Skechers USA Inc at Wells Fargo Consumer Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Frederick William Gaertner - Wells Fargo Securities, LLC - Analyst : So first of all, let's dive into your long term target. So as you march toward this $10 billion 2026 revenue target clearly applied CAGR over the next two years based on the midpoint of your 2024 guidance is 6%. That's down from the low double digits we've seen on average over the last couple of years. Are you expecting a slowdown in top line? I mean, how are you thinking about upside to that to that target?

Question: Frederick William Gaertner - Wells Fargo Securities, LLC - Analyst : And you've spoken about hitting this 11 to 13 operating margin target over time. Can you just talk about the drivers there? Maybe speak about gross margin over the next several years and then your expectations for SG&A deleverage or there or leverage?

Question: Frederick William Gaertner - Wells Fargo Securities, LLC - Analyst : So international, why don't we start with DTC. So that business continues to have real momentum. Can you discuss what regions you're seeing the most growth and where you see the most opportunity going forward from a regional standpoint from on the DTC side?

Question: Frederick William Gaertner - Wells Fargo Securities, LLC - Analyst : So maybe we move to international wholesale. So that slowed a little bit in 2Q. I mean, how should we think about that channel into the second half?

Question: Frederick William Gaertner - Wells Fargo Securities, LLC - Analyst : If you can just first discuss I mean, you touched on Red Sea and some issues that you have there. Can you first just talk about how your freight logistics work when you lock in contracts, how long do you lock them in for how much you use the spot rate market? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 19, 2024 / 6:00PM, SKX.N - Skechers USA Inc at Wells Fargo Consumer Conference

Question: Frederick William Gaertner - Wells Fargo Securities, LLC - Analyst : Is that is that typically how most companies in the footwear universe work as far as contracting annually? I mean, I don't know if you can speak to that and using the spot rate if there's -- if you're chasing demand, for example.

Question: Frederick William Gaertner - Wells Fargo Securities, LLC - Analyst : So as far as I mean, you talked about in-transit inventories up 150%, I believe, in Europe last quarter, I mean, are you seeing further delays in deliveries? Or is this kind of in the rearview now?

Question: Frederick William Gaertner - Wells Fargo Securities, LLC - Analyst : Given we talked a little bit, we mentioned here, appear you've been bucking the trend there. It's been soft for a lot of folks, but since you guys are have a really robust growth there, can you just talk about some of the drivers there and how you see that region going forward?

Question: Frederick William Gaertner - Wells Fargo Securities, LLC - Analyst : So are you seeing more growth on the wholesale side or on the DTC side in that region ? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 19, 2024 / 6:00PM, SKX.N - Skechers USA Inc at Wells Fargo Consumer Conference

Question: Frederick William Gaertner - Wells Fargo Securities, LLC - Analyst : When we pivot to China. So, a hot topic conversation here. Maybe just touch on the structure of the business units at a high level. Just remind us how it's structured within the region, DTC versus wholesale?

Question: Frederick William Gaertner - Wells Fargo Securities, LLC - Analyst : You touched on a little bit here. So on the call, you mentioned somewhat disappointing results in China in 2Q. You also mentioned that you're expecting it to improve, though in the second half. I mean, is that still the case? Or are we are we thinking about China sort of growing at the run rate that we saw in 2Q into the back half? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 19, 2024 / 6:00PM, SKX.N - Skechers USA Inc at Wells Fargo Consumer Conference

Question: Frederick William Gaertner - Wells Fargo Securities, LLC - Analyst : We'd move on to India. I mean that's been somewhat of a challenge, you know, navigating that market right now with government issues. Can you just talk about the regulatory challenges near term and any update on what's going on there and then perhaps touch on the long-term opportunity you see in that market.

Question: Frederick William Gaertner - Wells Fargo Securities, LLC - Analyst : Maybe we moving to domestic DTC business. So we saw slowdown in 1Q. I think that was a concern of a lot of investors and people often think that's a sign that a leading indicator for a wholesale slowdown. So maybe it looks like reasonably improve that at least that I've seen into August into the beginning of September. Maybe talk to back to school trends you saw second, how are you thinking about holiday demand in that channel? And what are your expectations

Question: Frederick William Gaertner - Wells Fargo Securities, LLC - Analyst : Domestic wholesale. I mean that's been a bright spot momentum from. It's continue to over the last few quarters, had some really great growth. You just talk about expectations for the balance of the year and what is driving this continued momentum? I remember last year around this time, you spoke about sell-in, not aligning with SAP through, right? And now, is that back in balance or there's still more catch-up with some of these retailers?

Question: Frederick William Gaertner - Wells Fargo Securities, LLC - Analyst : May be move to gross margins. You mentioned freight benefits of size. You know, you're lapping some pricing from last year, you had this outsized domestic growth, outsized wholesale domestic growth, which I assume is a headwind. You're not going to see some of these expansion that you saw in the first half. I mean, how do you think about the gross margin good guys and bad guys into the back half of the year?

Question: Frederick William Gaertner - Wells Fargo Securities, LLC - Analyst : So you've spoken about pricing and ASPs moderating this year. How do you think about each going forward? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 19, 2024 / 6:00PM, SKX.N - Skechers USA Inc at Wells Fargo Consumer Conference

Question: Frederick William Gaertner - Wells Fargo Securities, LLC - Analyst : Maybe a kind of -- we have just have thirty seconds left here. Maybe I could squeeze one more in here. So SG&A always front on our own and that answers right? Growth on a dollar basis, the average low 10s over the last six quarters, mid 10s in the first half of the year. How do you think about SG&A into the second half, particularly the cadence in the 3Q and 4Q? And then secondly, how do we think about SG&A more long-term? You continue to expect sort of run rate at a low 10s growth rate?