Skechers U.S.A., Inc.

Greetings and welcome to the Skechers fourth quarter and full year 2024 earnings conference call. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Skechers USA Incorporated. Thank you. You may begin.

Good afternoon, everyone. Thank you for joining Skechers' fourth quarter and full year 2024 earnings conference call. My name is Jason Deese, and I lead the cybersecurity engineering team here at Skechers. I have been with the company since 2013, and my favorite style is the SKX float from our Skechers basketball line. Joining us on today's call are Skechers' Chief Operating Officer, David Weinberg, and Chief Financial Officer, John Vandermoer. 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 in 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. 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 fourth quarter and full year conference call. 2024 was another growth year for Skechers, marked by strong financial performance and profitability, the launch of innovative products, and the expansion into new categories worldwide. It also marked a significant milestone in our history, our 25th year as a publicly traded company. On a constant currency basis, Skechers delivered sales of over $9 billion, a 13% increase, and diluted earnings per shares of $4.40, representing a 26% increase, while recording strong gross margin of 53.2% and achieving a double-digit operating margin of 10.1 percent. We also continued to return value to our shareholders through a repurchase of approximately 5.2 million shares during the year while maintaining a healthy balance sheet. We ended the year on a strong note, achieving fourth quarter constant currency sales of 2.24 billion and earnings per share of 86 cents. Our performance in the quarter was broad-based with reported sales growth of 17% in wholesale and 8% in direct-to-consumer, as well as 18% growth domestically and 10% growth internationally. For over three decades, we've upheld our core principles of delivering style, comfort, innovation, and quality at an affordable price. We have maintained this commitment while evolving and adapting to meet the needs of our customers and drive global demand. This was again evident over the past year as we broadened the category reach of Skechers performance to deliver innovation and comfort for the court, pitch, field, green, and trail. Building on the momentum of our Skechers pickleball debut in 2022, we strategically expanded into soccer and basketball the following year. We focused initially on major markets for these global sports, while partnering with world-class athletes to gain recognition and establish legitimacy. In 2024, we expanded our soccer and basketball offering with elite academy and youth styles available worldwide. And we introduced Skechers cricket footwear and apparel to India, which are now available globally. Our athletes provide valuable feedback on the development of best in comfort and best in performance technical footwear. In 2024, we expanded our roster of elite athletes to include Premier League's Mohamed Koudis and Anthony Alanga, La Liga's Icar Lozada, Indian Super League's Sunil Chetri, and Turkey's national star Baris Alper Yilmaz, as well as NBA player Joel Embiid and WNBA player Rakea Jackson. These athletes join our professional golfers, Matt Fitzpatrick and Brooke Henderson, pickleball pros Tyson McGuffin and Catherine Parenteau, and Major League Baseball players Clayton Kershaw and Aaron Nola, among others. Additionally, we announced the signing of Ishan Kishan and Yastika Bhatia, two cricket athletes from the Mumbai Indians, with more cricket and soccer players joining this year. Leveraging our innovative designs, technical expertise, and commitment to comfort that performs, We see tremendous opportunities to expand beyond our existing performance footwear offering, extend our reach into new accounts and countries, and meet the evolving needs of our global consumer base. Further, we are focused on building successful signature technologies, including Skechers Hand Free Slip-Ins and Skechers Arch Fit, as well as pursuing unique partnerships to unlock new market opportunities and enhance our product portfolio. These include the co-branded footwear offering with John Deere, collections with Martha Stewart and Snoop Dogg, and a collaboration with the Rolling Stones. We continue to support our diverse product offering with broad-based campaigns to engage new and existing customers. These are featured across traditional mediums such as linear and digital television, newspapers, magazines, and social media, as well as unconventional presence on stadium perimeter boards, buses, and trains, airport security areas, and much more. Our lifestyle marketing efforts featured our diverse, talented roster that includes Howie Mandel, Howie Long, Martha Stewart, and Brooke Burke, as well as regional ambassadors like former European footballers Jamie Redknapp, Fabio Cannavaro, and Frank Leboeuf, influencer Lele Pons in Mexico, K-pop singer and actor Cha Eun Woo in Southeast Asia, and Spanish singer David Bisbal, among others. We also partnered with regional influencers and key opinion leaders to drive awareness across social media platforms. Building on our history of airing memorable Super Bowl campaigns, this year we're planning an impactful moment with a commercial celebrating Kansas City Chiefs coach Andy Reid and his need for hands-free comfort. Believing consumers should be able to purchase our footwear in their destination of choice, we are enhancing the Skechers shopping experience in an impactful manner as we further grow our direct-to-consumer business with our first interactive performance store in Canada, and in our wholesale business with Shop and Shops and Brand Takeovers. We are focused on enhancing our distribution network for greater efficiency and reach, enabling us to deliver more innovation, drive purchase intent, and ensure that our products are available globally. Looking at our fourth quarter results in more detail. Our record fourth quarter sales of 2.21 billion reflected breadth across geographies and channels. Domestic sales rose 18% and international improved 10%. We saw regional growth in the Americas of 14% with continued strength in the United States and Canada. In EMEA, with growth of 25% driven by strength across nearly all markets, and in APAC, which increased 3.3%, led by double-digit growth in India, Japan, South Korea, and Thailand. This was partially offset by a decline in China. However, our diverse product portfolio and established network of retail stores and online shopping destinations gives us confidence that we will return to growth as the market recovers. Wholesale increased 17% due to increases of 31% domestically and 10% internationally. Our domestic wholesale growth reflects the continued demand for our comfort technology products, resulting in strong double-digit increases across our many footwear product lines for men, women, and kids. Within international wholesale, we saw continued demand for our innovative products, which resulted in growth across nearly all markets. Turning to our direct-to-consumer segment, sales increased 8.4%, with international improving 9.3% and domestic 6.8%. For the important holiday selling period, we saw an increase in in-store shopping with growth in nearly every market, including China. For our e-commerce, the Americas and EMEA both improved double digits, while APAC was negatively impacted by the challenges in China. With the breadth of our product and global reach, Sketch's branded stores, both concept locations and quality malls, and outlets and big box stores in high traffic areas, continue to drive awareness and purchase intent. We ended the quarter with 5,296 Sketchers stores worldwide, of which 1,787 are company-owned locations, including 610 in the United States. We opened 77 company-owned stores in the quarter, including 20 big box locations in the United States, 15 stores in China, and five each in Canada, Colombia, and Mexico. We also opened our first company-owned stores in the Philippines, three in total, and our first company-owned store in Prague. We closed 33 stores in the quarter. Also in the period, 121 third-party stores opened, including 36 in China, 10 in Indonesia, 7 in Australia, and 6 each in India, Malaysia, and South Africa. Also of note, 197 third-party stores closed in China. This brings our third-party store count at quarter end to 3,509. In the first quarter to date, we've opened 14 company-owned stores, six of which are in China and three in the United States. We also relocated four stores, including our West Edmonton Mall location, which is now our largest concept store and includes indoor courts for both basketball and pickleball. We expect to open an additional 180 to 200 company-owned stores worldwide in 2025. From an investment perspective, our priorities include expanding our distribution centers in the United States, Europe, and China to more efficiently deliver our product and manage the expected growth in these markets, continuing to strengthen our product offering while amplifying demand creation, and building our sketches direct to consumer footprint and capabilities. And now, I would like to turn the call over to John for more details on our financial results.