Skechers USA (NYSE:SKX) is a footwear company based in Manhattan Beach, California. In addition to producing footwear under a number of Skechers brands such as Skechers Active and Skechers Cali, the company has eight separately marketed "fashion and street" brands targeted at different demographics. Skechers makes money by selling its products to department and specialty stores, sports retailers, and boutiques. However, the company also sells directly to consumers through its website and its own retail stores. These include: 70 concept stores, 72 factory outlets, and 35 warehouse outlets in the US, as well as 14 concept stores and 2 factory outlets internationally. The company earned $1.4 billion in revenue and $55 million in net income in 2009.
Skechers has a stated focus on growing its company-owned retail business, and it increased its number of stores. By expanding its retail sales business, Skechers hopes to boost profit margins by bypassing traditional retailers and charging customers the full retail (as opposed to wholesale) price. If successful, this will also decrease the significance of Skecher's five largest customers, which account for 25% of all sales.
Skechers USA makes money by selling its footwear to department stores and other retailers, or directly to the consumer via its website or in its own stores. The company produces footwear of all kinds for men, women, and children, though the company's core consumers are 12- to 24-year-olds. Skechers makes an effort to maintain a trendy and stylish brand image by using celebrity-driven advertising.
Skechers offers multiple branded product lines for men, women and children as well as other products sold under established names not associated with Skechers. Under this line is Skechers USA which offers all types of shoes ranging from casual to dress for men and women. Skechers Sport includes include running and jogging shoes. Skechers Active provide a fusion of sport and casual shoes for females. Skechers Kids provides shoes for infants, toddlers, boys, and girls. Skechers Line also includes Shape-Ups, Tone-Ups and Skechers Work products.
The Fashion and Street brands are marketed individually and separately from Skechers. These brands include: Zoo York, Mark Nason, and Unltd by Marc Ecko. The reason they are marketed separately is because each of these brands has a distinct target audience. For example, Zoo York targets skateboarders and those who embrace skate fashion; SoHo Lab targets trend-conscious 18 to 34 year-olds.
Skechers' top five customers account for 25% of net sales. These clients are not obligated to purchase products from Skechers, and the loss of one of them could significantly reduce the company's sales. The company's plans to expand its retail business will decrease its dependency on these customers and mitigate some of the risk they pose to sales. As Skechers gains more sales from its own stores, these five customers will become less important to the welfare of the company.
Robert Greenberg (Chairman and CEO) and his family own almost 60% of class B common stock. Because class B stockholders are allowed 10 votes per share, Mr. Greenberg alone holds 28.1% of total votes. Including his family's voting power, he controls 46.7% of all votes. Therefore, any issue that is put to vote will be significantly influenced by Mr. Greenberg, regardless of whether or not his views are in line with the rest of the shareholders.
Skechers, which already operates in more than 100 countries, has grown revenue from its international wholesale business. The company will continue to expand internationally, in part to take advantage of rapid economic growth in certain parts of the world. For example, Skechers expanded its distribution network in China via a joint venture in 2008, which has generated between $10-$15 million more in revenue.
Skechers produces a very wide range of footwear and that it does not compete with each of these companies in the same way. For example, Skechers competes with Wolverine World Wide (WWW) mainly in the casual and work footwear categories, but Wolverine does not make athletic footwear as Skechers does.