On a regional basis, sales in the Europe, Middle East and Africa (EMEA) region increased by 14.0 percent to $718.2 million.
Skechers withdrew its sales and earnings guidance for the full year amid heightened macroeconomic uncertainty and signs of weakening US consumer sentiment due to global trade policy developments.
“As we began 2025, we communicated our belief reflected in our annual guidance that this would be another year of growth on the basis of the tremendous demand for Skechers we observed across the globe, particularly internationally,” explained John Vandemore, the Chief Financial Officer, in a conference call with analysts on first quarter results. “Today, we still believe many markets will continue along that trajectory, absent unforeseen impacts from the current macroeconomic environment. However, we must also acknowledge that the world is significantly more uncertain today than three months ago.”
If the current US import tariff structure remains in place in coming months, Vandemore said Skechers expects to see the first impact from tariffs towards the end of the second quarter and “fairly acutely” in the third quarter.
“Bluntly speaking, it doesn’t help when the policies change as quickly as they have over the last three weeks,” said Vandemore. “Some stability is necessary to be able run the analyses we need to be able to make informed decisions on sourcing, what to do with the product, what to do with pricing, what to do with cost, all that.”
The cautious outlook for the remainder of the year comes despite what management described as an “exceptional” first quarter. Sales in the three months ended March 31 grew by a reported 7.1 percent to $2.41 billion, reflecting 7.2 percentage increase in its international business and a 6.9 percent rise domestically. Sales were 9.0 percent higher at constant currency rates. First-quarter wholesales sales grew by 7.8 percent to $1.53 billion while direct-to-consumer sales (DTC) increased by 6.0 percent to $879.4 million.
EMEA the fastest growing region in Q1
On a regional basis, sales in the Europe, Middle East and Africa (EMEA) region increased by 14.0 percent to $718.2 million. In the Americas, sales grew by 8.3 percent to $1.1 billion while in the US alone they were 6.9 percent higher at $853.7 million. Asia Pacific (APAC) sales declined by 2.6 percent to $589 million, but excluding China they were up by 12 percent, led by double-digit growth in Japan, Thailand and South Korea. Sales in China fell by 16 percent amid still difficult macroeconomic conditions in the country.
Wholesale sales increased by 13.0 percent in the EMEA region and by 7.3 percent in the Americas while in the APAC they declined by 0.6 percent. Wholesale volumes increased by 9.1 percent while average selling prices declined by 1.3 percent.
DTC sales growth included increases of 9.8 percent in the Americas and 21.7 percent in the EMEA region, partially offset by a 4.4 percent decline in the APAC region. DTC volumes increased by 6.3 percent and average selling price slipped by 0.3 percent.
The gross margin in the quarter narrowed by 0.50 percentage points to 52.0 percent due to lower average selling prices in China and some other markets. Earnings from operations decreased by 11.3 percent to $265.1 million. Net profit fell slightly, decreasing to $202.4 million from $206.6 million as diluted earnings per share inched up to $1.34 from $1.33.
Skechers said it would continue to use three levers to address tariffs, namely cost sharing with vendors, sourcing optimization and price adjustments. “We don’t want to raise prices because of increased duties,” stressed Vandemore. That’s not our objective. If we have to do that because circumstances require it, then we will. But we won’t take that decision lightly.”
He also highlighted that the strong international presence of Skechers – with two-thirds of its sales from outside of the US – should helping to partially insulate it from higher US import tariffs.
Alongside the US, Skechers sees China as representing the most uncertainty for the company this year. Expectations for the Chinese market remain “pretty modest” due to the macroeconomic situation in that country, although Vandemore said the first quarter decline was “significantly exacerbated” by China’s strong performance in the first quarter of 2024. David Weinberg, the Chief Operating Officer, said Skechers nonetheless sees China “continuing a growth curve somewhere in the near future.”
Investments intact
For now, Skechers said it is maintaining plans to invest $600 million to $700 million this year, as it continues to invest in the brand for the long term. Investments to expand distribution center operations in both China and the US are moving forward. “I would gather that the vast majority of what we have planned, if it makes business sense and can’t be deferred easily without an impact to the business, we’ll probably continue forward,” said Vandemore.
Skechers still sees interesting opportunities to open stores, mainly internationally but also in the US. It expects to open an additional 150 to 170 company-owned stores in the remainder of the year, including 13 company-owned stores opened to date in the second quarter.
The company ended the first quarter with 5,318 stores worldwide, up from 5,296 at the end of the fourth quarter of 2024 and including 1,821 company-owned locations. During the quarter Skechers opened 51 company-owned stores and closed 17. New company-owned store openings included 15 locations in China, 13 in the US and three each in Hong Kong and Mexico. Skechers also opened 50 third party-stores in the first quarter while closing 62, to bring the third-party store count at the quarter’s end to 3,497.
