Skechers U.S.A., Inc.

Thank you for standing by. This is the conference operator. Welcome to the Skechers' fourth quarter 2021 earnings conference call. As a reminder, all participants are in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. Skechers requests that analysts limit themselves to one question and one follow-up question only to allow all analysts to have the opportunity to ask a question. Should you need assistance during the conference call, you may signal an operator by pressing star and then zero. I would now like to turn this conference over to Skechers. Please go ahead. You may begin your presentation.

Thank you, everyone, for joining us on Skechers' 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, They 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 Skechers Chief Operating Officer, David Weinberg, and Chief Financial Officer, John Vandermoer. David?

Thank you for joining us today for our fourth quarter and year-end 2021 conference call. I hope you, your colleagues, and loved ones are doing well. As we mark our 30th year in business, we remain focused on the well-being of our teams worldwide and are extremely proud and grateful that the entire organization continues to operate with flexibility, resiliency, efficiency, and above all, safely. Skechers achieved a new fourth quarter sales record of 1.65 billion, the second highest quarterly sales in a company's history, and gross margins of 48.6%. This is a remarkable achievement given the challenges we faced as the global pandemic continued to impact our business. For the full year, Skechers achieved record sales of 6.29 billion with strong gross margins of 49.3%. These exceptional results brings us closer to our goal of 10 in 5, or 10 billion by 2026. While the disruptions and costs remained a challenge in the global supply chain for the fourth quarter, our logistics team worked diligently to navigate around them. We saw improvements in December with more goods moving through our distribution centers than in the previous months. The improvement continued through January as port congestion eased and more containers reached our distribution center. However, we believe these challenges will remain through the first half of 2022. but we are optimistic they will ebb in the latter half of the year. We continually monitor the developments within the supply chain to deliver our products as efficiently as possible. The fourth quarter sales gain of 24% was the result of a 10% increase in our domestic sales and a 34% increase on our international sales. International represented 65% of our total sales for the fourth quarter. All our affordable segments achieved growth for the quarter and full year, with international wholesale registering the highest gains for both periods. We attribute this exceptional global growth to the ongoing broad-based demand for the Skechers brand and products. Consumers continue to embrace the outdoors for exercise, dining, and many other activities, and sought out Skechers for our comfort, innovation, style, and quality, all at a reasonable price. Our international wholesale business grew 30% year over year in the fourth quarter, with increases coming from all our channels, reflecting the global strength of our brand. Our distributor business was the largest growth driver, with a 124% increase, led by the Middle East and followed by Russia, Scandinavia, Indonesia, and Turkey. Subsidiary sales increased 47%, with double-digit growth coming from nearly every country. Several even achieved triple-digit growth. The strongest gains came from the United Kingdom and India, two of our largest markets. We believe this impressive sales growth is due to both strong demand for our product and our ability to deliver goods as some of the port pressure eased. Our joint venture business increased 10% for the quarter on strong sales in China and Mexico, as well as the addition of the Philippines. which transitioned from a distributor model to being directly managed by Skechers. China's high single-digit growth in the quarter is particularly notable given temporary store closures in select provinces due to COVID-19 and the supply chain restrictions, which resulted in a delay of some 1111 inventory. E-commerce still achieved double-digit growth for the quarter. The improvements in our joint venture business were partially offset by declines in several markets in Asia, due to COVID-19, inventory challenges, and a decline in tourism. An additional net 128 third-party Skechers stores opened in the fourth quarter across 30 countries, including our first in Bhutan, a notable number of franchise locations in China and India, as well as through our distributors in Australia, New Zealand, Turkey, among others. In total, at quarter's end, there were 2,946 third-party Skechers stores around the world. Skechers' direct-to-consumer business achieved quarterly sales gains of 30%, driven by a 52% increase in international and a 17% increase domestically. Worldwide, comparable same-store sales increased 21%, including 15% domestically and 36% internationally. our direct-to-consumer average selling price per unit increased 25%. This was reflective of our less promotional stance, higher-priced products, and the continued strong demand for the innovative features in our comfort technology footwear. The increase of 17% in our domestic direct-to-consumer business was the result of a 24% gain in our brick-and-mortar stores, partially offset by a decrease of 12% in domestic e-commerce, which was challenged by low inventory availability during periods in the quarter. As compared to the same period in 2019, our domestic e-commerce business increased 115%. The increase in our international direct-to-consumer business was primarily driven by strong retail sales across Europe and Latin America. This was despite the temporary closure of several stores in Austria and the Netherlands due to local health restrictions. We continue to invest in our direct-to-consumer capabilities in the quarter by upgrading our POS systems in North America and the UK, and we are currently in the process of completing updates in Japan with Europe to follow. The rollout of new e-commerce sites continued in the fourth quarter with the launch of new platforms in the United Kingdom, India, Germany, and Austria. More markets are planned for 2022, including several in Europe slated for this quarter. These investments further our progress as an omnichannel retailer capable of addressing consumer demand whenever, wherever, and however the shopper wants. In the fourth quarter, we opened 16 company-owned Skechers stores, including eight in India, two in Colombia, and one each in France, Italy, Peru, and Chile. We closed three locations in the quarter. This brings the global company-owned and third-party Skechers store count to 4,000 306 at year end. To date in the first quarter, we've opened six stores in the United States and one in Italy. And we plan to open an additional 120 to 150 company-owned locations by year end. We closed 11 stores in the United States at the end of January. And by the end of the year, expect to close another 5 to 10 locations, the majority of which are mall-based concept stores. Sales in our domestic wholesale business improved 5% in the fourth quarter. The growth came primarily from our women's and kids categories, though our men's running and walking categories also performed well. We believe our domestic wholesale growth is particularly positive given the supply chain challenges that continue to impact consumers in the United States. We are able to improve our deliveries in December from earlier in the quarter and are continuing to maintain a current flow of goods through our North American distribution center with the pace of shipments to our wholesale partners picking up, allowing us to better meet the demand for Skechers in our largest market. One of our main priorities is to meet consumers' needs with comfortable footwear at a reasonable price, and we're doing just that. We have seen consumers react positively to our product globally with the consistent and universal demand for Skechers comfort technology. The expansion of our offering with more comfort fits, fresh collaborations, and styles that incorporate recycled materials allow Skechers to appeal to an ever-widening consumer base and for shoppers to meet more of their footwear needs with a brand they trust. As always, we drove awareness to our various product offerings through multi-channel marketing efforts that united the Skechers message across all touchpoints, online and in-store, as well as through television, radio, magazines, outdoor, and social media. While 2021 was a record year, we expect the momentum to continue into 2022. We are strategically investing in both our distribution and corporate infrastructure. In India, we purchased our corporate headquarters in January and finalized the location for a new DC to be opened in 2023. We relocated our Japan distribution center, more than doubling our space, and we also recently relocated to a slightly larger distribution space in Panama with the intent to build an additional center, allowing us to grow from 270,000 square feet to approximately 800,000 square feet in 2023. The expansion continues on our LEED-certified Gold North American Distribution Center, which will bring our facility in Southern California to 2.6 million square feet later this year. And now, I'd like to turn the call over to John for more details on our financial results.