Lifted by robust international demand, Skechers’ revenues jumped by 15.0 percent in the first quarter to a record level of $1,428.4 million, as compared to a year ago. Sales outside of the U.S. soared by 20.2 percent to represent 58 percent of the total turnover. In particular, the International Wholesale segment rose by 23.8 percent to $712.2 million, led by China. On a constant-currency basis, the company’s total sales went up by 11.7 percent.
Overall, the gross margin expanded by 3.5 percentage points to 47.6 percent, thanks to gains in International Wholesale and in the direct-to-consumer (DTC) business, led by increased selling price across all channels and a favorable mix of online revenues. The operating margin climbed by 7.4 percentage points to 11.0 percent. Net income more than doubled to $98.6 million.
The digital business remained a strong growth driver. In the quarter, the company recorded an 18.1 percent gain to $341.5 million for its global DTC operations, in spite of a 37 percent loss in selling days outside the U.S. where the overall DTC business was up by 2.0 percent, led by Korea, India and Thailand. In the U.S., the DTC channel showed a 28 percent gain, with e-commerce rising by 143.0 percent, boosted by a new ”Buy online pickup in store” (BOPIS) service.
The strong growth of the International Wholesale segment was led by a 174.4 percent increase in China, where the Covid pandemic is now over, but it was partially offset by a dip in Europe of 8.1 percent and a 6.5 percent decline in sales to distributors. The distributor business was weighed down by lockdowns in Spain, Italy and the U.K., where retail partners were closed for the quarter. This was partially offset by good performances in Germany, India and Canada, and the management is optimistic that the distributor business will bounce back in the second quarter.
On a same-store basis, retail sales rose by 10.2 percent, driven by an increase of 25.7 percent in the U.S. that was partially offset by a decrease of 27.4 percent internationally.
In the U.S., overall revenues advanced by 8.5 percent. While the domestic wholesale business decreased by 0.9 percent due to logistic problems, brick-and-mortar retail sales rose by 14.0 percent. Sales gains were led by categories such as women’s sport, kids’, work and men’s.
Skechers’ sales showed an increase of 12 percent as compared to the more normal first quarter of 2019. The management attributed its positive sales results to continued demand for comfortable footwear as walking remains a top pandemic activity.
During the quarter, the company opened 12 stores, half of them abroad, while closing 20. Thanks to a net gain of 106 third-party mono-brand stores, the total store count rose to 3,989, up from 3,891 at the end of 2020. Skechers has completed a series of upgrades to improve the omni-channel performance of its U.S. stores, and the company will roll them out in its foreign stores. It will continue to develop e-commerce in Europe, launching a new website in Ireland and upgrading its U.K. site in the summer.
Moving forward, the company will continue to invest in its long-term growth potential, improving the supply chain in the U.S., Asia and Europe, while further enhancing its digital capabilities. Skechers believes it will achieve sales of between $5.8 billion and $5.9 billion for the full financial year, which would compare with levels of $5,220 million in 2019 and $4,597 million in 2020. Gross margins should be flat or up slightly from 2020.