Skechers (SKX) has a tough hill to climb as it navigates Trump’s trade war.
The shoemaker reported its first quarter results on Thursday after market close. It withdrew its 2025 guidance, citing “macroeconomic uncertainty stemming from global trade policies.”
It had released in February that it expected 2025 sales of $9.70 billion to $9.80 billion and diluted earnings per share of $4.30 to $4.50. The company said it doesn’t plan to provide any updated guidance at this time.
This trend could be indicative of future earnings for sportswear giants like Lululemon (LULU) and Nike (NKE), which also import a substantial portion of their products.
Skechers imports 100% of the products it sells in the US; around 40% are sourced from Vietnam, while another 40% are from China, which now faces a 145% duty.
CFO John Vandemore clarified in its earnings call that the withdrawal of guidance has “nothing to do with consumer demand.”
COO David Weinberg said two-thirds of its business is outside the US, which is not impacted by tariffs. The company will minimize importing Chinese goods to the US in the short term, he said.
Though Skechers can make shoes in other countries, China is hard to replace when it comes to kids’ footwear.
“It follows all the regulatory requirements for consumer product safety in the US and meets the right price point for a notoriously lower gross margin business … that will be a challenge,” Vandemore said.
Shares fell 7% in after-hours trading. Prior to the report, Skechers stock was down 25% year to date. Peers Nike (NKE), Deckers (DECK), and Crocs (CROX) are down around 22%, 45%, and 9%, respectively. The S&P 500 (^GSPC) has dropped nearly 7%.
For the first quarter, the company posted mixed results, with adjusted earnings per share and revenue of $1.17 and $2.41 billion, respectively.
Here’s what Skechers reported, compared to analysts’ expectations, per Bloomberg consensus:
-
Adjusted earnings per share: $1.17 versus $1.17
-
Revenue: $2.41 billion versus $2.43 billion
-
Gross Margin: 52% versus 52.18%
CFRA analyst Zach Warring warned of a “tougher macro environment in 2025 as excess savings are spent and consumer spending normalizes,” and that “margin pressure from higher wage and marketing costs [is] offset by lower freight and input costs.” He has a Hold rating on the shares.
Prior to the report, Warring said guidance will be key to watch.
“If companies just withdraw guidance because of all the uncertainty … you’ll see a lot more companies follow suit over the next two months as they report,” he explained. “You’re probably going to have a kind of a domino effect, and these companies are going to think that’s probably OK to do.”
