skx-10q_20220930.htm

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 28, 2022, 134,212,238 shares of the registrant’s Class A Common Stock, $0.001 par value per share, were outstanding.

As of October 28, 2022, 20,888,571 shares of the registrant’s Class B Common Stock, $0.001 par value per share, were outstanding.

	As of			As of
(in thousands)	September 30, 2022			December 31, 2021
ASSETS
Current assets
Cash and cash equivalents	$	508,281		$	796,283
Short-term investments		102,986			98,580
Trade accounts receivable, less allowances of $58,818 and $62,684		933,908			732,793
Other receivables		75,075			80,043
Inventory		1,779,369			1,470,994
Prepaid expenses and other		182,260			193,547
Total current assets ($996,197 and $1,040,765 related to VIEs)		3,581,879			3,372,240
Property, plant and equipment, net		1,289,520			1,128,909
Operating lease right-of-use assets		1,117,951			1,224,580
Deferred tax assets		448,179			451,355
Long-term investments		70,242			145,590
Goodwill		93,497			93,497
Other assets, net		77,371			75,109
Total non-current assets ($587,295 and $608,607 related to VIEs)		3,096,760			3,119,040
TOTAL ASSETS	$	6,678,639		$	6,491,280
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	925,907		$	876,342
Accrued expenses		261,577			265,420
Operating lease liabilities		221,396			225,658
Current installments of long-term borrowings		136,930			76,967
Short-term borrowings		31,013			1,195
Total current liabilities ($566,888 and $601,929 related to VIEs)		1,576,823			1,445,582
Long-term operating lease liabilities		996,414			1,094,748
Long-term borrowings		225,505			263,445
Deferred tax liabilities		11,739			11,820
Other long-term liabilities		119,288			133,613
Total non-current liabilities ($309,923 and $368,994 related to VIEs)		1,352,946			1,503,626
Total liabilities		2,929,769			2,949,208
Commitments and contingencies (Note 10)
Stockholders’ equity
Preferred Stock, $0.001 par value; 10,000 shares authorized; none issued and outstanding		—			—
Class A Common Stock, $0.001 par value; 500,000 shares authorized; 134,212 and 135,107 shares issued and outstanding		134			135
Class B Common Stock, $0.001 par value; 75,000 shares authorized; 20,889 and 20,939 shares issued and outstanding		21			21
Additional paid-in capital		387,459			429,608
Accumulated other comprehensive loss		(104,326	)		(48,323	)
Retained earnings		3,175,416			2,877,903
Skechers U.S.A., Inc. equity		3,458,704			3,259,344
Noncontrolling interests		290,166			282,728
Total stockholders' equity		3,748,870			3,542,072
TOTAL LIABILITIES AND EQUITY	$	6,678,639		$	6,491,280

See accompanying notes to unaudited condensed consolidated financial statements.

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share data)	2022			2021			2022			2021
Sales	$	1,878,367		$	1,558,476		$	5,565,765		$	4,654,802
Cost of sales		994,432			781,513			2,960,088			2,338,588
Gross profit		883,935			776,963			2,605,677			2,316,214
Operating expenses
Selling		150,857			127,845			425,675			360,640
General and administrative		603,107			502,871			1,719,969			1,450,449
Total operating expenses		753,964			630,716			2,145,644			1,811,089
Earnings from operations		129,971			146,247			460,033			505,125
Other expense		(15,139	)		(8,049	)		(40,144	)		(20,065	)
Earnings before income taxes		114,832			138,198			419,889			485,060
Income tax expense		20,498			21,497			83,229			92,027
Net earnings		94,334			116,701			336,660			393,033
Less: Net earnings attributable to noncontrolling interests		8,448			13,562			39,147			53,952
Net earnings attributable to Skechers U.S.A., Inc.	$	85,886		$	103,139		$	297,513		$	339,081
Net earnings per share attributable to Skechers U.S.A., Inc.
Basic	$	0.55		$	0.66		$	1.91		$	2.18
Diluted	$	0.55		$	0.66		$	1.90		$	2.17
Weighted-average shares used in calculating net earnings per share attributable to Skechers U.S.A., Inc.
Basic		155,420			155,835			155,783			155,413
Diluted		156,233			157,123			156,714			156,590

See accompanying notes to unaudited condensed consolidated financial statements.

	Shares					Amount								Accumulated
	Class A			Class B		Class A			Class B		Additional			other					Skechers						Total
	Common			Common		Common			Common		paid-in			comprehensive			Retained		U.S.A., Inc.			Noncontrolling			stockholders'
(in thousands)	Stock			Stock		Stock			Stock		capital			loss			earnings		equity			interests			equity
Balance at June 30, 2022		134,845			20,889	$	135		$	21	$	402,360		$	(75,784	)	$	3,089,530	$	3,416,262		$	301,842		$	3,718,104
Net earnings		—			—		—			—		—			—			85,886		85,886			8,448			94,334
Foreign currency translation adjustment		—			—		—			—		—			(28,542	)		—		(28,542	)		(14,346	)		(42,888	)
Distributions to noncontrolling interests		—			—		—			—		—			—			—		—			(8,891	)		(8,891	)
Net unrealized gain on derivative contract		—			—		—			—		—			—			—		—			3,113			3,113
Stock compensation expense		—			—		—			—		10,223			—			—		10,223			—			10,223
Shares issued under the incentive award plan		10			—		—			—		—			—			—		—			—			—
Shares redeemed for employee tax withholdings		(4	)		—		—			—		(112	)		—			—		(112	)		—			(112	)
Repurchases of common stock		(639	)		—		(1	)		—		(25,012	)		—			—		(25,013	)		—			(25,013	)
Balance at September 30, 2022		134,212			20,889	$	134		$	21	$	387,459		$	(104,326	)	$	3,175,416	$	3,458,704		$	290,166		$	3,748,870

Balance at June 30, 2021		134,884			20,949	$	135		$	21	$	395,951		$	(34,990	)	$	2,372,342	$	2,733,459		$	280,645		$	3,014,104
Net earnings		—			—		—			—		—			—			103,139		103,139			13,562			116,701
Foreign currency translation adjustment		—			—		—			—		—			(9,520	)		—		(9,520	)		(3,507	)		(13,027	)
Contributions from noncontrolling interests		—			—		—			—		—			—			—		—			6,717			6,717
Distributions to noncontrolling interests		—			—		—			—		—			—			—		—			(7,126	)		(7,126	)
Net unrealized gain on derivative contract		—			—		—			—		—			—			—		—			200			200
Stock compensation expense		—			—		—			—		14,664			—			—		14,664			—			14,664
Shares issued under the incentive award plan		14			—		—			—		—			—			—		—			—			—
Shares redeemed for employee tax withholdings		(5	)		—		—			—		(239	)		—			—		(239	)		—			(239	)
Conversion of Class B Common Stock into Class A Common Stock

Title of each class		Trading symbol		Name of each exchange on which registered
Class A Common Stock, par value $0.001 per share		SKX		New York Stock Exchange

PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets (Unaudited)	3
	Condensed Consolidated Statements of Earnings (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income (Unaudited)	5
	Condensed Consolidated Statements of Equity (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows (Unaudited)	8
	Notes to Condensed Consolidated Financial Statements (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	23

PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	25
	Signatures	26

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2022			2021			2022			2021
Net earnings	$	94,334		$	116,701		$	336,660		$	393,033
Other comprehensive income, net of tax
Net unrealized gain on derivative contract		3,113			200			10,210			1,823
Loss on foreign currency translation adjustment		(42,888	)		(13,027	)		(83,628	)		(22,520	)
Comprehensive income		54,559			103,874			263,242			372,336
Less: Comprehensive income (loss) attributable to noncontrolling interests		(2,785	)		10,255			20,979			50,480
Comprehensive income attributable to Skechers U.S.A., Inc.	$	57,344		$	93,619		$	242,263		$	321,856

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐