Skechers is suffering from excess inventories of toning shoes, as demand in this segment is slowing down and new competitors are joining the fray. The management says it could take until the summer for the U.S. company to clean up millions of pairs of unsold toning shoes, largely by cutting prices. In commenting on Skechers' results, the company's chief operating officer and chief financial officer, David Weinberg, stressed that the cleanup is not “a fire sale” and that the company continues to believe in the future of toning shoes. He stressed that these round-soled athletic shoes, which are aimed to exercise one's legs and buttocks while walking, are still selling well even if the size of the market has shrunk.
In the fourth quarter, the group was hit by order cancellations for toning shoes due to the slowdown in demand and oversupply. As a result, Skechers' overall inventories rose by $174.5 million at the end of 2010 to $398.6 million. The bulk of the additional stock, $110 million, is destined for the domestic wholesale business and the remainder is earmarked for the international and retail businesses (more in Shoe Intelligence).
