Jay Sole: Okay. Super. Thanks so much. Appreciate it.
John Vandemore: Thanks, Jay.
Operator: Thank you. Our next question is from Jim Duffy with Stifel. Please proceed with your question.
Peter McGoldrick: Hi. This is Peter McGoldrick on for Jim. Thanks for taking the question. I wanted to ask about store openings. You had 200 net new owned doors in 2023 and you have plans for 160 next year. Could you talk about what you’re seeing on a new store productivity level, how you’re building those stores out, how they compare to your existing footprint? And from a total retail base of 5,000-plus in the total Skechers retail network, how should we think of that progressing, going forward in 2024 and future years?
John Vandemore: Yes. Thanks, Peter. Yes, look, we’re making an estimate on new stores, but the thing to keep in mind, what’s most important to us on new stores is that we’re opening the right type of stores globally. And so I would tell you, we tend to give a range and then we work within that range or above or below, depending upon the opportunities that present themselves I think that’s a number you can rely on with, again, a bias towards us probably adding more than that if opportunities reveal themselves. And keep in mind, that’s a global number, that’s a global company-owned number so that includes some markets that have a bit more dynamicism than what we see in the United States, shorter leases, lower start-up costs. And so those tend to be a little bit more fluid as we go throughout the year.
In terms of the total number of stores, I can’t give you a final resting number, but I can tell you its well north of where we’re at. We mentioned achieving our 5,000 store, which if I remember correctly, was in Colombia, and we’re already well past that at north of 5,160. So we’re going to continue to expand that. We think that envelope worldwide is significantly above, if not double where we are today at some future point. New store openings have continued to do well. We have certainly domestically a fairly pronounced focus on what we would call big box stores. So stores that can hold a broader assortment. They can hold accessories, apparel, and that’s what we continue to open in the United States. I think that’s what you should expect from us, absent an occasional opportunity in an outlet that we may not already be in that we think has an opportunity.
I would tell you, again, I think the opportunity in the United States remains fairly robust for stores for a while. And obviously, most important to us is that those stores open the right way, that they have a path to profitability that has them contributing at the level we would normally expect. I would also just add, though, I mean it’s not just about stores. We are definitely pushing our omni-channel solution globally. It was an incredibly successful channel for us this year, particularly in the markets that we opened last year in the fourth quarter, we saw spectacular growth in many of those markets that had our new platform. And I think that continues to offer us opportunities to satisfy consumer desire for our product across a lot of different avenues.
And so that’s still going to be a heavy emphasis for us, particularly internationally, but worldwide.
Peter McGoldrick: All right. Thank you. And then there are some comments on inventory congestion in international markets weighing on deliveries in the fourth quarter. Can you tell us more about what’s going on there and then quantify any impacts to the quarter? And how should we think about this embedded in the first quarter guidance as well?
John Vandemore: Yes. I would describe them as atemporal so we don’t think that they’re durable. We don’t expect they’re going to last into 2024. I would also say it was pretty specific to a handful of customers. What was notable is it also tended to occur in markets where we weren’t naturally able to offset through direct-to-consumer, what may have been a deficit in the market vis-a-vis the demand we had because unfortunately, not every market has today what I would call the right balance or the ultimate balance of direct-to-consumer and wholesale. So if we see a pullback in wholesale in a market where we don’t have a significant direct-to-consumer presence. We can’t make that up. And as you’ve seen in the year, I mean, that’s what we’ve been doing all year.
We’ve been significantly outgrowing on the direct-to-consumer side because consumers want the product and that’s offset some of the challenges on the wholesale side of things. And in the quarter, in particular, because we had some situations where we couldn’t recover it vis-a-vis our direct-to-consumer channel because it wasn’t quite as mature as in other markets. But I would also point out, and I’ll just use an example, I mean, we had markets last year that grew 100%. So if you take their two-year stack, they’re still growing significantly this quarter, but if you’re comping against a market that grew 100%, that’s pretty hard, especially if it’s a mature market. So I would keep in mind there were definitely some difficult comparisons, particularly in EMEA that we were facing this quarter that are a bit anomalous and certainly don’t, I think, in any way indicate a letdown expected for 2024 or beyond.
Peter McGoldrick: Thank you.
Operator: Our next question is from John Kernan with TD Cowen & Company. Please proceed with your question.
Alex Douglas: Hi. This is Alex Douglas on for John. Thank you for taking our question, and congrats on a nice quarter. So if I remember correctly, you commented on the last call about consumers trading up within the portfolio as being a driver of higher ASPs. Was there any changes to that trend in Q4? And if that trend did persist, do you expect that to be a driver of gross margin in fiscal 2024? Thank you.
John Vandemore: That trend did persist which again is, we think, reflected of consumers choosing to buy our products with our comfort technology is embedded in them. So what we’ve seen is within our own portfolio, consumers trading up. A lot of that was evident last year, though. So I don’t know that, that’s going to drive a significant amount of year-on-year gross margin accretion because we’re pretty squarely lapping that now. But it is something we continue to see in our portfolio and as we can deliver more technologies, to consumers and, quite frankly, just bring more consumers into those technology solutions in our footwear. It certainly offers opportunities to continue to up-sell them. But I don’t know that it’s going to be a pronounced effect this year simply because we’re lapping that effect last year.
Alex Douglas: Okay. That’s very helpful. Thank you.
Operator: Our next question is from Rick Patel with Raymond James. Please proceed with your question.
Unidentified Analyst: Hey. This is Josh filling in for Rick. Thanks so much for taking my question. I was just curious if you’d be able to talk about the impact, if any, that you’re seeing from any of the Red Sea issues? I know it’s a very fluid situation, but I’m just curious if you could touch on how it might be affecting shipping times and freight costs as we think about the next few quarters in the upcoming year?
David Weinberg: Well, as far as Europe is concerned, we’re no different than anybody else. I think the good news for us is we had a higher demand going in, and I’m showing up in the first quarter, we bought a lot of goods in early. And feel we’re in a pretty good situation depending on how long it goes, there’s no way around the additional time it takes to get there in a number of times the ships are out of port and picking up new. We have some issues in the US as well, obviously, because the West Coast is getting a little backed up because of the issues down in the Panama Canal and going through to the East Coast. But given it all, it doesn’t seem to be as extensive as it could be. I don’t know what the future holds. But right now, we seem to be in pretty good shape.
We had taken our deliveries in early, knowing that we were going to ship very heavily in the end of December and through this whole month of January. Like I said before, January has held up very well. It was beyond our expectations around the world. So right now, we sit in a good position inventory-wise and with receipt of goods, and we’ll see what happens as we go back through the year. But right now, for the month of January and going into February, we sit in a very strong position and shipping very well in our major markets.
