Skechers U.S.A., Inc.

Greetings and welcome to the Skechers third quarter 2021 earnings conference call. At this time, all participants are on a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to the Skechers team. Please go ahead.

Thank you, everyone, for joining us on Scheduler's conference call today. I will now read the Safe Harbor Statement. Certain statements contained herein, including without limitation statements addressing the beliefs, plans, objectives, estimates, or expectations of the company or future results or events may constitute forward-looking statements that involve risks and uncertainties. Specifically, the COVID-19 pandemic has and is currently having a significant impact on the company's business, financial conditions, cash flow, and results of operations. Such forward-looking statements with respect to the COVID-19 pandemic include, without limitation, the company's plans in response to this pandemic. At this time, there is significant uncertainty about the duration and extent of impact of the COVID-19 pandemic. The dynamic nature of these circumstances means that what is said on this call could change at any time. And as a result, actual results could differ materially from those contemplated by such forward-looking statements. Additional forward-looking statements involve known and unknown risks, including but not limited to global, national, and economic business and market conditions, including supply chain delays and disruptions in general and specifically as they apply to the retail industry and the company. There can be no assurance that the actual future results, performance, or achievements expressed or implied by any of our forward-looking statements will occur. Users of forward-looking statements are encouraged to review the company's filings with the U.S. Securities and Exchange Commission, including the most recent annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all other reports filed with SEC as required by federal securities law for a description of all other significant facts that may affect the company's business, financial conditions, cash flow, and results of operations. With that, I would like to turn the call over to Sketcher's Chief Operating Officer, David Weinberg, and Chief Financial Officer, John Vandamore. David.

Thank you for joining us today for our third quarter conference call. I hope you, your colleagues, and loved ones are all doing well. As the pandemic remains a challenge in our business and personal lives, we are focused on the safety of our teams around the world. We are appreciative of the resiliency of the entire Skechers organization. Without them, we wouldn't have achieved our strong results and do what we do best, design, deliver, and market what we believe is the most comfortable and innovative footwear available today. Before we share details of our record third quarter sales, it is important to note that the pandemic continues to impact our business globally. While many markets, including the United States and Europe, eased restrictions, Others, particularly the Asia Pacific region, experienced extended and even renewed lockdown measures. Further, the global supply chain disruptions, including the congestion at ports around the world, especially in the United States, and the COVID-related closures of factories in South Vietnam, where we manufacture a limited amount of our product, have delayed our ability to ship goods. Transit times doubled from what they were in the pre-pandemic period. Our supply chain team is working to overcome these issues and I would like to extend a special note of appreciation to them for their diligent work, as well as thank our factories who partnered with us through this period. This is a global phenomenon that we believe will continue to impact our business into the first half of 2022. However, we are seeing positive signs that conditions are improving. Factory production in South Vietnam has restarted albeit at a reduced capacity in some areas, and the congestion at some global ports has improved. We are optimistic, given our strong start to the fourth quarter. Getra's third quarter revenue of $1.55 billion was a new record for the period and a remarkable achievement given the ongoing global supply chain disruptions just discussed. For the nine-month period, we also achieved a sales record of over $4.6 billion. Quarterly gross margin remained strong at 49.6%, primarily driven by higher average selling prices and fewer promotions in our direct-to-consumer business, partially offset by increases in freight costs. The third quarter sales gain of 19% was the result of a 20% increase in our domestic business and a 19% increase in our international business, which represented 58% of our total sales for the period. We achieved double-digit increases across all our reportable segments, driven by the continued global demand for our comfort technology footwear. Skechers direct-to-consumer business achieved the highest quarterly sales gains, increasing 44%, driven by a 61% increase in our international business and a 35% increase in our domestic business. Worldwide, comparable same-store sales increased 31%, including 34% domestically and 25% internationally. Importantly, the unit volume improved 17%, with an average selling price per unit increase of 23%, reflective of our less promotional stance, the success of our comfort technology product, and a return to a more normal lifestyle and shopping behavior. The increase in our domestic direct-to-consumer business was driven by a 43% gain in our brick and mortar stores, where we saw higher traffic and normalized operating hours. Our domestic e-commerce channel increased 3% year-over-year, but 180% over the same period in 2019. Our domestic e-commerce business was particularly impacted by limited product availability in the quarter. The increase in our international direct-to-consumer business was primarily driven by a rebounding demand and easing of COVID restrictions. This growth came from triple-digit increases in Chile and Korea and double-digit increases in the United Kingdom and Mexico, as well as strong growth in Canada, Peru, and India. We continue to invest in our e-commerce infrastructure and launched new sites on our new platform in Ireland in September and the United Kingdom this month. with more markets planned for the fourth quarter and into 2022. In the third quarter, we opened 10 company-owned Skechers stores, including two in Columbia and one each in Peru, India, Germany, and France. We also opened a store in downtown Los Angeles in a renovated historic building, marking our first street location in this evolving urban center. We closed one location in the quarter. To date in the fourth quarter, we have opened three stores, including one in Naples, Italy, And we plan to open an additional 15 to 20 locations by year end. An additional net 119 third-party Skechers stores opened in the third quarter across 28 countries, including a net new 67 in China, nine in India, six in Australia, and four in New Zealand. In total, at quarter end, there were 4,170 Skechers stores around the world. Our international wholesale business grew 11% year over year. The quarterly sales growth was primarily driven by an increase of 62% in our distributor business and a 10% increase in China. Our distributor business performed well, reflecting a more normal selling environment, particularly with our largest partner based in the Middle East and Africa. Our joint venture business increased 5% for the quarter due to a 10% increase in China, as well as strong sales in Mexico and Israel. These improvements were partially offset by declines in several markets in Asia due to continuing COVID-related restrictions. Subsidiary sales increased 6%, primarily driven by improvements in India, as well as Colombia and Canada. This growth was partially offset by an 11% decrease in Europe, primarily due to supply chain issues. We are currently seeing progress in the European ports with improvements in the flow of goods resulting in a strong October. Sales in our domestic wholesale business improved 10% in the third quarter. The growth came primarily from women's go-walk, men's sport, work, bonds from Skechers, as well as our performance and casual running style for men and women. Central to our global success is our comfort technology footwear. Comfort, innovation, style, and quality are the Skechers product tenants. In the third quarter and over the last 18 months, consumers have been increasingly loyal to Skechers comfort as we elevated our products with more fit offerings as well as lightweight cushioning options and added durability to many styles. We also have focused our efforts on an expanding collection that features recycled materials. Our ongoing goal is to meet consumers needs with comfortable footwear at a reasonable price. We drove awareness of our available collections through our multi-platform approach to marketing that included television, outdoor, digital, influencers, and more. This approach resulted in influencers from Tokyo, London, and Los Angeles all wearing Skechers Times Kansai Yamamoto limited edition collection and localized campaigns featuring key opinion leaders in key global markets. Given Skechers' global growth, we are strategically investing in both our distribution and corporate infrastructure. Our UK and China distribution centers became fully operational in the third quarter, and we narrowed down locations for a new DC in India. We completed the first phase of our corporate headquarters expansion in Manhattan Beach, and we are working on the expansion of our North American distribution center that will bring our facility in Southern California to 2.6 million square feet in 2022. Both of these expansions will be LEED-certified gold. We believe our record results in the third quarter reflect our powerful global brand. With factory production in South Vietnam restarted and transit times and port constraints improving, we are optimistic about the holiday season. And now, I would like to turn the call over to John for more details on our financial results.