Skechers U.S.A., Inc.

Greetings and welcome to SKETCH's third quarter 2024 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to SKETCHers. Thank you. You may begin.

Good afternoon, everyone. Thank you for joining SKETCHers third quarter 2024 earnings conference call. My name is Melissa Tankersley. I'm a manager on our digital marketing team at Skechers and have been with the company since 2021. My favorite style at Skechers is the Eden LX from our Court and Classics collection. Joining us on today's call are Skechers Chief Operating Officer David Weinberg and Chief Financial Officer John Vandemoor. Before we begin, I would like to remind everyone of the company's safe harbor statement. Certain statements made on today's call contain forward-looking statements based on current expectations, including, without limitation, statements addressing the beliefs, plans, objectives, estimates, and expectations of the company and its future results and certain events. These forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause actual results to differ materially from such statements. 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. Please refer to the company's reports filed with the SEC, including its annual report on Form 10-K and quarterly reports on Form 10-Q for more information on these risks and uncertainties that may affect the company's business, financial conditions, cash flows, and results of operations. With that, I would like to turn the call over to Skechers Chief Operating Officer, David Weinberg.

Good afternoon, and thank you for joining us today on our third quarter 2024 conference call. The third quarter marked a new quarterly sales record as we achieved $2.35 billion in sales, an increase of 16%, or $323 million. Earnings per diluted share were $1.26, a 35% increase. We saw significant growth in both our segments, 21% in wholesale, 9.6% in direct-to-consumer, and balanced growth of 16% internationally and 15% domestically. These across-the-board increases and record sales are a testament to the widespread acceptance of our diverse product as customers and consumers increasingly look to Skechers as their source of innovative, comfortable footwear. Our product line offers a unique value proposition for our partners and consumers, providing style, comfort, quality, and innovation at a reasonable price. These attributes differentiate Skechers. Our consistent focus on new products and delivering our signature comfort technology across the portfolio, from sandals and boots to performance and sports styles, is key. Consumers now seek Skechers comfort features, knowing these styles offer more value. For the Skechers Performance Division, we see a significant opportunity to build on our existing performance business, which includes technical running, golf, and pickleball footwear, with the addition of new categories that will attract a broader audience. We are in the early stages of team sports with a growing roster of Olympians and elite athletes competing in our basketball, soccer, court, and cleated footwear globally. Regardless of the sport and skill level, elite or recreational, Athletes can trust that with Skechers, they will experience and enjoy comfort that performs. Raising awareness and creating purchase intent for our lifestyle and performance technologies has been an integral part of our growth. We achieved this through both feature-focused marketing campaigns and by leveraging our strong team of ambassadors and athletes. Earlier this quarter, Snoop Dogg and Philadelphia 76ers basketball star Joelle Embiid both achieved golden moments at the Paris Games wearing Skechers. Joel and Team USA earned a gold medal in basketball, while Snoop championed athletes around the world in his Skechers by Snoop Dogg gold shoes. Also, earlier this year, Harry Kane, the celebrated striker and Skechers athlete, received the Golden Boot Award as the leading scorer in Europe. And just last month, he competed in his limited edition gold Skechers football boots while earning a gold cap for his 100th match on England's national team. For lifestyle, we recently signed TV host Howie Mandel and launched a campaign featuring him across North America, as well as former Dutch footballer Ruud Goedert, whose slipping campaigns began airing last month in Europe. This month, we introduced our first ambassador for the Philippines, Pia Wurtzbach, who attracted crowds of fans at a Manila Mall event. Overall, we experienced healthy consumer sentiment and shopping behavior for Skechers across channels, As more of our comfort technology products became widely available, as we continue to drive purchase intent, infuse more innovation in more of our products, and ensure that they are available globally, we remain focused on building efficiencies within our business to scale for profitable growth. Looking at our third quarter results in more detail, international sales increased 16% and represented 61% of our total sales. By region, we saw growth in EMEA of 30% due to increases across every market, and the Americas of 14% led by the United States and Canada. Additionally, APAC increased 7.4% led by Japan, Korea, and India. We achieved impressive international sales growth while navigating challenges in certain markets, especially in China, where we continue to see pressure on consumer discretionary spend. With our established long-standing business in China and a strong team on the ground, we are confident in our ability to withstand these short-term impacts. In India, we saw an impressive rebound in the quarter with 24 percent growth. We continue to work closely with both our India team and regulators to further advance our local sourcing strategy. We are seeing positive trends and remain optimistic about the progress in this important market. We see tremendous opportunity, not only in our lifestyle business, but also in performance. We have long-established run clubs across 10 cities and are branching into new sports. This year, we became the kit sponsors for the All India Pickleball Association and signed multiple players. For the introduction of cricket footwear, we are also the kit sponsors for the Mumbai Indians, signing multiple players from the Indian national team. In September, we announced the deal with NBA India to sponsor the youth basketball team, The demand for our product is strong in India, as demonstrated in the third quarter, and we will continue to invest in this important market. For wholesale, sales grew 21% due to increases of 26% domestically and 18% internationally. Our domestic wholesale strength reflects a healthier market that is embracing our comfort technologies. This resulted in double-digit increases across our men's, women's, and kids' footwear across our many product lines and significant improvements in volume. Within international wholesale, we saw meaningful growth, especially in EMEA, due to continued demand for our innovative products and improved timing of shipments. Given the breadth of product offering available, direct-to-consumer continues to be a key indicator of consumer sentiment. Sales increased 9.6% primarily due to an increase of 14% internationally with improvements in both our retail and e-commerce channel. Domestic direct-to-consumer sales improved 3.7% on top of last year's 14% increase primarily due to strong e-commerce growth as more consumers gravitated to shopping online. We ended the quarter with 5,332 Skechers branded stores worldwide, of which 1,743 are company-owned locations, including 592 in the United States. We opened 68 company-owned stores in the quarter, including 20 in China, 17 in the United States, eight in Mexico, five in Korea, and three in Colombia. We closed 27 stores in the quarter. Also in the period, 121 third-party stores open, including 56 in China, 14 in Indonesia, 10 in India, 7 in South Korea, and 4 each in the Netherlands and Vietnam. This brings our third-party store count at quarter end to 3,589. In the fourth quarter to date, we've opened 21 company-owned stores, including 7 big-box stores in the United States and 4 locations in China. We expect to open a total of 55 to 60 company-owned stores worldwide in the fourth quarter. From an investment perspective, our priorities include continuing to strengthen our product offering while amplifying demand creation and enhancing our worldwide operational capabilities, building our Skechers retail footprint, and ensuring Skechers product is available where and when our diverse consumer base wants to shop. And now, I'd like to turn the call over to John for more details on our financial results.