Skechers’ Online Business Is Booming This Month — Here’s How Much Digital Could Deliver in Annual Sales
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Skechers is proving that it can battle the coronavirus.
After reporting solid first-quarter results this afternoon, the Manhattan Beach, Calif.-based company elaborated on its pandemic game plan in a conference call.
While digital has become critical for every company amid the pandemic, results have been uneven across an industry that is still relying heavily on brick-and-mortar stores.
Skechers is one big player that is seeing notable online strength — and naturally, analysts are wondering just how big the digital pie could be.
“It’s fair to say, I believe, if you take China and what we have on our own online, what we know about people like Amazon … that we must be pushing somewhere in the neighborhood of $500 million a year,” said Skechers EVP and COO David Weinberg.
CFO John Vandemore said later in the call that number could be conservative, given the current momentum. (In 2019, Skechers’ annual sales were $5.2 billion, so online is still only about 10% of the total business.)
Company-owned e-commerce platforms grew over 70% in the first quarter, and have increased more than 250% month-to-date, Weinberg said. “For several of our key international markets, our April online sales are already above their entire first quarter [numbers], and we anticipate that the balance will get there by the end of the month,” he explained.
The brand’s retail partners also have ranked Skechers among their top 3 brands online in terms of sales, and in some cases it is the top-performing label, Weinberg noted.
The company also is learning from its experience in China, a market where it racked up $850 million in sales last year. Almost all stores are back in operation. In fact, the company last week debuted its first new store since the pandemic occurred — a 9,000 sq-ft. outlet unit in the northeastern part of the country.
Other international markets, including Germany, Austria, Scandinavia and the Netherlands, are now starting to reopen.
Vandemore said that as the company continues to navigate the pandemic, its products hit the “sweet spot” of what consumers are looking for right now — from athletic to work shoes.
While it seeing several positive signs, Skechers, like every company, is uncertain about its near-term outlook and did not offer guidance. The company has furloughed some employees and froze head count and compensation levels, as well as re-prioritized capital expenditures to focus only on business-critical projects.
The executives emphasized that brick-and-mortar is still a crucial part of the growth plan going forward. (Skechers operates more than 3,000 stores.) While Weinberg declined to elaborate on future goals, he said that there could be attractive real estate opportunities as the situation shakes out. The company said it is focused on the safety of its employees and is taking guidance from the CDC as it develops reopening plans.
The Manhattan Beach, Calif.-based company posted adjusted earnings per share of 39 cents on profits of $49.1 million — a drop of 45.1% from the prior year but in line with analysts’ bets. Revenues fell 2.7% to $1.24 billion, versus market watchers’ predictions of $1.22 billion.
While its international business recorded a 6.8% decline, sales were partially offset by a 2.9% increase in the U.S domestic wholesale business.
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