Dive Brief:
- Skechers reported a 24% YoY increase in inventory for Q3 2024, primarily due to higher stock levels in China and in-transit, according to an Oct. 24 earnings call.
- Despite the stockpile, executives told analysts the company feels “pretty good” about the composition of its inventory, both in-house and in the market.
- “I think it's a good idea to remind everybody that we have the capacity to move that inventory around the world,” Skechers COO David Weinberg said on the call. “It's not like it's stuck in China, stays in China.”
Dive Insight:
As peak season nears, Skechers is not seeing any significant inventory imbalances, according to Skechers CFO John Vandemore. Instead, there is slightly higher than planned inventory in certain locations, including in China and in-transit.
“There's some spots here or there where you see some either sell-through outpacing inventory deliveries or the reverse,” Vandemore said, noting that in some markets, on-hand inventory levels decreased during Q3. The CFO also said that much of the shoemaker’s current inventory is new, rather than static.
Based on its recent financial results, Skechers may benefit from larger inventory levels. The company has increased sales by 12% YoY in 2024, including a 15.3% increase in domestic sales in Q3 alone.
In addition, the company is not seeing any backup at distribution centers, per the earnings call, even during October, a month Weinberg called historically weak for wholesale shipments.
“There's nothing that we think is old or debilitating in that inventory per se that can't be moved around the world in a relatively short period of time,” Weinberg said.
In terms of when Skechers might begin shifting some of its excess inventory, Vandemore said the company is waiting to see how much product it can sell during China’s Singles’ Day holiday in early November before redirecting goods elsewhere.
Skechers is not alone in presenting a positive inventory outlook ahead of the holiday season. National Retail Federation President and CEO Matthew Shay said he expects retailers to be well stocked for peak season, particularly thanks to mitigating strategies many employed to avoid delivery delays from this month’s East and Gulf Coast labor strike and other disruptions this year.
