10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-14429

SKECHERS U.S.A., INC.

(Exact name of registrant as specified in its charter)

 Delaware

95-4376145

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

228 Manhattan Beach Blvd.
Manhattan Beach, California

90266

(Address of principal executive office)

(Zip Code)

(310) 318-3100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol	Name of each exchange on which registered
Class A Common Stock, par value $0.001 per share	SKX	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 28, 2023 134,368,462 shares of the registrant’s Class A Common Stock, $0.001 par value per share, were outstanding.

As of July 28, 2023 20,385,569 shares of the registrant’s Class B Common Stock, $0.001 par value per share, were outstanding.

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

Form 10-Q

Table of Contents


PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets (Unaudited)	3
	Condensed Consolidated Statements of Earnings (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income (Unaudited)	5
	Condensed Consolidated Statements of Equity (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows (Unaudited)	8
	Notes to Condensed Consolidated Financial Statements (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23

PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosures	24
Item 5.	Other Information	24
Item 6.	Exhibits	24
	Signatures	25

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

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

Condensed Consolidated Balance Sheets

(Unaudited)


	As of			As of
(in thousands, except par value)	June 30, 2023			December 31, 2022
ASSETS
Current assets
Cash and cash equivalents	$	896,514		$	615,733
Short-term investments		80,648			102,166
Trade accounts receivable, less allowances of $68,501 and $59,472		940,201			848,287
Other receivables		69,307			86,036
Inventory		1,486,012			1,818,016
Prepaid expenses and other		197,007			176,035
Total current assets ($1,100,137 and $1,014,962 related to VIEs)		3,669,689			3,646,273
Property, plant and equipment, net		1,417,225			1,345,370
Operating lease right-of-use assets		1,230,635			1,200,565
Deferred tax assets		461,021			454,190
Long-term investments		96,591			70,498
Goodwill		101,483			93,497
Other assets, net		131,013			83,094
Total non-current assets ($616,850 and $598,973 related to VIEs)		3,437,968			3,247,214
TOTAL ASSETS	$	7,107,657		$	6,893,487
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	802,234		$	957,384
Accrued expenses		300,071			294,143
Operating lease liabilities		261,954			238,694
Current installments of long-term borrowings		76,388			103,184
Short-term borrowings		36,654			19,635
Total current liabilities ($533,807 and $568,158 related to VIEs)		1,477,301			1,613,040
Long-term operating lease liabilities		1,069,384			1,063,672
Long-term borrowings		236,763			216,488
Deferred tax liabilities		20,224			8,656
Other long-term liabilities		112,523			120,045
Total non-current liabilities ($313,526 and $293,726 related to VIEs)		1,438,894			1,408,861
Total liabilities		2,916,195			3,021,901
Commitments and contingencies (Note 10)
Stockholders’ equity
Preferred Stock, $0.001 par value; 10,000 shares authorized; none issued and outstanding		—			—
Class A Common Stock, $0.001 par value; 500,000 shares authorized; 134,291 and 134,473 shares issued and outstanding		134			134
Class B Common Stock, $0.001 par value; 75,000 shares authorized; 20,464 and 20,810 shares issued and outstanding		20			21
Additional paid-in capital		362,769			403,799
Accumulated other comprehensive loss		(87,707	)		(84,897	)
Retained earnings		3,564,133			3,250,931
Skechers U.S.A., Inc. equity		3,839,349			3,569,988
Noncontrolling interests		352,113			301,598
Total stockholders' equity		4,191,462			3,871,586
TOTAL LIABILITIES AND EQUITY	$	7,107,657		$	6,893,487

See accompanying notes to unaudited condensed consolidated financial statements.

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

Condensed Consolidated Statements of Earnings

(Unaudited)


	Three Months Ended June 30,					Six Months Ended June 30,
(in thousands, except per share data)	2023		2022			2023		2022
Sales	$	2,012,516	$	1,867,804		$	4,014,444	$	3,687,398
Cost of sales		951,992		970,225			1,975,341		1,965,656
Gross profit		1,060,524		897,579			2,039,103		1,721,742
Operating expenses
Selling		187,118		166,609			315,678		274,818
General and administrative		655,673		576,812			1,282,115		1,116,862
Total operating expenses		842,791		743,421			1,597,793		1,391,680
Earnings from operations		217,733		154,158			441,310		330,062
Other income (expense)		2,792		(19,259	)		12,715		(25,005	)
Earnings before income taxes		220,525		134,899			454,025		305,057
Income tax expense		38,942		28,739			82,158		62,731
Net earnings		181,583		106,160			371,867		242,326
Less: Net earnings attributable to noncontrolling interests		28,824		15,756			58,665		30,699
Net earnings attributable to Skechers U.S.A., Inc.	$	152,759	$	90,404		$	313,202	$	211,627
Net earnings per share attributable to Skechers U.S.A., Inc.
Basic	$	0.99	$	0.58		$	2.02	$	1.36
Diluted	$	0.98	$	0.58		$	2.00	$	1.35
Weighted-average shares used in calculating net earnings per share attributable to Skechers U.S.A., Inc.
Basic		154,970		155,941			155,055		155,969
Diluted		156,571		156,748			156,654		157,074

See accompanying notes to unaudited condensed consolidated financial statements.

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

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2023			2022			2023			2022
Net earnings	$	181,583		$	106,160		$	371,867		$	242,326
Other comprehensive income, net of tax
Net unrealized gain (loss) on derivative contract		499			1,254			(917	)		7,097
Loss on foreign currency translation adjustment		(16,144	)		(42,229	)		(9,293	)		(40,740	)
Comprehensive income		165,938			65,185			361,657			208,683
Less: Comprehensive income attributable to noncontrolling interests		20,669			3,743			51,265			23,764
Comprehensive income attributable to Skechers U.S.A., Inc.	$	145,269		$	61,442		$	310,392		$	184,919

See accompanying notes to unaudited condensed consolidated financial statements.

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

Condensed Consolidated Statements of Equity

(Unaudited)



	Shares						Amount								Accumulated
(in thousands)	Class A Common Stock			Class B Common Stock			Class A Common Stock			Class B Common Stock		Additional paid–in capital			other comprehensive loss			Retained earnings		Skechers U.S.A., Inc. equity			Noncontrolling interests			Total stockholders' equity
Balance at March 31, 2023		134,259			20,474		$	134		$	20	$	383,540		$	(80,217	)	$	3,411,374	$	3,714,851		$	331,444		$	4,046,295
Net earnings		—			—			—			—		—			—			152,759		152,759			28,824			181,583
Foreign currency translation adjustment		—			—			—			—		—			(7,490	)		—		(7,490	)		(8,654	)		(16,144	)
Net unrealized gain on derivative contract		—			—			—			—		—			—			—		—			499			499
Stock compensation expense		—			—			—			—		17,716			—			—		17,716			—			17,716
Proceeds from the employee stock purchase plan		148			—			—			—		5,402			—			—		5,402			—			5,402
Shares issued under the incentive award plan		713			—			1			—		(1	)		—			—		—			—			—
Shares redeemed for employee tax withholdings		(260	)		—			—			—		(13,877	)		—			—		(13,877	)		—			(13,877	)
Repurchases of common stock		(579	)		—			(1	)		—		(30,011	)		—			—		(30,012	)		—			(30,012	)
Conversion of Class B Common Stock into Class A Common Stock		10			(10	)		—			—		—			—			—		—			—			—
Balance at June 30, 2023		134,291			20,464		$	134		$	20	$	362,769		$	(87,707	)	$	3,564,133	$	3,839,349		$	352,113		$	4,191,462

Balance at March 31, 2022		134,829			20,939		$	135		$	21	$	415,357		$	(46,822	)	$	2,999,126	$	3,367,817		$	298,099		$	3,665,916
Net earnings		—			—			—			—		—			—			90,404		90,404			15,756			106,160
Foreign currency translation adjustment		—			—			—			—		—			(28,962	)		—		(28,962	)		(13,267	)		(42,229	)
Net unrealized gain on derivative contract		—			—			—			—		—			—			—		—			1,254			1,254
Stock compensation expense		—			—			—			—		15,828			—			—		15,828			—			15,828
Proceeds from the employee stock purchase plan		144			—			—			—