Despite retail industry headwinds, Skechers has seen positive consumer trends going into 2023.
“Since mid-holiday the consumer has been pretty robust,” said Skechers CFO John Vandemore during a Monday morning session at the UBS Global Consumer and Retail Conference in New York City. “We continue to see really strong consumer trends.”
The Los Angeles-based footwear company last month reported better-than-expected results for the fourth quarter, reporting total sales of $1.88 billion, up 13.5% over the same period last year. Diluted earnings per share also beat expectations, at $0.48. For the full-year of 2022, Skechers broke annual sales records of $7.4 billion, up 18% from the prior year.
The encouraging update comes as some other footwear retailers report a similarly upbeat consumer in the back half of the holiday. Caleres president and CEO Jay Schmidt noted in a call with analysts this week that sales in the Famous Footwear channel were slow at the start of Q4 but picked up in mid-December and exceeded expectations in the last six weeks of the quarter. Dick’s Sporting Goods’ CEO also noted this month that the chain’s strong Q4 results highlighted a healthy consumer that wants to keep spending on active and wellness.
For Skechers, this consumer strength plays into the company’s omnichannel strategy, which is a key element on its path to achieve $10 billion in sales by 2026.
“None of us really know what the future holds,” Vandemore said. But, as he explained, people seem to want to keep shopping in stores. And while other brands have placed more of a focus on growing their direct-to-consumer channels, Skechers still sees value in operating a true omnichannel experience, which includes direct channels, owned stores and wholesale partnerships. The goal is to create a “frictionless relationship” between these different distribution channels.
“We want to get the product to wherever the consumer is going to be,” Vandemore said.
On the wholesale side, sales were up 15.7% at Skechers in Q4, driven by the U.S., Germany, India, Mexico and Spain. At the same time, Skechers is honing its own DTC model as well. In Q4, DTC sales grew 10.8%.
“We know it’s a fashionable strategy of late, but it’s been something that’s been built into our DNA for a long time,” Vandemore said, regarding the company’s approach to DTC. “It’s an approach that we have learned to work in concert with our wholesale partners.”
Moving forward, Skechers is cautiously optimistic about the current state of the consumer, even in China, where sales dropped 23% in the fourth quarter, in part due to Covid-19 related restrictions and temporary store closures in November. When it comes to wholesale, Vandemore said partners range from optimistic to “skittish” regarding the potential for a recession in 2023.
“We’re conscientious that there’s factors out there that would suggest there could be a pullback,” Vandemore said. “But as of yet, we quite frankly haven’t seen it. We’ve been watching carefully.”