Skechers: 10 Years of Shareholder Letters: Highlights
- AKA Mr. Neck
- Jul 14, 2020
- 22 min read
Updated: Jul 16, 2020
The following is my personal research on Skechers Inc. Pease NOTE that none of the content on this website should be considered as investment advise. So if you decide to invest in SKX or any other company mentioned on this website, you understand that you are doing so at your own risk. Anything on this website should be understood to be MY personal interpretation of fact, and trust me, I am NOT a professional... at all. You should NEVER invest in any company that you have not researched personally.
The following is a highlight of what I believe to be the most important points mentioned in Skechers' Shareholder Letters from 2010 to 2019. This is literally copied and pasted from Skechers shareholder letters for the last 10 years.
SKX Shareholder Letter Highlights
History:
We started with logger boots for guys, added women’s and kids’ casuals, launched sport and active footwear, and took our signature look to the workplace – from construction sites to offices. All under the SKECHERS brand. Then we extended our reach with urban and skate shoes under the iconic Marc Ecko and Zoo York monikers, and also with a high-end men’s line known as Mark Nason. Our first SKECHERS store, which opened in 1995 in downtown Manhattan Beach.
At our foundation is product. In the beginning, we were a men’s brand with a single sport utility look. As the demand grew, we expanded our offering. Today, we still react to increased demand for our product, but we also focus on new opportunities to create demand with fresh lines. (2012 letter)
2006:
EPS: $1.59
Revenue: $1,205.37
2007:
EPS: $1.63
Revenue: $1,394.18
2008:
EPS: $1.19
Revenue: $1,440.74
2009:
EPS: $1.16
Revenue: $ 1,436.44
2010 Letter Highlights:
Revenue Distribution: 56% Wholesale Domestic. 22% Retail/Ecommerce. 22% International wholesale.
Yeah-end global production breakdown: 53% Women, 28% Men, 19% Kids
EPS: $2.78
Revenue: $2,006.87
Stores: 287 company-owned stores, including 44 international stores. 143 distributor-owned or -licensed Retail Stores worldwide. More than 375 points of sale.
Planned Stores: 30 to 35 stores planned for 2011
Stock Year Open: $9.92
Stock Year Close: $6.67
Stock Year Change: -32.8%
LETTER SUMMARY:
· We passed $2 billion in annual sales, a new record with year-over-year growth of 39.7 percent.
· Entered the technical running market with our introduction of the SKECHERS Resistance Runner (SRR).
· Opened our first SKECHERS stores in Mexico, Italy, Ireland and Austria.
· we are the second largest athletic footwear brand in the United States.
· more than 3,000 styles designed for men, women and kids of all ages,
· with the addition of toning and technical performance footwear in 2010, we are reaching a segment of the population that may not have come to SKECHERS for footwear, or came to us only for casual or lifestyle footwear.
· We believe that marketing is paramount to our success and take an aggressive approach, regularly developing new print and TV campaigns for our adult and kids’ lines.
· We believe the star power of these animated characters and celebrities who are representing our brands will build sales, drive purchase intent and further leverage our business around the world.
· Our domestic and international growth is the result of the growing demand for our toning and kids’ footwear and the continued success of our core products. For the year, our domestic wholesale net sales improved by 48.3 percent and our international wholesale business grew by 32.9 percent, which were significant gains over 2009.
· Our domestic and international company-owned retail sales also improved during the year with an increase of 27.6 percent. We also expanded into new countries — including Italy and Austria, growing our store base at year-end to 287 company-owned stores, including 44 international stores.
· Along with our company-owned stores, at year-end we also had 143 distributor-owned or -licensed SKECHERS retail stores around the world –including our first stores in Mexico, India and Indonesia.
· Our new 1.8-million-square-foot distribution facility is planned to be operational in 2011, enabling us to deliver our product faster and more efficiently.
· And we will continue to seek out new locations to grow our profitable retail base with another 30 to 35 stores planned for 2011.
· Our subsidiaries now include 12 countries in Europe, two in Latin America, and one in Canada.
· We have also established joint ventures across Asia, specifically China and Hong Kong, to mimic the opportunities that we see in neighboring Asian countries as well as in the United States. Through our joint ventures, we have established 44 SKECHERS stores and more than 375 points of sale.
· Over the year, we opened 25 domestic stores and 17 international stores,
· a warehouse store at our new 1.8-million-square-foot distribution center in Rancho Belago, California, pending its completion.
Revenue Distribution: Retail/Ecommerce 27%, Domestic Wholesale 43%, International Wholesale 30%
Yeah-end global production breakdown: 31% Men’s, 47% Women’s, 22% Kids
EPS: $-1.39 (Split Adjusted= -$0.46)
Revenue: $1,606
Stores: More than 330 company-owned SKECHERS stores. Over 265 international distributor-owned.
Planned Stores: will approach 700 stores in 2012.
Stock Year Open: $6.72
Stock Year Close: $4.04
Stock Year Change: -39.9%
LETTER SUMMARY:
· In 2011, we focused on several key initiatives: 1. Keeping our product and marketing fresh, including the clearing of old toning inventory; 2. Developing new forward-thinking products that would set us apart in the market; and 3. Building our infrastructure at home and abroad.
· We also launched BOBS from SKECHERS, a charity-based shoe line, and Skechers GOrun, our first high-performance running line.
· In 2011 we also launched our first performance running line, Skechers GOrun.
· we believe Skechers GOrun is the start of what will be a successful performance division.
· We continue to believe that targeted marketing is essential to our global growth and brand awareness.
· now have more than 330 company-owned SKECHERS stores in the United States and other markets where we directly handle the distribution of our product and over another 265 international distributor-owned or joint venture operated SKECHERS branded stores at year-end 2011.
· we are continuing to focus on growing our international business to become 35 to 40 percent of our total sales.
· We believe South America is a huge opportunity.
· we are seeing positive trends in China,
· In 2011, we began transitioning from a distributor-operated business to a wholly-owned Japanese subsidiary in order to maximize our potential.
· Our goal this year is to launch a full-scale product assortment, open more retail stores and target our distribution in Japan to ultimately double our business in the next 3 to 5 years.
· with our now 20 years of experience, we have been able to successfully position our brand in more than 100 countries around the world.
· In just two decades, our modest company that started by the beach in Southern California has grown into one of the largest footwear brands in the world.
· 330+ company-owned SKECHERS stores showcase our extensive product offering in 13 countries.
· 265+ SKECHERS-branded stores owned and operated by third-party distributors and franchisees in 40+ countries.
· SKECHERS total store count will approach 700 stores in 2012.
· In Europe, subsidiaries receive product from our 490,000-square-foot distribution facility in Liege, Belgium
· Our vast network of distributors receive product directly from third-party manufacturers.
· Now open: our 1.82 million-square-foot, fully automated, LEED-certified distribution facility in Rancho Belago, California, ships to our North American accounts and stores. [To see a youtube video of Skechers new store, CLICK HERE]
2012 Highlights:
Revenue Distribution: 42% Domestic Wholesale, 28% International wholesale, 30% Retail/Ecommerce.
Yeah-end global production breakdown: 48% Women’s, 30% Mens, 22% Kids.
EPS: $0.19 (Split Adjusted= $0.06)
Revenue: $1,560
Stores: 733 Skechers stores around the world, of which 349 stores were company-owned and -operated.
Planned Stores: 30 to 35 company-owned stores planned for 2013.
Stock Year Open: $4.15
Stock Year Close: $6.17
Stock Year Change: 48.7%
LETTER SUMMARY:
· The most growth in the year came from our Skechers Performance Division, which saw its first full year of sales with triple-digit growth in the fourth quarter.
· Meb has brought a great deal of acclaim to the Skechers Performance Division, as have the Numerous favorable blog reviews and the eight awards we have received from top running publications in the United States and several countries around the world.
· the GO platform has become a key growth category for our company.
· Along with product-focused commercials, we used the power of celebrities to build several of our lifestyle lines.
· Through the success of the BOBS program, we reached the three-million-pair donation milestone in 2012.
· our domestic and international wholesale businesses, which grew by 72 percent and 30 percent in the fourth quarter of 2012, respectively.
· Economic problems across Europe and other parts of the world impacted our international sales for the year, but the growth we experienced in the fourth quarter, including the improvements in many of the regions that had experienced economic stress earlier in the year, as well as the backlogs, leads us to believe that we are on a positive track
· With an eye on growing our international business, we transitioned Japan from a distributor to a wholly owned subsidiary during the year, and saw first product deliveries there through our subsidiary in the second half of the year. We also established a joint venture in India during the year, and believe both of these countries will have a positive impact on our business in the next three to five years.
· In the fourth quarter, we also experienced 16 percent gains in our company-owned Skechers stores.
· As of February 15, 2013, there were 733 Skechers stores around the world, of which 349 stores were company-owned and -operated.
· New stores were opened on six continents in 2012, and we are planning to continue this trend, with at least another 30 to 35 company-owned stores planned for 2013.
· Our e-commerce business experienced 39 percent growth during the fourth quarter of 2012.
· Consumers can already shop for Skechers branded eyewear, apparel, backpacks and socks, among other items.
· BOBS, which has resulted in three million pairs of new shoes donated to kids in need.
· 733 Skechers retail stores around the world, of which 349 are Skechers-owned.
· e-commerce presence with new Skechers.com web sites in Germany and the U.K.
2013 Highlights:
Revenue Distribution: Retail/Ecommerce 31%, Domestic Wholesale 43%, International Wholesale 26%
Yeah-end global production breakdown: 29% Men’s, 52% Women’s, 19% Kids
EPS: $1.08 (Split Adjusted= $0.36)
Revenue: $1,846.4
Stores: Grown retail store base to 476. 205+ shop-in-shop (Asian joint ventures.) In the U.S. and international 390 company-owned retail stores at the close of 2013. An additional 118 Skechers stores in 2013 for a total of 866: 321 domestic company-owned retail stores at the end of 2013. 545 Skechers retail stores outside the US at year end—69 of those Skechers-owned
Planned Stores: In 2014, we plan to open another 60 to 70 Company-owned stores. we project our total Skechers retail stores to be more than 1,000 by year end.
Stock Year Open: $6.36
Stock Year Close: $11.04
Stock Year Change: 73.6%
LETTER SUMMARY:
· $1.8 billion in net sales—the second highest yearly revenues in Skechers’ 22-year history.
· Year-over-year, we achieved sales growth of 22.9 percent in our domestic wholesale, 10.8 percent in our international business, 18.7 percent in our company-owned retail channel, and 24.2 percent in our e-commerce platform.
· Growing the Skechers retail footprint by an additional 118 Skechers stores in 2013 for a total store count of 866
· The success of BOBS meant by year-end we had donated more than six million pairs of shoes to children in need around the world.
· While our international wholesale business achieved year-over-year growth of 10.8 percent, at 26 percent of total sales, we believe we have tremendous opportunity for additional growth in the coming years.
· China, a newer market for us, is a key growth driver, with sales more than doubling in 2013.
· We have grown our distributor, joint venture and licensed international retail store base to 476, including expansion into previously untapped Skechers retail markets such as Brazil, Kenya, Hungary, New Zealand, and Turkey
· In addition, we have more than 205 shop-in-shop locations across our Asian joint ventures.
· In the United States and international markets where we directly sell our footwear to wholesale accounts, we grew our company-owned retail store base from 354 at year-end 2012 to 390 at the close of 2013.
· we experienced year-over-year positive comparable store sales (this sounds like a KPI to me) of 14.8 percent.
· In 2014, we plan to open another 60 to 70 Company-owned stores, and with the addition of distributor, joint venture and licensed stores on plan, we project our total Skechers retail store count to be more than 1,000 by year end.
· Today, we offer more immediate engagement in our social media channels and in-store returns for e-commerce orders. We will continue to focus on this omni-channel approach in 2014 by enabling retail stores to order directly for consumers through skechers.com with at-home delivery coming.
· We are pleased with our sales growth of 18.3 percent for the full year.
· We also expect sales from our e-commerce channel, which is a small part of our total business, to grow in the future as we continue to invest in that platform on the heels of six consecutive quarter over quarter growth.
· Early key performance indicators—including double–digit backlogs and strong incoming order rate—lead us to believe that we will continue our company-wide positive momentum from 2013.
· We are investing in product development and technologies to better serve our customers and consumers.
· 321 domestic company-owned retail stores at the end of 2013.
· Expanding retail presence with 545 Skechers retail stores outside the US at year end—69 of those Skechers-owned.
2014 Highlights:
[NOTE: The difference in stock price is due to a 3-for-1 split done in 2015]
Revenue Distribution: Retail/Ecommerce 29%, Domestic Wholesale 42%, International Wholesale 35%
Yeah-end global production breakdown: 28% Men’s, 56% Women’s, 16% Kids
EPS: $2.27 (Split Adjusted= $0.91)
Revenue: $2,378
Stores: 536 Skechers-branded stores by joint ventures, more than 660 Skechers retail stores, 449 Company-owned stores around the world, 87 outside the US
Planned Stores: We expect there will be 1,250 Skechers retail stores by the end of 2015.
Stock Year Open: $11.02
Stock Year Close: $18.42
Stock Year Change: 67.2%
LETTER SUMMARY:
· Achieved record annual net sales of $2.378 billion, a net sales increase of over half a billion dollars when compared to 2013;
· Four quarters of record sales, including the third quarter, which marked our highest quarterly sales in our 22-year history
· Increased our combined international retail and wholesale business by 47 percent to approximately 34 percent of our Company’s total business;
· Opened our 1,000th Skechers-branded retail store in the fourth quarter;
· domestic wholesale business. For the year, sales increased 24 percent, which included a 19 percent increase in pairs shipped and a 4 percent increase in average price per pair when compared to the prior year period.
· BOBS reached the 10 million pair donation mark in 2014
· Key drivers in our performance lines were the updates to our Skechers GO range
· our international wholesale business experienced 44 percent annual sales growth over 2013.
· In Europe, where we faced currency issues within our international subsidiary business due to the strength of the U.S. dollar, we achieved sales increases of 50 percent over the prior year with the highest sales increase from the United Kingdom—our largest subsidiary—which shipped more than 2.7 million pairs during the year. With our wholesale accounts and Company-owned retail stores combined, the UK surpassed $100 million dollars in sales for the year, a significant achievement.
· In our Southeast Asia joint ventures, we experienced sales growth of 42 percent over the prior year, which included an increase of 88 percent in China.
· We believe that sales in China will continue to grow at an accelerated pace exceeding $100 million dollars in sales for 2015.
· we announced earlier this year that several distributors in Central Eastern Europe will transition in 2015 to a wholly-owned subsidiary that will oversee 14 countries
· With Skechers retail stores in more than 80 countries around the world, we hit the 1,000-Skechers-store mark
· At year-end, we had 536 Skechers-branded stores owned and operated by our joint ventures, licensees and distributors outside the United States, and 449 Company-owned Skechers retail stores around the world, 87 of which were outside the United States.
· We expect there will be 1,250 Skechers retail stores by the end of 2015.
· accelerating worldwide backlogs, up more than 60 percent at December 31, 2014 compared to the prior year-end
· belief that international sales will become 50 percent of our total business in the next three to four years.
· 362 company-owned retail stores at the end of 2014.
· more than 660 Skechers retail stores outside the US at year-end—87 of those Skechers-owned.
2015 Highlights:
Revenue Distribution: Retail/Ecommerce 26%, Domestic Wholesale 39%, International Wholesale 35%
Yeah-end global production breakdown: 30% Men’s, 57% Women’s, 13% Kids
EPS: $1.5 (3-for-1 Split)
Revenue: $2,378
Stores: At year-end, there were 1,323 Skechers retail stores worldwide, including 517 company-owned
Planned Stores: 330 to 340 new stores expected worldwide, 1,650 Skechers stores by the end of 2016, of which approximately 575 will be company-owned.
Stock Year Open: $18.57 (highest ever was on 8/6/2015 at $54.53, Q2 & Q3)
Stock Year Close: $30.21
Stock Year Change: 62.7%
LETTER SUMMARY:
· For the first time in our 23-year history, we surpassed $3 billion in annual sales
· we saw growth across both our domestic and international businesses
· we became the second largest footwear company in the United States,
· We also became the number one walking and work footwear brand [MOAT] in the United States
· While we achieved high single-digit growth on our more mature business in the United States, our international sales grew by 59 percent, resulting in it becoming 40 percent of our total sales in 2015.
· The significant gains in 2015 came
across nearly every region—the Americas, Asia Pacific, Europe, and the Middle East—with triple-digit, year-over-year improvements in Indonesia, Turkey, Scandinavia, and our two largest markets, China and the Middle East/Africa through our distributor based in the United Arab Emirates.
· With a combined increase of 31.5 percent, all of our existing wholly-owned international subsidiaries had year-over-year double-digit sales increases in 2015, except for one that was limited to a mid-single-digit increase due to the strength of the U.S. dollar affecting foreign currency translation.
· transitioned the business of several distributors to our newly formed Central Eastern Europe subsidiary, which now oversees product distribution to 13 countries in the region. We also transitioned our distributor’s business in Panama to a new Latin America subsidiary, which oversees product distribution to Peru, Costa Rica, Colombia, Panama and numerous other countries in the area. With a strong network of stores in Latin America and stores opening in Central Eastern Europe, we believe these new subsidiaries will positively impact our operations in the next couple of years.
· With more than 160 Skechers retail stores, over 600 shop-in-shops, an extremely strong e-commerce business and triple-digit year-over-year growth in 2015, we believe there is still tremendous opportunity across China to build our brand—especially within our men’s and kids’ divisions, which are just getting started in this vast market.
· At year-end, there were 1,323 Skechers retail stores worldwide, including 517 company-owned SKECHERS retail stores—which had year-over-year sales growth of 21 percent.
· With an additional 330 to 340 Skechers retail stores expected to open worldwide this year, we estimate there will be more than 1,650 Skechers stores by the end of 2016, of which approximately 575 will be company-owned.
· To prepare for our accelerated growth around the world, we have increased our capacity and efficiencies through improved automation
· By the end of the second quarter, we will complete the fourth expansion phase, which will provide more than one million square feet of distribution space in Europe.
· annual year-over-year growth of 22 percent in our domestic wholesale channel, 59 percent in our international distributor and subsidiary business channel, and 21 percent in our worldwide company owned retail stores and strong comp store gains—we have the infrastructure to support this ongoing growth
2016 Highlights:
Revenue Distribution: Retail/Ecommerce 27%, Domestic Wholesale 34%, International Wholesale 39%
Yeah-end global production breakdown: 31% Men’s, 56% Women’s, 13% Kids
EPS: $1.57
Revenue: $3,563
Stores: At year-end, total of 2,011 stores around the world, 570 were Company-owned, of which 157 were outside the United States. In China, 545 free-standing Skechers stores, approximately 2,080 points of sale, and an extremely strong e-commerce business with growth just short of triple digits
Planned Stores: By the end of 2017, we expect to have between 2,600 and 2,750 Skechers stores around the world.
Stock Year Open: $29.04
Stock Year Close: $24.58
Stock Year Change: -15.4%
LETTER SUMMARY:
· Our record annual sales were the result of four record quarters in 2016—including the first quarter which was the biggest sales quarter in our 25-year history—plus year over-year growth of 27.1 percent in our international wholesale business and 16.7 percent in our Company-owned retail business.
· the strongest growth coming from our international businesses
· In the last few years—most notably in 2016, we evolved our product development focus—designing for both the domestic and many international markets, addressing the different nuances, tastes and seasons. This global strategy has been instrumental in evolving our international wholesale business into the largest distribution channel for Skechers.
· In 2016, our roster of celebrities with Skechers marketing campaigns was extensive and impactful.
· we also increased our presence as a true running brand as we became the title sponsor of the Skechers Performance Los Angeles Marathon and the footwear sponsor of the Ironman European Tour.
· donating 14 million pairs of shoes in total since the program [BOBS] launched.
· In 2016, international wholesale sales achieved the highest percentage and dollar gains of our three distribution channels and became the largest of the three channels, making up 46.1 percent of our sales when including international retail. The increases were the result of growth in our subsidiary and joint venture businesses with a 41.6 percent increase in 2016 over 2015.
· For the full year, all of our subsidiary and joint venture markets saw growth—with our largest subsidiary market, the United Kingdom, increasing 12.2 percent and, and our largest joint venture country, China, increasing 68.9 percent.
· China shipped 10.5 million pairs for the year with its business comprised of 545 free-standing Skechers stores, approximately 2,080 points of sale, and an extremely strong e-commerce business with growth just short of triple digits thanks in-part to a highly successful Singles Day in November.
· We transitioned our distributors in Israel and South Korea to joint ventures in the second half of 2016. This followed the transition in 2015 of our Latin American and Central Eastern European distributors to subsidiaries. We expect our business in each of these countries to have a positive benefit on our total international sales within the next three years.
· Skechers hit another milestone when the 2,000th Skechers store opened in December.
· At year-end, we had a total of 2,011 Skechers stores around the world. Of those Skechers stores, 570 were Company-owned, of which 157 were outside the United States.
· By the end of 2017, we expect to have between 2,600 and 2,750 Skechers stores around the world.
· And finally, the second half of 2016 presented some challenges in the United States with several retailers shuttering doors and an influx of off-priced footwear that was typically full-priced.
· While we were impacted by the sluggish retail environment in the United States, we focused on maintaining strong gross margins and keeping our inventory in-line.
· Our speed to market and diverse product offering as well as our vast distribution network have been the cornerstone of our success and aided us during these challenging times.
· Now in our 25th year, we are a well-established brand (MOAT) with a prominent position in the United States, and an expanding international business that is continuing to grow in market share and name recognition.
· Of our total business, we plan for international to increase to 50% in 2017 and continue to increase in future years.
· We have been investing in our infrastructure to support the current and planned growth —including the completion of our approximately one-million-square-foot, automated distribution center in Europe, the planned opening of new logistics facilities in China, as well as currently open facilities in Chile and Japan, plus the resources and teams to maintain and grow our operations globally.
· After record sales in the first quarter of 2016, making year-over-year sales comparison a challenge, we believe 2017 will again be a record-breaking sales year
2017 Highlights:
Revenue Distribution: Retail/Ecommerce %, Domestic Wholesale %, International Wholesale %
Yeah-end global production breakdown: % Men’s, % Women’s, % Kids
EPS: $1.14
Revenue: $ 4,164
Stores: By the end of 2017, there were almost 800 Skechers stores in China—the most for one country—and despite that reach we continue to believe there is opportunity to further extend our brand in the region. In total, there were 2,570 Skechers stores around the world (fell short of the minimum projected by 30 stored opened). This included 1,925 third-party international stores, and 645 company-owned Skechers stores, of which 196 were outside the United States.
Planned Stores: We plan to open 75 to 85 new stores in 2018. [10K page 9]
Stock Year Open: $25.00
Stock Year Close: $37.94
Stock Year Change: 51.8%
LETTER SUMMARY:
[First thing I noticed was a very big change in the format and tone of their letters starting this year. I believe this is because the previous letters were addressed to both customers and shareholders alike, while this letter is addressed specifically to shareholders only]
· we have built the infrastructure to deliver this vast collection to our network of Skechers retail stores and third-party partners.
· We search year after year for new opportunities to resonate with consumers through our product, to broaden our reach, and to continue growing our brand.
· four record sales quarters for our company, including the first quarter being our highest quarterly sales ever, and a new annual record in sales of $4.16 billion. This achievement was a 16.9 percent or $600.8 million increase over 2016, and the first time we surpassed $4 billion in annual sales.
· In our domestic wholesale channel, our sales improved 4.1 percent over the prior year. This was due to growth in our men’s, women’s and kids’ product lines and an increase in pairs shipped by 7.8 percent.
· We remained the No. 1 Walking, Work, Casual Lifestyle, and Casual Dress footwear brand, and the No. 2 Casual Athletic Footwear brand in the United States (SportsOneSource, year-end 2017).
· In our international wholesale channel, our sales increased 24.3 percent over last year, which represented 41.5 percent of our total revenues. This annual growth was the result of sales increases of 28.6 percent in our subsidiaries and joint ventures, and 9.0 percent in our distributors. In the year, we saw the highest growth in our key markets—including China, India, South Korea, Canada and Spain.
· In China, we achieved double-digit growth in sales over the prior year and shipped 17 million pairs during the year, including 1.4 million during the country’s biggest online shopping period—Single’s Day—which was an increase of 76 percent over last year.
· By the end of 2017, there were almost 800 Skechers stores in China—the most for one country—and despite that reach we continue to believe there is opportunity to further extend our brand in the region.
· In total, there were 2,570 Skechers stores around the world. This included 1,925 third-party international stores, and 645 company-owned Skechers stores, of which 196 were outside the United States.
· Our company-owned Skechers retail store sales grew by 21.8 percent for the year, this included retail comps [KPI] of 7.2 percent for the year.
· Adding to our direct-to-consumer business was our e-commerce channel, which improved by 22.9 percent for the year
· This global acceptance and universal appeal of Skechers resulted in our international wholesale and retail business representing just over 50 percent of our total sales in 2017.
· in February 2018, our Board of Directors approved a three-year, $150 million stock repurchase program. This decision reflects the strength of our balance sheet, confidence in our growth prospects, and a comfort as to capital allocation needs in the future.
2018 Highlights:
Revenue Distribution: Retail/Ecommerce %, Domestic Wholesale %, International Wholesale %
Yeah-end global production breakdown: % Men’s, % Women’s, % Kids
EPS: $1.92
Revenue: $ 4,642
Stores: 875 Skechers free-standing stores, a total of 2,390 points of sale in China. in India 220 stores with another 80 to 100 planned to open in 2019. We ended the year with 2,998 Skechers retail stores, and in February of 2019, we announced the opening of the 3,000th Skechers store. More than 2,500 of our 3,000-plus stores are in international locations.
Planned Stores: 80 to 100 planned to open in 2019 [in India], and another 70 to 80 company-owned retail locations worldwide.
Stock Year Open: $38.00
Stock Year Close: $22.89
Stock Year Change: -39.8%
LETTER SUMMARY:
· Our successes in marketing, product and sales resulted in a new annual sales record of $4.64 billion, the result of four record sales quarters.
· It was also a year where we achieved a new quarterly sales record—$1.25 billion in the first quarter, and our first billion-dollar fourth quarter—$1.08 billion in sales.
· 2018 also marked our sixth consecutive year of annual sales growth, a testament to our consistent determination to remain relevant and in demand, and to grow long term.
· Our domestic business continued to show positive results with a 3.5 percent improvement for the year, but international remained the key sales driver in 2018 as it has been in recent years.
· Our international business increased 19.2 percent for the year, bringing it to 54.2 percent of our total sales at year end.
· For 2018, we experienced double-digit growth in our largest joint venture markets—China and India—and within our largest subsidiaries—the United Kingdom and Germany.
· China remains our largest country outside the United States with an annual sales increase of 29 percent and approximately 22.8 million pairs shipped in the full year of 2018.
· At the close of the year, we had over 875 Skechers free-standing stores, a total of 2,390 points of sale in China, and a 53 percent increase in our online sales for the year.
· With a population of over 1.4 billion, we believe there is still much opportunity to grow our business in China. To support this planned growth, in 2018 we broke ground on a 1.6-million-square-foot distribution center and logistics facility, which we expect to become operational in 2020.
· With a population of 1.3 billion people, India is already one of the fastest-growing and largest international markets for Skechers.
· 2018 saw double-digit increases in wholesale and retail sales and an 80 percent increase in pairs sold, reaching 2.7 million pairs for the year in India.
· We have a substantial existing retail network of over 220 stores with another 80 to 100 planned to open in 2019, a strong wholesale business and a recently launched e-commerce site in India.
· In February 2019, we purchased the remaining minority share in our India joint venture business from the partner, and have converted it into a wholly owned subsidiary with the belief that we can build upon this solid foundation.
· We ended the year with 2,998 Skechers retail stores, and in February of 2019, we announced the opening of the 3,000th Skechers store. Located in Shenyang, China, this new store is also our largest to date at approximately 32,000 square feet.
· More than 2,500 of our 3,000-plus stores are in international locations where we also have a wholesale presence.
· We have a growing concentration of stores in certain regions that are particularly strong, including: more than 80 Skechers stores in Indonesia, Saudi Arabia and Taiwan; more than 70 in Australia, Malaysia and Mexico; and more than 50 in Canada and the United Kingdom.
· Of course our success in 2018 was also due to our product combined with our marketing.
· We have confidence in the long-term prospects for our business. We broke ground earlier in 2019 on the expansion of our corporate headquarters, which will double our office, showroom and design space when completed in 2022.
· We’re revamping our ecommerce solution, which had a double-digit sales increase in 2018, and we plan to roll it out to more countries.
· We continue to believe that international sales holds the greatest growth potential, and we will continue to focus on maintaining our strength in North America, while actively investing in our international business.
2019 Highlights:
Revenue Distribution: Retail/Ecommerce %, Domestic Wholesale %, International Wholesale %
Yeah-end global production breakdown: % Men’s, % Women’s, % Kids
EPS: $2.25
Revenue: $5,220
Stores: At year end, we had 3,547 stores around the world, 800 Company-owned stores
Planned Stores: We plan to open 115 to 125 new stores in 2020. [10K page 10]
Stock Year Open: $22.42
Stock Year Close: $43.19
Stock Year Change: 92.6%
10-year Stock change average: 26.87%
LETTER SUMMARY:
· 2019 was another year of impressive growth as we surpassed $5 billion in sales, a 12.5 percent increase over the prior year
· We also set sales records during each quarter, including our highest quarterly sales to date of $1.35 billion in the third quarter
· Our annual sales of $5.22 billion was the result of year-over-year increases of 3.3 percent in our domestic business and 20.2 percent in our international business.
· For the full year, sales outside the United States represented 57.9 percent of our total [This was a goal first discussed in the 2011 Letter (35%-40% goal), and then in the 2016 Letter (50% in 2017 and continue increase further)], and we continue to believe international markets remain a leading long-term growth driver for our brand.
· We believe our unique and competitive product offering, along with the pervasive marketing we execute, sets us apart from other global brands.
· This past year we grew in nearly every market around the world.
· We also expanded our distribution—including expanding in growing markets such as India and Mexico, and improved our logistics and operations capabilities, including additional information technology support.
· launched several collaborations with retailers such as Atmos, Urban Outfitters and Opening Ceremony... aimed at creating brand relevance with a younger audience.
· we believe that sharing our message of comfort and style, talking to consumers and creating welcoming in-store destinations are essential to our success
· At year end, we had 3,547 Skechers stores around the world, including 800 Company-owned stores, and new locations
· To provide for our long-term growth, we continued to invest in the logistics and operations of Skechers. In 2019, this included investments to form a new joint venture in Mexico and to acquire outright our subsidiary in India, to expand capacity at our European distribution center in Belgium, to construct our first distribution center in China and to expand our corporate offices in Manhattan Beach. We also made investments in our information technology and digital platforms.
· Additional achievements in 2019 include the reduction of plastics in our packaging to less than seven percent, of which 100% is recyclable. We are examining further opportunities to reduce our impact on the environment
· But, as we write this, the Coronavirus and its impact on our business and employees remains a concern.
· We believe that given the strength of our brand, our ability to navigate in challenging environments and our investments in our future, we will continue to drive demand
Keeping up with Skechers: 2020 and beyond:
[2018 Letter] In 2018 we broke ground on a 1.6-million-square-foot distribution center and logistics facility in China to support our business in the region, which we expect to become operational in 2020.
[2018 Letter] We broke ground earlier in 2019 on the expansion of our corporate headquarters, which will double our office, showroom and design space when completed in 2022.
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