American footwear and apparel giant, Skechers registered a robust 12.5 per cent Y-o-Y increase in overall sales, reaching $2.25 billion in Q1 FY24. This growth was propelled by a notable 15.2 per cent rise in international markets and a 7.8 per cent uptick in domestic sales.
The company’s wholesale operations expanded by 9.8 per cent during the quarter, contributing an additional $127.1 million to the sales figure. Noteworthy, the brand’s sales in the EMEA region grew by 11.5 per cent during the quarter.
Its sales in APAC rose by 15.3 per cent while sales in the AMER region increased by 5.9 per cent. Skecher’s wholesale volume grew by 9.9 per cent, while the average selling price remained steady, as per the brand.
Direct-to-consumer sales of the brand also soared by 17.3 per cent to $122.6 million during the quarter. This included a notable 62.4 per cent increase in the EMEA region, 16.5 per cent in the APAC region, and 10.5 per cent in AMER. Volume in this sector increased by 15.5 per cent, with the average selling price rising by 1.6 per cent.
Significantly, the company's gross margin improved by 360 basis points to 52.5 per cent. This growth was primarily attributed to lower unit costs, reduced freight expenses, and higher average selling prices.
However, Skechers’ operating expenses also rose by 16.9 per cent. As a percentage of sales, these expenses increased by 150 basis points to 39.2 per cent. Selling expenses alone surged by 21.7 per cent, or $27.9 million, primarily due to elevated demand creation expenditures. General and administrative expenses rose by $99.9 million or 15.9 per cent, influenced by higher labor and facility costs, including rent and depreciation.
Despite the rise in expenses, Skechers’ earnings from operations soared significantly by 33.6 per cent to $298.8 million, with the operating margin expanding to 13.3 per cent. The brand’s net earnings also saw an increase to $206.6 million.
David Weinberg, Chief Operating Officer, states, a strong global demand for the brand alongwith a healthy inventory position comprised of proven sellers, innovative technologies, and new product categories presents significant growth opportunities for the brand across the globe.
