Unidentified Analyst: Really appreciate the color.
Operator: Our next question is from Tom Nikic with Wedbush Securities. Please proceed with your question.
Matt Quigley: Hi. This is Matt Quigley on for Tom. You touched a little bit on your prepared remarks about your initial entries into soccer and basketball this past year. Just how should we think about the growth opportunities for those categories for 2024 and beyond?
David Weinberg: Well, there are obviously major growth opportunities for us around the world. I don’t know if they’re quite a ’24, certainly not an early ’24. This is all just cultivating and getting our players in order and getting our imaging correct around the world. But we do think as we go through the year, as you exit ’24 and into ’25, the opportunities for us on a worldwide basis both for the footwear and apparel and for signing players and moving into more sports will be significantly large. And we have a great start for it, there’s great reception for the high price and technically advanced footwear we have, and we have a lot of interest from a lot of professional players in a lot of places around the world to try them, get them, use them.
So we’re trying to be careful and go slow because it is obviously a very high profile and a significantly large marketplace, but we’re very happy with where we are today, how it’s starting and how it’s being received and getting ready to take it out around the world in stages as we go throughout this year.
Matt Quigley: Great. Thanks a lot. Operator: Our next question is from Abie Danet [ph] with Piper Sandler. Please proceed with your question.
Unidentified Analyst: Great. Thanks for taking question. You talked about that deficit in the wholesale market causing the strength in D2C this year. So just how do we think about lapping that D2C strength domestically as the wholesale channel restock at some point? And then I have a follow-up.
John Vandemore: Thanks, Abie. I would just — I’d be very specific. I don’t think it caused the wholesale challenges. I think it was the solution for many consumers who found that they couldn’t get our latest product, our technology-infused product at their favorite traditional retailer. So it was kind of a plan B for many of those consumers that thankfully, we had the inventory and the product available for listen, I think as we look forward to the year, as we mentioned, we continue to expect the direct-to-consumer business to grow. It may not grow at heady a pace we saw this year, but it will still continue to grow nicely. It is, for us, one of our strategic imperatives. We see opportunities for stores for digital to grow.
And so again, I don’t think it really will have a significant impact on the opportunity to continue to grow direct to consumer. It just may not be that we have as, again, a significant growth next year as we did this year. But again, I would just ask everybody to keep in mind that growing 24% year-on-year in your direct-to-consumer business is pretty fantastic. So again, we continue to expect growth there. We don’t think there’s any reason why wholesale and D2C can’t grow together. We’ve done that innumerable moments in our history, and we expect that to be the profile for this year. And I would add to that, I mean it’s on the back of incredible product, right? The reason why we’re seeing the success at the consumer level, we’re seeing is incredible product with great technologies that really resonate and so that’s going to be what pulls those sales through both in wholesale and in the direct-to-consumer side.
Unidentified Analyst : Got it. That’s helpful. And then just quickly, the distributor sales were pressured this year. With those coming back, does that put any pressure on wholesale gross margin? Or is it not material?
John Vandemore: It can be material, it depends. We tend to see more quarterly fluctuations, but it is true that our distributor gross margins are lowest. Now keep in mind, we also bear almost none of the operating costs for that channel. So it’s a very good operating margin. It’s just a lower gross margin. Look, we’d love nothing more than to see the distributor business get back to where it was last year. Again, keep in mind last year was a little bit of an anomaly because they had been making up for the year before. I would also just point out, one of the things to keep in mind as you look at that year-on-year distributor number is that we took one of our major distributors in the Nordic region in-house vis-à-vis an acquisition.
So for three quarters, I think, or maybe a little bit more than that, we transition them to be a fully consolidated entity. So we also took consciously a chunk of our distributor sales and move them in-house. So some of that decline is just vis-à-vis that transaction.
Unidentified Analyst: Got it. Okay. That’s helpful. Thank you.
John Vandemore: Thanks, Abie.
Operator: Thank you. Our next question is from Alex Straton with Morgan Stanley. Please proceed with your question.
Alex Straton : Great. Thanks all for taking the question. You sound a lot more optimistic than you all have in a number of quarters on the wholesale order book. So maybe do you guys view this as the domestic wholesale weakness as being firmly behind you? And as a quick follow-up on that, say that market does inflect or the demand does inflect further, do you feel you have enough inventory to fulfill that demand?
John Vandemore: I would say we’re cautious and optimistic we’re behind what we deviled [ph] the domestic wholesale business really for the last, I’d say, five quarters because this stretches back to when congestion first began. And what we’re seeing in orders, what we’re seeing in conversations gives us that encouragement. Now we’ll see because it’s been a while, but we’re optimistic about what we’re seeing. And I think that’s good. I think yes, we feel good about our inventory position. I mean if things go crazy, you’re going to be in a catch-up mode. But I’d say, by and large, because of what David mentioned, we brought in some inventory early at the tail end of last year. And we’re very efficient right now at the levels we’re at, plus we’ve invested a lot in our distribution.
So, we have the infrastructure, which is getting increasingly more efficient every day to handle that, we would feel good about our ability to chase opportunity within limits, right? There’s obviously a production timeline you have to be cognizant of, but we would certainly feel pretty good about our opportunity to chase orders if they came in, particularly towards the back end of the booking window.
Alex Straton: That’s helpful. Maybe one follow-up. How do you guys view like the inventory in total in the footwear market right now? Has that kind of been more so cleaned up in your view?
John Vandemore: Well, we don’t have perfect visibility into the totality of the inventory. I can say, and I think we’ve said this before, we feel really good about where the Skechers inventory is in our wholesale partners. We felt that way for a while, we felt there was opportunity for those retailers to get even more behind some of the new fresh technology-infused product. And I would say that’s still the case today.
Alex Straton: Thanks a lot.
Operator: Thank you. There are no further questions at this time. This does conclude today’s conference. You may disconnect your lines at this time. Thank you for your participation.
