,515.4

3,124.4

391.0

12.5

Gross margin

47.2

%

49.5

%

(230

)bps

Additional Sales Information

Three Months Ended December 31,

Change

(in millions)

2022

2021

$

%

Geographic sales

Domestic

Wholesale

$

365.4

$

315.5

49.9

15.8

Direct-to-Consumer

345.4

265.7

79.7

30.0

Total domestic sales

710.8

581.2

129.6

22.3

International

Wholesale

683.8

591.3

92.5

15.6

Direct-to-Consumer

484.2

482.9

1.3

0.3

Total international sales

1,168.0

1,074.2

93.8

8.7

Total sales

$

1,878.8

$

1,655.4

223.4

13.5

Regional sales

Americas (AMER)

$

925.6

$

755.7

169.9

22.5

Europe, Middle East & Africa (EMEA)

413.7

320.9

92.8

28.9

Asia Pacific (APAC)

539.5

578.8

(39.3

)

(6.8

)

Total sales

$

1,878.8

$

1,655.4

223.4

13.5

China sales

$

308.0

$

402.4

(94.4

)

(23.4

)

Distributor sales

$

160.7

$

118.2

42.5

35.9

Year Ended December 31,

Change

(in millions)

2022

2021

$

%

Geographic sales

Domestic

Wholesale

$

1,831.6

$

1,448.3

383.3

26.5

Direct-to-Consumer

1,243.5

1,115.1

128.4

11.5

Total domestic sales

3,075.1

2,563.4

511.7

20.0

International

Wholesale

2,800.8

2,310.3

490.5

21.2

Direct-to-Consumer

1,568.6

1,436.5

132.1

9.2

Total international sales

4,369.4

3,746.8

622.6

16.6

Total sales

$

7,444.5

$

6,310.2

1,134.3

18.0

Regional sales

Americas (AMER)

$

3,854.4

$

3,152.3

702.1

22.3

Europe, Middle East & Africa (EMEA)

1,699.2

1,282.9

416.3

32.5

Asia Pacific (APAC)

1,890.9

1,875.0

15.9

0.9

Total sales

$

7,444.5

$

6,310.2

1,134.3

18.0

China sales

$

1,062.7

$

1,247.9

(185.2

)

(14.8

)

Distributor sales

$

557.1

$

387.2

169.9

43.9

SKECHERS U.S.A., INC. AND SUBSIDIARIES

Reconciliation of GAAP Earnings Financial Measures to Corresponding Non-GAAP Financial Measures

(Unaudited)

Adjusted Diluted Earnings Per Share (Non-GAAP Financial Measure)

We believe that adjusted diluted earnings per share provide meaningful supplemental information to investors in evaluating our business performance for the quarter and year ended December 31, 2022. Adjusted diluted earnings per share is not a measure of financial performance under GAAP and should be considered in addition to, and not a substitute for, diluted earnings per share which is the most comparable GAAP measure. We believe that this non-GAAP measure provides useful information to investors regarding our results of operations and that when this non-GAAP financial information is viewed with our GAAP financial information, investors are provided with valuable supplemental information regarding our results of operations, facilitating period-to-period comparisons of our business performance consistent with how management evaluates the Company’s operating performance. Our method of determining non-GAAP financial measures may differ from other companies’ methods and therefore may not be comparable to those used by other companies. The table below includes prior-year adjustments for a tax benefit due to the establishment of net deferred tax assets related to an intra-entity transfer of certain intellectual property rights, as well as charges related to the settlement of multiple legal matters and the related tax benefit.

Three Months Ended December 31,

Year Ended December 31,

2022

2021

2022

2021

Diluted earnings per share, as reported

$

0.48

$

2.56

$

2.38

$

4.73

Less: Income tax benefits

—

(2.23

)

—

(2.24

)

Plus: Settlement of legal matters

—

0.10

—

0.10

Adjusted diluted earnings per share

$

0.48

$

0.43

$

2.38

$

2.59

Constant Currency Adjustment (Non-GAAP Financial Measure)

We evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of period-over-period fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our results of operations, thereby facilitating period-to-period comparisons of our business performance and is consistent with how management evaluates the Company’s performance. We calculate constant currency percentages by converting our current period local currency financial results using the prior-period exchange rates and comparing these adjusted amounts to our prior period reported results.

Three Months Ended December 31,

2022

2021

Change

(in millions, except per share data)

Reported GAAP Measure

Constant Currency

Adjustment

Adjusted for Non-GAAP Measures

Reported GAAP Measure

$

%

Sales

$

1,878.8

$

92.8

$

1,971.6

$

1,655.4

316.2

19.1

Cost of sales

969.1

52.6

1,021.7

847.2

174.5

20.6

Gross profit

909.7

40.2

949.9

808.2

141.7

17.5

Operating expenses

823.0

33.7

856.7

715.1

141.6

19.8

Earnings from operations

86.6

6.5

93.2

93.1

0.1

0.1

Other income (expense)

15.8

(21.4

)

(5.6

)

(8.4

)

2.8

(33.3

)

Income tax expense (benefit)

9.9

1.4

11.3

(337.9

)

349.2

n/m

Less: Noncontrolling interests

17.0

1.5

18.5

20.2

(1.7

)

(8.4

)

Net earnings

$

75.5

$

(17.8

)

$

57.8

$

402.4

(344.6

)

(85.6

)

Diluted earnings per share

$

0.48

$

(0.11

)

$

0.37

$

2.56

(2.19

)

(85.5

)

Year Ended December 31,

2022

2021

Change

(in millions, except per share data)

Reported GAAP Measure

Constant Currency

Adjustment

Adjusted for Non-GAAP Measures

Reported GAAP Measure

$

%

Sales

$

7,444.5

$

291.6

$

7,736.1

$

6,310.2

1,425.9

22.6

Cost of sales

3,929.1

176.0

4,105.1

3,185.8

919.3

28.9

Gross profit

3,515.4

115.6

3,631.0

3,124.4

506.6

16.2

Operating expenses

2,968.7

97.0

3,065.7

2,526.2

539.5

21.4

Earnings from operations

546.7

18.6

565.3

598.2

(32.9

)

(5.5

)

Other income (expense)

(24.5

)

6.8

(17.7

)

(28.5

)

10.8

(37.9

)

Income tax expense (benefit)

93.1

4.3

97.4

(245.9

)

343.3

n/m

Less: Noncontrolling interests

56.1

2.2

58.3

74.1

(15.8

)

(21.3

)

Net earnings

$

373.0

$

18.9

$

391.9

$

741.5

(349.6

)

(47.1

)

Diluted earnings per share

$

2.38

$

0.12

$

2.50

$

4.73

(2.23

)

(47.1

)

Investor Relations

Eunice Han

[email protected]

Press

Jennifer Clay

[email protected]

Source: Skechers U.S.A., Inc.