Skechers U.S.A., Inc. (NYSE:SKX) Q2 2023 Earnings Call Transcript

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Tom Nikic: Got it. If I could just follow up. I think on the last couple of calls, John, you said your hope would be or you would drive towards getting back to flat in U.S. wholesale for the end of the year. Is it safe to assume that it will take a little bit longer to get to that point? And we should assume that 2H U.S. wholesale is still down but to a lesser extent than the first half?

John Vandemore: Well, I don’t want to prejudge the range of possibilities. I would say, as we look forward and certainly when we considered our guidance, that’s what we’re currently expecting, although again, as I just mentioned, we think the situation is prime for the healthy consumer demand we’re seeing out there in the market, stimulating some early reorder activity. But insofar as our guidance is concerned, that’s the position we’ve taken.

Tom Nikic: Understood. Thanks, John. Thanks, David. Best of luck in the second half of the year.

John Vandemore: Thanks, Tom.

Operator: The next question comes from Abbie Zvejnieks with Piper Sandler. Please go ahead.

Abbie Zvejnieks: Great. Thanks for taking my question. I was just wondering if you’re seeing any of the same dynamics in terms of inventory congestion in any of the international markets, particularly Europe. And then second, are you — what are you seeing in terms of promotions? Thank you.

David Weinberg: Well, internationally, it’s probably not the order of magnitude as here in the States, but the same things exist. And while we’re doing better in EMEA, we still have customers there that are cleaning through inventory. But the sell-through rates as in the states and maybe even more so than the states continue to be at the top end and the brand performs very well. So we’re starting to see a bigger influx of orders and certainly looking better as we get to the end of the year and into Q1. As you go around the world, it varies from place to place or geography to geography. I would say that Europe is slightly better shaped than the U.S. as far as those sell-throughs are concerned. South America, Central America, if you go from Mexico down is a mixed bag.

Chile is a strong market for us, does much better direct-to-consumer. Their wholesale business are having a little trouble cleaning out yet. In Peru and Colombia, it’s picking up for us as it is in Central America. Same holds true in Canada. We have significantly better direct-to-consumer and still have a number of wholesale customers cleaning out. As far as China is concerned, they’re getting back in line. They started earlier. They had a big pickup, which was very good for them in Q2. They’re looking good as far as inventory is concerned. They are a bigger piece direct-to-consumer than wholesale. So that bodes well as we go forward.

John Vandemore: Insofar as promotions, I would actually say it’s still pretty stable. If you recall, last year, we started to introduce promotions kind of in the current quarter, maybe a little bit before sporadically, but they look stable. And again, from our perspective, the in-store work, in particular, continues to motivate consumers to come into the store and shop. And so it’s doing exactly what we wanted to do.

Abbie Zvejnieks: Great. Thank you.

Operator: Since there are no further questions at this time, this concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.

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