Skechers Stock Declines Despite Reporting Earnings Beat in Q1

Skechers U.S.A., Inc. SKX reported first-quarter 2025 results, wherein the top line missed the Zacks Consensus Estimate but the bottom line surpassed the same. While both metrics showed year-over-year growth, the company withdrew its full-year guidance due to ongoing economic uncertainty related to global trade policies. As a result, shares of this Manhattan Beach, CA-based footwear company declined 6.5% in the after-hours trading session yesterday.

The company’s first-quarter results were driven by strong global demand for its comfort-focused and innovative footwear. Growth was solid in both wholesale and direct-to-consumer (“DTC”) channels, with international markets leading the way. Despite economic pressures in China, other Asia Pacific regions performed well. The brand continues to invest in retail expansion, distribution and marketing, leveraging comfort technologies to boost global appeal.

Amid ongoing global uncertainty and tariff challenges, Skechers remains confident in its strategy and flexibility. The company is addressing cost pressures through sourcing shifts, cost-sharing and pricing adjustments, while focusing investments on infrastructure, product innovation and digital growth to support its long-term goals.

Skechers’ Quarterly Performance: Key Insights

Skechers reported earnings of $1.34 per share, surpassing the Zacks Consensus Estimate of $1.17. Also, the bottom line increased 0.8% from the year-earlier quarter. The quarterly results benefited from a gain of 17 cents per share due to favorable foreign exchange rates.  (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

SKX generated sales of $2.41 billion, which missed the consensus estimate of $2.44 billion. However, the top line grew 7.1% year over year, driven by the rise of 6.9% and 7.2% in domestic and international sales, respectively. Improvements in domestic and international sales were driven by robust sales in DTC and wholesale. On a constant-currency basis, total sales grew 9%.

The company’s wholesale increased 7.8% year over year to $1.53 billion, while DTC rose 6% to $879.4 million. The Zacks Consensus Estimate for wholesale and DTC sales was pegged at $1.55 billion and $885.3 million, respectively.

Wholesale increased 4.2% domestically and 9.5% internationally. The segment increased 7.3% year over year in the Americas (“AMER”), 13% in the EMEA and decreased 0.6% in the APAC. Wholesale average selling price declined 1.3%, whereas the unit volume increased 9.1% year over year.

DTC sales growth included increases of 10.7% in domestic sales and 2.9% in international sales. The DTC volume rose 6.3%, but the average selling price declined 0.3%. Also, growth of 9.8% in the AMER and 21.7% in the EMEA aided the segment’s performance. This was partially offset by a 4.4% decline in the APAC.

SKX’s Region-Wise Performance Details

Region-wise, sales increased 8.3% year over year to $1.10 billion in the AMER, 14.4% to $718.2 million in the EMEA and decreased 2.6% to $589 million in the APAC. The Zacks Consensus Estimate for net sales in the AMER, EMEA and APAC regions was pegged at $1.12 billion, $708.6 million and $618.6 million, respectively, for the quarter under review.

SKX Stock's Past 3-Month Performance

Skechers’ Margin & Cost Update

Gross profit increased 6.2% year over year to $1.25 billion. The gross margin decreased 50 basis points (bps) to 52%, caused by lower average selling prices. 

Total operating expenses grew 12.1% year over year to $989.2 million. The metric, as a percentage of sales, increased 180 bps to 41%.

The company’s selling expenses grew 18.3% from the year-ago period to $185.1 million, due to higher demand creation expenditures. Also, general and administrative expenses jumped 10.7% to $804.2 million. Increased costs resulted from elevated labor and facility costs, such as rent and depreciation.

SKX’s Financial Health Snapshot

As of March 31, 2025, cash and cash equivalents totaled $993.1 million, whereas short-term investments amounted to $107.6 million.

Skechers ended the quarter with long-term borrowings of $82.4 million and shareholders’ equity of $4.51 billion, excluding non-controlling interests of $474.5 million. The company incurred a capital expenditure of $147.1 million in the quarter.

Skechers’ Store Update

As of March 31, 2025, SKX had 5,318 stores, including 618 domestic stores, 1,203 international locations and 3,497 distributors, licensees and franchise stores.

In the first quarter, the company opened 13 domestic stores, 38 international stores and 50 distributors, licensees and franchise stores. It closed five domestic stores, 12 international stores and 62 distributors, licensees and franchise stores in the same period.

Shares of this Zacks Rank #3 (Hold) company have lost 32.7% in the past three months compared with the industry’s 25.3% decline.

Key Picks

Some better-ranked stocks are The Gap, Inc. GAP, Canada Goose GOOS and G-III Apparel Group, Ltd. GIII.

The Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for The Gap’s fiscal 2025 earnings and revenues indicates growth of 7.7% and 1.5%, respectively, from fiscal 2024 reported levels. GAP delivered a trailing four-quarter average earnings surprise of 77.5%.

Canada Goose is a global outerwear brand. GOOS is a designer, manufacturer, distributor and retailer of premium outerwear for men, women and children. It carries a Zacks Rank of 2 (Buy) at present.

The Zacks Consensus Estimate for Canada Goose’s current fiscal year’s earnings and revenues implies a decline of 1.4% and 4.9%, respectively, from the year-ago actuals. Canada Goose delivered a trailing four-quarter average earnings surprise of 71.3%.

G-III Apparel is a manufacturer, designer and distributor of apparel and accessories under three types of brands, licensed, owned and private label. It currently carries a Zacks Rank of 2.

The Zacks Consensus Estimate for GIII’s fiscal 2025 earnings and revenues implies a decline of 4.5% and 1.2%, respectively, from the year-ago actuals. GIII delivered a trailing four-quarter average earnings surprise of 117.8%.

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This article originally published on Zacks Investment Research (zacks.com).

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