EMEA booming: Skechers surprises with strong Q2

Skechers significantly increased sales and profits in the second quarter of 2025, despite ongoing margin pressure and weakening demand in China. Sales rose 13.1 percent to $2.44 billion, while net income increased 21.5 percent to $170.5 million. Positive currency effects contributed $0.30 per share to diluted earnings of $1.13; on a constant currency basis, EPS was $0.83. Gross margin declined from 54.9 percent to 53.3 percent.

Highlights Q2 FY25

• Sales: $2.44 billion, +13.1 percent YoY; currency-adjusted $2.41 billion, +11.5 percent
• Positive currency effect on sales: $33.9 million
• Wholesale sales: +15.0 percent
• Direct-to-consumer sales: +11.0 percent
• Diluted EPS: $1.13; excluding currency effects $0.83

After the cautious tone at the beginning of the year, management is now cautiously optimistic. While the first quarter was dominated by the withdrawal of the annual forecast and concerns about import tariffs, the company is now emphasizing the robustness of its international business and continued expansion in key markets.

Half-year performance shows solid growth

In the first half of 2025, sales rose by 10.0 percent to $4.85 billion, compared with $4.41 billion in the same period last year. The gross margin was 52.7 percent, down 100 basis points from the previous year, impacted by higher unit costs and increased import tariffs in the US. Net income grew by 7.5 percent to $372.9 million, with EPS reaching $2.46.

Q2 was noticeably more dynamic than Q1, driven by strong international demand, expanded distribution partnerships and positive currency effects. Notable developments included a massive boost in EMEA, a more moderate decline in China and a significant slowdown in growth in the Americas.

Shift in momentum: EMEA pulls ahead, China slows down

EMEA proved to be the growth engine in the second quarter, supported by strong demand in core European markets and the expansion of the wholesale business. In the Asia-Pacific region, markets such as Japan and South Korea showed solid growth, while China suffered from weak consumer sentiment and economic uncertainty. In the Americas, Skechers’ largest market, growth remained subdued, mainly because of cautious consumer spending in the US and intensified competition.

• EMEA: +48.5 percent to approximately $732 million
• Asia-Pacific: +5.5 percent to approximately $596 million
• Americas: +1.1 percent to approximately $1.11 billion
• China: -8.2 percent to $287 million

Sales channels: Wholesale grows faster than DTC

The wholesale business grew by 15.0 percent to $1.30 billion, driven by growth in international markets and supported by a broad network of third-party partners. The direct-to-consumer segment grew by 11.0 percent to $1.14 billion, driven by the company’s own stores and stable online performance. While wholesale made the largest contribution to revenue growth, with an increase of $169 million, direct-to-consumer is often considered in the industry to have higher margins and to be a lever for greater control over brand presentation.

Between cost pressures and currency gains

Gross margin declined by 160 basis points to 53.3 percent in the second quarter. The company attributes this primarily to higher unit costs and increased US import tariffs. Positive currency effects increased EPS by $0.30 and provided an additional revenue boost of $33.9 million; adjusted for currency effects, growth was 11.5 percent.

Uncertainty surrounding 3G deal – cautious optimism

The planned takeover by 3G Capital remains uncertain. Regulatory hurdles and possible differences in valuation could jeopardize the deal. Analysts see short-term uncertainty in the event of a failure, but assume that Skechers will continue to drive its international expansion and efficiency programs on its own. For the full year, management expects sales growth in the mid-single-digit percentage range – a clear change in sentiment from Q1, when the forecast was withdrawn and risks were clearly in the foreground.