Skechers U.S.A., Inc.

Greetings and welcome to Skechers' first quarter 2025 earnings conference call. At this time, all participants are in 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 this conference over to Skechers. Thank you. You may begin.

Good afternoon, everyone. Thank you for joining Skechers' first quarter 2025 earnings conference call. My name is Su Huang. I'm a Senior Director of International Merchandising at Skechers, and I've been with the company since 2017. My favorite style at Skechers is the cozy fit in white navy. Joining us on today's call are Skechers Chief Operating Officer, David Weinberg, and Chief Financial Officer, John Vandermeer. 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 report 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 first quarter 2025 conference call. The first quarter marked a new sales record for Skechers with $2.41 billion in revenue, or $2.46 billion on a constant currency basis, and earnings per share of $1.34. Our strong financial performance across both our wholesale and direct-to-consumer segments was the result of continued global demand for our comfortable and innovative footwear and growth across geographies, driving our international to 65% of our total business. This growth is of significant importance given the increasing macroeconomic uncertainty and waning consumer sentiment. Both domestic and international sales increased by 7%, with growth of 14% in EMEA and 8.3% in the Americas. In APAC, sales decreased by 2.6%, primarily due to soft consumer spending in China. However, when excluding China, APAC sales grew 12%. We continue to view international as our primary growth engine, strategically investing in our retail store network and enhancing our distribution efficiencies. Sketch's enduring success stems from our core design principles of style, comfort, quality, and innovation at an affordable price. Our mission is to make convenience and comfort part of consumers' everyday life, no matter their age, interest, or lifestyle. Sketch's proprietary hands-free slip-ins technology, ArchFit, StretchFit, and other features are the center of this comfort movement. Our technical performance division continues to expand its roster of elite athletes with the signing of footballers Isco Alarcon, a Spanish national team veteran, and rising star Nicolo Passelli, who plays for Roma and the Italian national team, Jasprit Bumrah, India's fast cricket bowler and national team veteran, baseball player Jake Berger of the Texas Rangers, and basketball pro Norman Powell of the Los Angeles Clippers. This quarter, we also announced the signing of Kiki Iriafin, first-round draft pick of the WNBA Washington Mystics, and legendary golfer Bernard Langer. Our athletes provide valuable feedback on the development of our best-in-comfort technical footwear and lend credibility and awareness as we further build our presence on the court, pitch, green, and field, and extend our region to new accounts and countries to meet the needs of sports enthusiasts globally. Complementing our athlete-driven initiatives are multi-format lifestyle marketing campaigns that feature a diverse roster of talents. This includes Howie Mandel, Tony Romo, Howie Long, Martha Stewart, and Brooke Burke, as well as regional ambassadors like former European footballers Jamie Redknapp and Frank LaBeouf, Spanish singer David Bisbal, and German singer Vanessa Mai, among others. Looking at our first quarter results in detail. Our record first quarter sales of 2.41 billion were the result of 7% increases in both our domestic and international channels due to the continued demands for Skechers. We saw regional growth in EMEA of 14%, driven by strength across nearly all markets, and the Americas of 8.3%, with continued strength in the United States and Canada, partially offset by a decrease of 2.6% in APAC, primarily due to the continued economic pressures in China. Again, when excluding China, APAC grew 12%. We believe Skechers has significant growth opportunities in this region, and we remain committed to investing in our product, marketing, retail footprint, and logistics. Wholesale sales increased 7.8%, with growth of 4.2% domestically and 9.5% internationally. The domestic wholesale growth reflected broad-based demand for our comfort technology products across our kids, men's, and women's categories. Within international wholesale, we experienced solid growth across many regions and markets, driven by the strength of our brand and appealing innovative products. Turning to our direct-to-consumer segment, sales increased 6%, with domestic growth of 11%, including strong performance in e-commerce. International increased 2.9%. When excluding China, international grew 12% due to the strong DTC sales in nearly every market. Skechers branded stores showcase our comfort technology products for the entire family, as well as innovative performance footwear, and continue to drive awareness and purchase intent. We ended the quarter with 5,318 Skechers stores worldwide, of which 1,821 are company-owned locations, including 618 in the United States. We opened 51 company-owned stores in the quarter, including 15 locations in China, 13 in the United States, and three each in Hong Kong and Mexico. We also relocated five stores, including the New Performance Focus store in Edmonton, Canada, and expanded two others. We closed 17 stores in the quarter. Also in the period, 50 third-party stores opened, including 12 in China, six in Indonesia, and the first Skechers store in Argentina. 62 third-party Skechers stores closed in the quarter, including 42 in China, bringing our third-party store count at the quarter end to 3,497. We expect to open an additional 150 to 170 company-owned stores worldwide in 2025. Included in the estimate is the 13 company-owned stores open to date in the second quarter. Our investment priorities remain focused on three key areas, expanding our distribution centers in the United States, China, and Europe to more efficiently deliver our product, and manage the expected growth in these markets, enhancing our product offering with new technologies and categories while amplifying demand creation, and growing our direct-to-consumer footprint and capabilities. We are encouraged by the positive reception to our varied product initiatives during our recent domestic and international customer meetings, reaffirming our commitment to evolving, innovating and adapting our footwear to meet the needs of consumers and drive demand across our global footprint. While we are fully cognizant of the uncertainty in the current environment, we believe we are well positioned to navigate this, leveraging the strength of our brand, our distinct and global market position, and our healthy balance sheet. And now, I'd like to turn the call over to John for more details on our financial results.