skx-10q_20220630.htm

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).

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.

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 29, 2022, 134,844,529 shares of the registrant’s Class A Common Stock, $0.001 par value per share, were outstanding.

As of July 29, 2022, 20,888,571 shares of the registrant’s Class B Common Stock, $0.001 par value per share, were outstanding.

	As of			As of
(in thousands)	June 30, 2022			December 31, 2021
ASSETS
Current assets
Cash and cash equivalents	$	751,904		$	796,283
Short-term investments		105,099			98,580
Trade accounts receivable, less allowances of $53,799 and $62,684		916,784			732,793
Other receivables		55,039			80,043
Inventory		1,563,907			1,470,994
Prepaid expenses and other		177,236			193,547
Total current assets ($986,204 and $1,040,765 related to VIEs)		3,569,969			3,372,240
Property, plant and equipment, net		1,225,529			1,128,909
Operating lease right-of-use assets		1,168,385			1,224,580
Deferred tax assets		452,747			451,355
Long-term investments		89,423			145,590
Goodwill		93,497			93,497
Other assets, net		77,046			75,109
Total non-current assets ($591,827 and $608,607 related to VIEs)		3,106,627			3,119,040
TOTAL ASSETS	$	6,676,596		$	6,491,280
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	972,399		$	876,342
Accrued expenses		258,640			265,420
Operating lease liabilities		223,230			225,658
Current installments of long-term borrowings		73,414			76,967
Short-term borrowings		—			1,195
Total current liabilities ($520,979 and $601,929 related to VIEs)		1,527,683			1,445,582
Long-term operating lease liabilities		1,049,330			1,094,748
Long-term borrowings		253,260			263,445
Deferred tax liabilities		9,712			11,820
Other long-term liabilities		118,507			133,613
Total non-current liabilities ($345,658 and $368,994 related to VIEs)		1,430,809			1,503,626
Total liabilities		2,958,492			2,949,208
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; 134,845 and 135,107 shares issued and outstanding		135			135
Class B Common Stock, $0.001 par value; 75,000 shares authorized; 20,889 and 20,939 shares issued and outstanding		21			21
Additional paid-in capital		402,360			429,608
Accumulated other comprehensive loss		(75,784	)		(48,323	)
Retained earnings		3,089,530			2,877,903
Skechers U.S.A., Inc. equity		3,416,262			3,259,344
Noncontrolling interests		301,842			282,728
Total stockholders' equity		3,718,104			3,542,072
TOTAL LIABILITIES AND EQUITY	$	6,676,596		$	6,491,280

See accompanying notes to unaudited condensed consolidated financial statements.

	Three Months Ended June 30,					Six Months Ended June 30,
(in thousands, except per share data)	2022			2021		2022			2021
Sales	$	1,867,804		$	1,661,871	$	3,687,398		$	3,096,326
Cost of sales		970,225			808,279		1,965,656			1,557,075
Gross profit		897,579			853,592		1,721,742			1,539,251
Operating expenses
Selling		166,609			141,470		274,818			232,795
General and administrative		576,812			510,912		1,116,862			947,578
Total operating expenses		743,421			652,382		1,391,680			1,180,373
Earnings from operations		154,158			201,210		330,062			358,878
Other income (expense)		(19,259	)		2,158		(25,005	)		(12,016	)
Earnings before income taxes		134,899			203,368		305,057			346,862
Income tax expense		28,739			41,545		62,731			70,530
Net earnings		106,160			161,823		242,326			276,332
Less: Net earnings attributable to noncontrolling interests		15,756			24,454		30,699			40,390
Net earnings attributable to Skechers U.S.A., Inc.	$	90,404		$	137,369	$	211,627		$	235,942
Net earnings per share attributable to Skechers U.S.A., Inc.
Basic	$	0.58		$	0.88	$	1.36		$	1.52
Diluted	$	0.58		$	0.88	$	1.35		$	1.51
Weighted-average shares used in calculating net earnings per share attributable to Skechers U.S.A., Inc.
Basic		155,941			155,561		155,969			155,196
Diluted		156,748			156,674		157,074			156,321

See accompanying notes to unaudited condensed consolidated financial statements.

	Shares						Amount								Accumulated
	Class A			Class B			Class A			Class B		Additional			other					Skechers						Total
	Common			Common			Common			Common		paid-in			comprehensive			Retained		U.S.A., Inc.			Noncontrolling			stockholders'
(in thousands)	Stock			Stock			Stock			Stock		capital			loss			earnings		equity			interests			equity
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			—			—			—		4,836			—			—		4,836			—			4,836
Shares issued under the incentive award plan		692			—			1			—		(1	)		—			—		—			—			—
Shares redeemed for employee tax withholdings		(234	)		—			—			—		(9,429	)		—			—		(9,429	)		—			(9,429	)
Repurchases of common stock		(636	)		—			(1	)		—		(24,231	)		—			—		(24,232	)		—			(24,232	)
Conversion of Class B Common Stock into Class A Common Stock		50			(50	)		—			—		—			—			—		—			—			—
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

Balance at March 31, 2021		134,172			20,949		$	134		$	21	$	377,350		$	(36,349	)	$	2,234,973	$	2,576,129		$	255,417		$	2,831,546
Net earnings		—			—			—			—		—			—			137,369		137,369			24,454			161,823
Foreign currency translation adjustment		—			—			—			—		—			1,359			—		1,359			1,653			3,012
Distributions to noncontrolling interests		—			—			—			—		—			—			—		—			(750	)		(750	)
Net unrealized loss on derivative contract		—			—			—			—		—			—			—		—			(129	)		(129	)
Stock compensation expense		—			—			—			—		14,645			—			—		14,645			—			14,645
Proceeds from the employee stock purchase plan		141			—			—			—		4,027			—			—		4,027			—			4,027
Shares issued under the incentive award plan		572			—			1			—		(1	)		—			—		—			—			—

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

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	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
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	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	25
	Signatures	26

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2022			2021			2022			2021
Net earnings	$	106,160		$	161,823		$	242,326		$	276,332
Other comprehensive income, net of tax
Net unrealized gain (loss) on derivative contract		1,254			(129	)		7,097			1,623
Gain (loss) on foreign currency translation adjustment		(42,229	)		3,012			(40,740	)		(9,493	)
Comprehensive income		65,185			164,706			208,683			268,462
Less: Comprehensive income attributable to noncontrolling interests		3,743			25,978			23,764			40,225
Comprehensive income attributable to Skechers U.S.A., Inc.	$	61,442		$	138,728		$	184,919		$	228,237

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