Skechers' Q3 Inventory Surge Casts No Shadow on Peak Season

Skechers reported a 24% year-over-year increase in inventory during the third quarter of 2024. The company attributed the rise primarily to elevated stock levels in China and products in transit. However, Skechers executives emphasized that the increased inventory levels do not negatively impact peak season expectations.

Skechers COO David Weinberg stressed in his remarks that inventories can be moved flexibly across the globe. "I want to remind everyone that our inventory is not stuck in China—we have the ability to move it around the world as needed," Weinberg said. This approach highlights the company's capacity to redirect excess stock to different markets.

CFO John Vandemore noted that inventory imbalances are not at critical levels, while acknowledging that some regions have higher-than-planned stock levels. However, he added that overall, inventories remain at manageable levels through peak season, and in many markets, current inventory consists primarily of new products. "In some regions we are seeing sales exceed inventory deliveries, or vice versa," Vandemore summarized the situation.

Skechers, which increased sales by 12% in 2024, posted a 15.3% increase in domestic sales in the third quarter. This growth demonstrates the company's ability to capitalize on elevated inventory levels. Weinberg also noted that no backlogs occurred at distribution centers, and despite October historically being a weak month for wholesale shipments, inventory management proceeded smoothly.

Skechers said it plans to monitor how much product it can sell during China's Singles' Day holiday to determine when to redirect excess inventory. Following Singles' Day, steps will be taken to transfer additional stock to other markets.

A similarly positive inventory outlook prevails in retail. National Retail Federation President and CEO Matthew Shay stated that retailers are well-stocked for peak season and that delivery delays have been minimized thanks to strategies implemented to prevent disruptions such as labor strikes on the East and Gulf Coasts this year.

Skechers' positive season expectations despite rising inventory levels are supported by the company's flexible inventory management strategy and strong sales performance. The company's global distribution capacity allows potential stock surpluses to be resolved quickly, while rising sales figures demonstrate the effectiveness of inventory management.

Key Takeaways:

• Skechers increased 2024 Q3 inventory by 24%.

• The increase stems from elevated stock in China and products in transit.

• COO David Weinberg noted that inventory can be moved globally.

• CFO John Vandemore said inventory imbalances are minimal and stock consists largely of new products.

• The company raised 2024 sales by 12%; Q3 domestic sales climbed 15.3%.

• Excess inventory will be redirected to other markets following China's Singles' Day holiday.

• National Retail Federation CEO Matthew Shay said retailers are well-stocked and delivery delays have been minimized.

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News Link: https://www.supplychaindive.com/news/skechers-holiday-inventory-Q3-earnings/731442/

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