Skechers USA (SKX, Financial) saw a 4% drop in its stock following its Q1 report. The company reported in-line EPS results with a 7.1% year-over-year revenue increase to a record $2.41 billion. However, the decision to withdraw its 2025 guidance due to macro uncertainties, particularly tariff issues, has unsettled investors.
Key Highlights:
- Regional growth was balanced, with both domestic and international sales up by 7%. EMEA grew by 14% and the Americas by 8.3%. However, APAC saw a 2.6% decline, mainly due to reduced consumer spending in China. Excluding China, APAC sales rose 12%. Skechers views international markets as its main growth driver.
- Wholesale sales grew 7.8%, with domestic growth at 4.2% and international growth at 9.5%. Domestic wholesale growth was broad-based, while international wholesale saw strong growth across various regions. Direct-to-consumer (DTC) sales increased by 6%, with domestic growth at 11%, including strong e-commerce performance. International DTC rose 2.9%, but excluding China, it increased by 12%.
- Skechers cited increased global uncertainty as the reason for withdrawing guidance, likening tariff uncertainties to the initial COVID pandemic phase. Positively, two-thirds of its business operates outside the US, lessening the impact.
- The company is employing strategies like cost sharing with vendors, sourcing optimization, and price hikes to tackle tariffs. Skechers is confident in its ability to navigate these challenges, noting strong consumer demand for its brand and comfort technology.
While Q1 results were somewhat disappointing, the withdrawal of guidance seems to be the main issue affecting the stock. Despite this, shares have shown resilience, having already dropped significantly (-36%) from a January high of $78.85. The sentiment may remain bearish until tariff issues are resolved. Nike (NKE, Financial) also experienced a 3% decline in sympathy.
