SKX Q1 Earnings Call: Revenue Misses Estimates, Management Focuses on Tariff Uncertainty and Global Growth

Footwear company Skechers (NYSE: SKX) missed Wall Street’s revenue expectations in Q1 CY2025, but sales rose 7.1% year on year to $2.41 billion. Its non-GAAP profit of $1.34 per share was 13.8% above analysts’ consensus estimates.

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StockStory’s Take

Skechers’ first quarter performance was shaped by continued international strength and the company’s ongoing appeal in comfort-focused footwear. Management attributed sales growth to robust demand for its hands-free slip-ins, ArchFit, and other comfort technologies, particularly in Europe and the Americas. However, softness in China and increased promotional activity, especially in certain markets, weighed on overall results. During the call, leadership emphasized that 65% of Skechers’ business is now international, with ongoing investments in both retail footprint and distribution infrastructure to support this global expansion.

Looking ahead, Skechers’ guidance reflects significant caution due to heightened uncertainty in global trade and consumer sentiment, especially in the United States and China. Chief Financial Officer John Vandemore stated, “We will not be providing revenue or earnings guidance at this time, as the current environment is simply too dynamic from which to plan results with a reasonable assurance of success.” Management highlighted the need for flexibility in managing tariffs, production sourcing, and pricing, and underscored its intention to protect long-term brand value even as near-term margin pressures persist.

Key Insights from Management’s Remarks

Skechers’ management highlighted international sales momentum, the impact of tariffs, and evolving consumer trends as critical themes for the quarter. The company’s global reach, product innovation, and omnichannel strategy shaped first quarter results, while ongoing volatility in China and the U.S. was a focal point for discussion.

• International sales outperformed: Management reported double-digit growth in Europe, Middle East, and Africa (EMEA), as well as in the Americas outside the U.S., attributing strength to product innovation and expanding retail presence. Excluding China, Asia Pacific grew 12%.

• China headwinds continue: Sales in China declined, with management citing ongoing macroeconomic pressures. They indicated that the region remains strategically important, but recovery expectations are modest. Efforts are underway to boost demand through localized marketing and expanded comfort technology offerings.

• Tariff mitigation in focus: Leadership outlined three main strategies to address increased U.S. tariffs on goods sourced from China: cost-sharing with vendors, shifting production to alternative locations, and selective price adjustments. Flexibility in sourcing and constant monitoring of trade policy changes are central to this approach.

• Direct-to-consumer growth: The direct-to-consumer (DTC) segment grew 6% year over year, with notable strength in e-commerce. Management pointed out that DTC channels allow Skechers to respond quickly to shifts in consumer behavior and mitigate wholesale channel uncertainty.

• Investment in supply chain and retail: Skechers continued investing in distribution centers in the U.S., China, and Europe, as well as expanding both company-owned and third-party retail stores. Management views these investments as essential for supporting future growth and improving delivery efficiency across markets.

Drivers of Future Performance

Management’s outlook for the coming quarters centers on navigating dynamic trade conditions, sustaining international momentum, and managing margin headwinds linked to tariffs and consumer uncertainty. The company’s priorities are maintaining flexibility in sourcing, adapting pricing as needed, and expanding its global retail and direct-to-consumer presence.

• Tariff and sourcing flexibility: Leadership stressed that ongoing adjustments to production sourcing, cost-sharing with suppliers, and potential price increases will be used to address U.S. tariff changes. Management acknowledged that the impact will be most pronounced in Q2 and Q3, but emphasized a flexible and regionally tailored response.

• International market expansion: The company continues to prioritize growth outside the United States, with a particular focus on EMEA, the Americas ex-U.S., and Asia Pacific (excluding China). Investments in new stores and distribution infrastructure are expected to support broader brand reach and mitigate risk from domestic volatility.

• Margin management under uncertainty: Management highlighted the challenge of protecting gross margins as higher costs from tariffs and logistics are absorbed. The company intends to balance short-term profitability with long-term brand health, and will monitor the consumer response to any price adjustments closely.

Top Analyst Questions

• Jay Sole (UBS): Asked how Skechers is minimizing production exposure to U.S. tariffs and whether the company is collaborating with industry peers on trade policy. Management explained they are actively leveraging sourcing flexibility, cost-sharing, and pricing, and participating in industry discussions but expect resolution to rest mainly on company actions.

• Laurent Vasilescu (BNP Paribas): Pressed for detail on which regions face the most volatility. Management pointed to the U.S. and China as most uncertain, while international markets excluding these geographies remain stable. They reiterated no evidence of anti-American sentiment impacting the brand.

• Peter McGoldrick (Stifel): Inquired about Skechers’ willingness to increase prices to offset tariffs. Management replied that price adjustments are being considered but will be implemented thoughtfully, with a focus on brand value and consumer acceptance.

• John Keeman (TD Cowen): Asked about DTC expansion and omnichannel performance. Management stated store openings are evaluated case by case, with international locations prioritized. They also highlighted strong e-commerce growth and the value of omnichannel flexibility.

• Jesalyn Wong (Evercore ISI): Queried the company’s ability to shift production out of China, especially for kids’ footwear. Management indicated that while most products can be sourced flexibly, kids’ shoes are more challenging due to regulatory and quality considerations but efforts to diversify are ongoing.

Catalysts in Upcoming Quarters

In the quarters ahead, the StockStory team will be monitoring (1) Skechers’ progress in shifting production and managing costs as tariff policies evolve, (2) sales trends in key international markets, especially China and the broader Asia Pacific region, and (3) the company’s ability to sustain DTC growth and mitigate wholesale channel risks. The pace and effectiveness of new store openings and supply chain investments will also be important markers for long-term trajectory.

Skechers currently trades at a forward P/E ratio of 14.4×. Should you double down or take your chips? Find out in our free research report.

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