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, 2024


☐	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 October 24, 2024 131,593,345 shares of the registrant’s Class A Common Stock, $0.001 par value per share, were outstanding.

As of October 24, 2024 19,378,651 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 Stockholders' Equity and Redeemable Noncontrolling Interest (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	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	27
	Signatures	28

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, 2024			December 31, 2023
ASSETS
Current assets
Cash and cash equivalents	$	1,354,054		$	1,189,910
Short-term investments		113,795			72,595
Trade accounts receivable, less allowances of $64,810 and $57,867		1,187,033			860,300
Other receivables		98,272			82,253
Inventory		1,706,842			1,525,409
Prepaid expenses and other		238,512			222,137
Total current assets ($1,448,448 and $1,252,372 related to VIEs)		4,698,508			3,952,604
Property, plant and equipment, net		1,782,606			1,506,690
Operating lease right-of-use assets		1,354,811			1,276,171
Deferred tax assets		443,571			450,574
Long-term investments		130,470			123,996
Goodwill		99,774			101,230
Other assets, net		136,301			136,086
Total non-current assets ($817,173 and $641,879 related to VIEs)		3,947,533			3,594,747
TOTAL ASSETS	$	8,646,041		$	7,547,351
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	1,190,194		$	1,008,001
Accrued expenses		331,335			320,105
Operating lease liabilities		295,591			274,296
Current installments of long-term borrowings		371,438			46,571
Short-term borrowings		208,098			11,894
Total current liabilities ($868,123 and $600,337 related to VIEs)		2,396,656			1,660,867
Long-term operating lease liabilities		1,169,488			1,108,110
Long-term borrowings		49,351			242,944
Deferred tax liabilities		11,177			12,594
Other long-term liabilities		106,855			122,794
Total non-current liabilities ($143,424 and $329,219 related to VIEs)		1,336,871			1,486,442
Total liabilities		3,733,527			3,147,309
Commitments and contingencies (Note 10)
Redeemable noncontrolling interest (Note 1)		91,979			89,832
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; 131,593 and 132,837 shares issued and outstanding		132			133
Class B Common Stock, $0.001 par value; 75,000 shares authorized; 19,379 and 20,182 shares issued and outstanding		19			20
Additional paid-in capital		110,350			295,847
Accumulated other comprehensive loss		(88,366	)		(73,388	)
Retained earnings		4,336,875			3,796,730
Skechers U.S.A., Inc. equity		4,359,010			4,019,342
Noncontrolling interests (Note 1)		461,525			290,868
Total stockholders' equity		4,820,535			4,310,210
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS' EQUITY	$	8,646,041		$	7,547,351

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)		2024		2023			2024		2023
Sales		$	2,347,705	$	2,024,958		$	6,756,935	$	6,039,402
Cost of sales			1,124,659		953,040			3,167,818		2,928,381
Gross profit			1,223,046		1,071,918			3,589,117		3,111,021
Operating expenses
Selling			211,162		178,286			603,534		493,964
General and administrative			778,460		680,449			2,246,830		1,962,564
Total operating expenses			989,622		858,735			2,850,364		2,456,528
Earnings from operations			233,424		213,183			738,753		654,493
Other income (expense)			11,891		(7,055	)		8,189		5,660
Earnings before income taxes			245,315		206,128			746,942		660,153
Income tax expense			36,006		40,202			132,731		122,360
Net earnings			209,309		165,926			614,211		537,793
Less: Net earnings attributable to noncontrolling interests and redeemable noncontrolling interest (Note 1)			16,088		20,511			74,066		79,176
Net earnings attributable to Skechers U.S.A., Inc.		$	193,221	$	145,415		$	540,145	$	458,617
Net earnings per share attributable to Skechers U.S.A., Inc.
Basic		$	1.27	$	0.94		$	3.54	$	2.96
Diluted		$	1.26	$	0.93		$	3.50	$	2.93
Weighted-average shares used in calculating net earnings per share attributable to Skechers U.S.A., Inc.
Basic			151,831		154,525			152,409		154,876
Diluted			153,662		156,200			154,412		156,496

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)		2024			2023			2024			2023
Net earnings		$	209,309		$	165,926		$	614,211		$	537,793
Other comprehensive income, net of tax
Net unrealized loss on derivative contract			(1,810	)		(776	)		(3,673	)		(1,693	)
Gain (loss) on foreign currency translation adjustment			16,516			(13,301	)		(22,680	)		(22,594	)
Comprehensive income			224,015			151,849			587,858			513,506
Less: Comprehensive income attributable to noncontrolling interests and redeemable noncontrolling interest (Note 1)			18,490			16,771			62,691			68,036
Comprehensive income attributable to Skechers U.S.A., Inc.		$	205,525		$	135,078		$	525,167		$	445,470

See accompanying notes to unaudited condensed consolidated financial statements.

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

Condensed Consolidated Statements of Stockholders' Equity and Redeemable Noncontrolling Interest

(Unaudited)


	Shares						Amount
(in thousands)	Class A Common Stock			Class B Common Stock			Class A Common Stock			Class B Common Stock			Additional paid–in capital			Accumulated other comprehensive loss			Retained earnings		Skechers U.S.A., Inc. equity			Noncontrolling interests (Note 1)			Total stockholders' equity (Note 1)			Redeemable noncontrolling interest (Note 1)
Balance at June 30, 2024		132,231			20,079		$	132		$	20		$	178,148		$	(100,670	)	$	4,143,654	$	4,221,284		$	292,288		$	4,513,572		$	93,576
Net earnings		—			—			—			—			—			—			193,221		193,221			14,279			207,500			1,809
Foreign currency translation adjustment		—			—			—			—			—			12,304			—		12,304			7,618			19,922			(3,406	)
Contribution from noncontrolling interests		—			—			—			—			—			—			—		—			150,000			150,000			—
Distributions to noncontrolling interests		—			—			—			—			—			—			—		—			(850	)		(850	)		—
Net unrealized loss on derivative contract		—			—			—			—			—			—			—		—			(1,810	)		(1,810	)		—
Stock compensation expense		—			—			—			—			21,026			—			—		21,026			—			21,026			—
Shares issued under the incentive award plan		48			—			—			—			1,611			—			—		1,611			—			1,611			—
Shares redeemed for employee tax withholdings		(7	)		—			—			—			(409	)		—			—		(409	)		—			(409	)		—
Repurchases of common stock		(1,379	)		—			(1	)		—			(90,026	)		—			—		(90,027	)		—			(90,027	)		—
Conversion of Class B Common Stock into Class A Common Stock		700			(700	)		1			(1	)		—			—			—		—			—			—			—
Balance at September 30, 2024		131,593			19,379		$	132		$	19		$	110,350		$	(88,366	)	$	4,336,875	$	4,359,010		$	461,525		$	4,820,535		$	91,979

Balance at June 30, 2023		134,291			20,464		$	134		$	20		$	362,769		$	(87,707	)	$	3,564,133	$	3,839,349		$	266,277		$	4,105,626		$	85,836
Net earnings		—			—			—			—			—			—			145,415		145,415			19,303			164,718			1,208
Foreign currency translation adjustment		—			—			—			—			—			(10,337	)		—		(10,337	)		(2,424	)		(12,761	)		(540	)
Distributions to noncontrolling interests		—			—									—			—			—		—			(16,755	)		(16,755	)		—
Net unrealized gain 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		$	265,625		$	4,217,759		$	86,504

See accompanying notes to unaudited condensed consolidated financial statements.

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

Condensed Consolidated Statements of Stockholders' Equity and Redeemable Noncontrolling Interest

(Unaudited)


	Shares						Amount
(in thousands)	Class A Common Stock			Class B Common Stock			Class A Common Stock			Class B Common Stock			Additional paid–in capital			Accumulated other comprehensive loss			Retained earnings		Skechers U.S.A., Inc. equity			Noncontrolling interests (Note 1)			Total stockholders' equity (Note 1)			Redeemable noncontrolling interest (Note 1)
Balance at December 31, 2023		132,837			20,182		$	133		$	20		$	295,847		$	(73,388	)	$	3,796,730	$	4,019,342		$	290,868		$	4,310,210		$	89,832
Net earnings		—			—			—			—			—			—			540,145		540,145			65,807			605,952			8,259
Foreign currency translation adjustment		—			—			—			—			—			(14,978	)		—		(14,978	)		(1,590	)		(16,568	)		(6,112	)
Contribution from noncontrolling interests		—			—			—			—			—			—			—		—			150,000			150,000			—
Distributions to noncontrolling interests		—			—			—			—			—			—			—		—			(39,887	)		(39,887	)		—
Net unrealized loss on derivative contract		—			—			—			—			—			—			—		—			(3,673	)		(3,673	)		—
Stock compensation expense		—			—			—			—			65,190			—			—		65,190			—			65,190			—
Proceeds from the employee stock purchase plan		137			—			—			—			6,823			—			—		6,823			—			6,823			—
Shares issued under the incentive award plan		1,861			—			2			—			1,609			—			—		1,611			—			1,611			—
Shares redeemed for employee tax withholdings		(793	)		—			(1	)		—			(49,057	)		—			—		(49,058	)		—			(49,058	)		—
Repurchases of common stock		(3,252	)		—			(3	)		—			(210,062	)		—			—		(210,065	)		—			(210,065	)		—
Conversion of Class B Common Stock into Class A Common Stock		803			(803	)		1			(1	)		—			—			—		—			—			—			—
Balance at September 30, 2024		131,593			19,379		$	132		$	19		$	110,350		$	(88,366	)	$	4,336,875	$	4,359,010		$	461,525		$	4,820,535		$	91,979

Balance at December 31, 2022		134,473			20,810		$	134		$	21		$	403,799		$	(84,897	)	$	3,250,931	$	3,569,988		$	223,229		$	3,793,217		$	78,369
Net earnings		—			—