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 September 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 November 2, 2023 133,595,695 shares of the registrant’s Class A Common Stock, $0.001 par value per share, were outstanding.

As of November 2, 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	25
	Signatures	26

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)	September 30, 2023			December 31, 2022
ASSETS
Current assets
Cash and cash equivalents	$	1,100,401		$	615,733
Short-term investments		64,065			102,166
Trade accounts receivable, less allowances of $66,115 and $59,472		929,368			848,287
Other receivables		65,323			86,036
Inventory		1,382,027			1,818,016
Prepaid expenses and other		226,565			176,035
Total current assets ($1,125,164 and $1,014,962 related to VIEs)		3,767,749			3,646,273
Property, plant and equipment, net		1,466,145			1,345,370
Operating lease right-of-use assets		1,212,113			1,200,565
Deferred tax assets		442,875			454,190
Long-term investments		108,517			70,498
Goodwill		101,230			93,497
Other assets, net		140,635			83,094
Total non-current assets ($630,170 and $598,973 related to VIEs)		3,471,515			3,247,214
TOTAL ASSETS	$	7,239,264		$	6,893,487
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	820,789		$	957,384
Accrued expenses		296,313			294,143
Operating lease liabilities		264,556			238,694
Current installments of long-term borrowings		76,695			103,184
Short-term borrowings		35,178			19,635
Total current liabilities ($544,018 and $568,158 related to VIEs)		1,493,531			1,613,040
Long-term operating lease liabilities		1,047,896			1,063,672
Long-term borrowings		239,590			216,488
Deferred tax liabilities		20,203			8,656
Other long-term liabilities		133,781			120,045
Total non-current liabilities ($320,145 and $293,726 related to VIEs)		1,441,470			1,408,861
Total liabilities		2,935,001			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; 133,574 and 134,473 shares issued and outstanding		134			134
Class B Common Stock, $0.001 par value; 75,000 shares authorized; 20,386 and 20,810 shares issued and outstanding		20			21
Additional paid-in capital		340,476			403,799
Accumulated other comprehensive loss		(98,044	)		(84,897	)
Retained earnings		3,709,548			3,250,931
Skechers U.S.A., Inc. equity		3,952,134			3,569,988
Noncontrolling interests		352,129			301,598
Total stockholders' equity		4,304,263			3,871,586
TOTAL LIABILITIES AND EQUITY	$	7,239,264		$	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 September 30,							Nine Months Ended September 30,
(in thousands, except per share data)		2023			2022			2023		2022
Sales		$	2,024,958		$	1,878,367		$	6,039,402	$	5,565,765
Cost of sales			953,040			994,432			2,928,381		2,960,088
Gross profit			1,071,918			883,935			3,111,021		2,605,677
Operating expenses
Selling			178,286			150,857			493,964		425,675
General and administrative			680,449			603,107			1,962,564		1,719,969
Total operating expenses			858,735			753,964			2,456,528		2,145,644
Earnings from operations			213,183			129,971			654,493		460,033
Other income (expense)			(7,055	)		(15,139	)		5,660		(40,144	)
Earnings before income taxes			206,128			114,832			660,153		419,889
Income tax expense			40,202			20,498			122,360		83,229
Net earnings			165,926			94,334			537,793		336,660
Less: Net earnings attributable to noncontrolling interests			20,511			8,448			79,176		39,147
Net earnings attributable to Skechers U.S.A., Inc.		$	145,415		$	85,886		$	458,617	$	297,513
Net earnings per share attributable to Skechers U.S.A., Inc.
Basic		$	0.94		$	0.55		$	2.96	$	1.91
Diluted		$	0.93		$	0.55		$	2.93	$	1.90
Weighted-average shares used in calculating net earnings per share attributable to Skechers U.S.A., Inc.
Basic			154,525			155,420			154,876		155,783
Diluted			156,200			156,233			156,496		156,714

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 September 30,							Nine Months Ended September 30,
(in thousands)		2023			2022			2023			2022
Net earnings		$	165,926		$	94,334		$	537,793		$	336,660
Other comprehensive income, net of tax
Net unrealized (loss) gain on derivative contract			(776	)		3,113			(1,693	)		10,210
Loss on foreign currency translation adjustment			(13,301	)		(42,888	)		(22,594	)		(83,628	)
Comprehensive income			151,849			54,559			513,506			263,242
Less: Comprehensive income (loss) attributable to noncontrolling interests			16,771			(2,785	)		68,036			20,979
Comprehensive income attributable to Skechers U.S.A., Inc.		$	135,078		$	57,344		$	445,470		$	242,263

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 June 30, 2023		134,291			20,464		$	134		$	20	$	362,769		$	(87,707	)	$	3,564,133	$	3,839,349		$	352,113		$	4,191,462
Net earnings		—			—			—			—		—			—			145,415		145,415			20,511			165,926
Foreign currency translation adjustment		—			—			—			—		—			(10,337	)		—		(10,337	)		(2,964	)		(13,301	)
Distributions to noncontrolling interests		—			—			—			—		—			—			—		—			(16,755	)		(16,755	)
Net unrealized loss on derivative contract		—			—			—			—		—			—			—		—			(776	)		(776	)
Stock compensation expense		—			—			—			—		17,979			—			—		17,979			—			17,979
Shares issued under the incentive award plan		16			—			—			—		—			—			—		—			—			—
Shares redeemed for employee tax withholdings		(6	)		—			—			—		(257	)		—			—		(257	)		—			(257	)
Repurchases of common stock		(805	)		—			—			—		(40,015	)		—			—		(40,015	)		—			(40,015	)
Conversion of Class B Common Stock into Class A Common Stock		78			(78	)		—			—		—			—			—		—			—			—
Balance at September 30, 2023		133,574			20,386		$	134		$	20	$	340,476		$	(98,044	)	$	3,709,548	$	3,952,134		$	352,129		$	4,304,263

Balance at June 30, 2022		134,845			20,889		$	135		$	21	$	402,360		$	(75,784	)	$	3,089,530	$	3,416,262		$	301,842		$	3,718,104
Net earnings		—			—			—			—		—			—			85,886		85,886			8,448			94,334
Foreign currency translation adjustment		—			—			—			—		—			(28,542	)		—		(28,542	)		(14,346	)		(42,888	)
Distributions to noncontrolling interests		—			—			—			—		—			—			—		—			(8,891	)		(8,891	)
Net unrealized gain on derivative contract		—			—			—			—		—			—			—		—			3,113			3,113
Stock compensation expense		—			—			—			—		10,223			—			—		10,223			—			10,223
Shares issued under the incentive award plan		10			—			—			—		—			—			—		—			—			—
Shares redeemed for employee tax withholdings		(4	)		—			—			—		(112	)		—			—		(112	)		—			(112	)
Repurchases of common stock		(639	)		—			(1	)		—		(25,012	)		—			—		(25,013	)		—			(25,013	)
Balance at September 30, 2022		134,212			20,889		$	134		$	21	$	387,459		$	(104,326	)	$	3,175,416	$	3,458,704		$	290,166		$	3,748,870

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 December 31, 2022		134,473		20,810	$	134	$	21	$	403,799	$	(84,897	)	$	3,250,931	$	3,569,988	$	301,598	$	3,871,586
Net earnings		—		—		—		—		—		—			458,617		458,617		79,176		537,793
Foreign currency translation adjustment