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What Could Cause Higher Future Domestic Sales for Skechers?

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Nov. 22 2019, Updated 5:55 a.m. ET

An overview of Skechers’ domestic wholesale segment

Athletic and casual footwear company Skechers (SKX) derived $1.2 billion in sales (RTH) from its domestic wholesale segment in 2015.

As its name suggests, the segment comprises sales made in the United States through other retailers. Sales from the segment are significant, as Skechers’ network of owned stores in the United States is still limited. The company relies on third-party US retailers to generate sales volumes and drive brand growth. These retailers include the following:

  • sporting goods stores (FXD) such as DICK’s Sporting Goods (DKS), DSW (DSW) and Foot Locker (FL)
  • department stores (XRT)
  • e-retailers (XLY)
  • other specialty retailers

Prior to 1Q16, the domestic wholesale segment was Skechers’ largest reporting segment, accounting for about 38.8% of its total sales in 2015.

In 1Q16, Skechers’ international wholesale segment became its largest, with 42.9% of the company’s sales stemming from the segment. We’ll discuss the international wholesale segment’s performance and prospects in the next article.

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Growth trajectory

Sales from the domestic wholesale segment rose at a CAGR (compound annual growth rate) of 15.4% from fiscal 2011 to fiscal 2015. The segment’s sales rose 22.2% to $1.2 billion in 2015 compared to $998 million in 2014.

The rise came about primarily due to new points of sale, higher unit sales, and higher selling prices. Skechers’ footwear sales volumes in the domestic wholesale segment rose 15.3% to 51.8 million pairs in 2015, while its average selling prices rose 6%. The rises in volumes and prices were primarily driven by growth in SKX’s Women’s GO, Women’s Active, and Men’s Sport footwear collections.

While the domestic wholesale channel is an important element of Skechers’ growth story, the company is looking to establish relationships with more and more vendors in a bid to grow its sales in both the domestic and international markets.

We’ll discuss the growth potential of the international wholesale segment—Skechers’ largest distribution channel—in the next article.

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