Skechers shares got a lift in after-hours trading after the shoe company beat expectations for sales and profits in the second quarter of 2023, despite a slowdown in the U.S. wholesale market.
The Los Angeles-based footwear company reported record quarterly sales of $2.01 billion, which were up 7.7 percent from the prior year and well ahead of the company’s previously outlined projection of between $1.85 billion and $1.90 billion. Net earnings were $152.8 million and diluted earnings per share were up 69 percent to $0.98. Skechers had been aiming for diluted earnings per share of between $0.40 and $0.50.
The results also surpassed expectations from analysts surveyed by Yahoo Finance, who were looking for EPS of $0.54 and revenues of $1.93 billion.
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Shares of Skechers were up almost 5 percent as of 4:30 p.m. ET.
By channel, Skechers’ direct-to-consumer sales increased 29.1 percent, while wholesale decreased 5.9 percent. In a statement, CFO John Vandemore said the company faced “anticipated headwinds in the domestic wholesale market” during the quarter, though momentum persisted in DTC and the international wholesale business.
Across U.S. retail, wholesale channels have been largely challenged due to consumer caution and excess inventory. In Q2, Skechers’ inventory decreased by 18.3 percent from December 31, 2022.
Prior to the earnings report, analysts suggested that Skechers’ wholesale channels would likely be challenged in Q2, though DTC sales and product growth would likely offset losses.
Skechers CEO Robert Greenberg called out the company’s strong standing in high performance golf and pickleball shoes. As the official footwear sponsor of the US Open Pickleball Championships as well as multiple other tournaments, Skechers has been one of the main brands leading the way in the pickleball footwear space as the sport gains momentum. Greenberg also highlighted the company’s popular Slip-ins shoes, a hands-free innovation that has to resonated with consumers, including President Joe Biden, who was recently spotted wearing a pair while boarding Air Force One.
“The power of our marketing and the relevancy of our footwear resonates throughout our 4,700 Skechers stores around the world and at retailers, where consumers can slip into our footwear and leave with the understanding that they just purchased unbelievable comfort technology,” Greenberg said.
Skechers raised the bottom end of its full-year sales outlook and now expects revenues of between $7.95 billion and $8.1 billion for fiscal year 2023, up from its previously issued guidance of between $7.9 billion and $8.1 billion. Diluted earnings per share is now expected in the range of $3.25 to $3.40, up from its prior range of $3.00 to $3.20.
In Q3, Skechers expects to achieve between $1.95 billion and $2 billion in sales, with diluted earnings per share of between $0.70 and $0.75.
