As many footwear brands lean into their direct-to-consumer channels, Skechers is picking up wholesale wins.
Skechers reported a strong second quarter on Thursday, more than doubling its revenue. The footwear company said it earned $137.4 million, or 88 cents a share, in Q2, reversing a $68.1 million loss a year ago. Notably, domestic wholesale business sales grew 205.7% to $339.7 million year over year, and 31% compared to 2019.
According to analysts, Skechers’ wholesale business is directly benefiting from a larger industry trend to turn away from retail partnerships in favor of a robust direct-to-consumer model.
Crocs, which reported a revenue growth of 93% in Q2 this week, has focused on sharpening its direct-to-consumer business and slimming down on certain wholesale partnerships in recent months. In April, Crocs ended partnerships with some long-time wholesalers to prioritize key partners that can elevate the brand’s position in the marketplace. Crocs reported a 78.6% year over year increase in direct-to-consumer sales for Q2, which made up 52% of revenues for the quarter.
Industry leader Nike has made similar moves. The company has terminated wholesale accounts with Zappos, Dillard’s, DSW, Urban Outfitters, Shoe Show and more retailers since last year, leaving many retailers without the ability to sell one of the most popular brands in stores.
In the wake of this wholesale exodus, Skechers is picking up wins. In a Friday note, Williams Trading analyst Sam Poser said he expects “SKX wholesale revenue to benefit from Nike’s decision to stop selling a number of retailers.”
Poser added that Skechers’ superior supply chain and comfort-focused products have made it a great option for retailers “who are in dire need of goods” during the current shipping crunch.
“In other words, the well is almost dry at many retailers, and SKX has the hose to fill the well,” he said.
Skechers CFO John M. Vandemore confirmed that Skechers is seeing gains from its position in a wholesale environment devoid of some other major brands.
“We’re seeing really good sell-through of the product. It’s driving higher prices for our wholesale partners,” Skechers CFO John M. Vandemore said in a call with investors. “There absolutely is an opportunity to gain shelf space as [it]becomes available. But I would say, independent of that, our product is tremendously effective.”
Vandemore added that he sees opportunity to grow above the market in domestic wholesale for the long term.
“We believe we’re exceedingly well positioned with key retailers and in categories and with technologies that consumers value,” he said. “But certainly growing above the market in the domestic wholesale marketplace long term is absolutely achievable as well.”
Beyond wholesale, Skechers’ direct-to-consumer sales also rose 137.8% to $507.9 million, led by growth across domestic and international retail stores.
Skechers’ shares are up more than 8% in mid-morning trading today.