Skechers' top executive Robert Greenberg knows how to land on his feet. The founder of 1980s icon L.A. Gear heads Skechers USA, which designs and sells more than 3,000 styles of lifestyle and athletic footwear (oxfords, boots, sandals, sneakers, training shoes, and semi-dressy shoes) for men, women, and children. In addition to its namesake products, the company offers fashion and street-focused footwear under the Marc Ecko, Zoo York, and Mark Nason brands. Its shoes are sold through department and specialty stores in more than 100 countries, as well as some 330 company-owned concept and outlet stores and its website. Sketchers footwear is manufactured primarily by Chinese contractors.
Skechers operates its business through four segments. The company's International Wholesale segment generates revenue overseas three ways: direct sales to department stores and specialty retail stores through subsidiaries and joint ventures, sales to foreign distributors of Skechers footwear to department stores and specialty retail stores, and royalties from licensees who make and distribute non-footwear items outside the US. Its second segment, Domestic Wholesale, distributes footwear through several channels, primarily via department stores and specialty stores, but also athletic specialty shoe stores, independent retailers, catalogs, and Internet retailers. Skechers also operates a Retail Stores segment comprises a portfolio of 120 owned an operated concept stores, 107 factory outlet stores, and 54 warehouse outlets -- all located in the US -- with 33 concept stores and 16 factory outlet stores operating globally. Skechers' fourth segment is its e-commerce operation. To support anticipated additional capacity needs, Skechers built a 1.8 million-sq.-ft. domestic distribution facility through a joint venture agreement with HF Logistics I to replace half a dozen of its existing distribution facilities in or near Ontario, California.
Across the Skechers segments, the business enjoys a global reach. Its International Wholesale unit serves Canada, France, Germany, Spain, Portugal, Italy, Switzerland, Austria, Malaysia, Thailand, Singapore, Hong Kong, China, Japan, the Benelux region, the UK, Brazil, Chile, Africa, the Middle East, and Australia.
Following robust revenue rises in 2010 thanks to its toning footwear, Skechers saw significant sales dips in 2011. The footwear maker logged a 20% decrease (or $400 million) in 2011 compared to 2010, citing lower sales in the domestic wholesale segment spurred by lower volumes of toning products and lower average selling prices for its products. This noteworthy decline was offset, however, by sales boosts across its international wholesale segment. Skechers got some bad press in 2011 when consumers reported that its toning shoes were cause for concern due to the higher potential for falls. The company reported a $67 million net loss in 2011, attributed to a nearly 15% rise in general and administrative expenses and higher legal settlement costs.
One of Skechers' longtime strategies is to build brand awareness by opening up new retail stores. During 2011 it opened 40 domestic stores and six international ones while shuttering three domestic stores and one international shop. In 2012, Skechers has plans to open up to 20 new stores across its portfolio. Skechers has looking to grow its international business. To this end, the footwear firm is leveraging its joint ventures in Asia, developing its businesses in Brazil and Chile, and boosting its presence in India and Mexico, as well as existing markets. Catering to its core customer, Skechers consistently peddles its products to style-conscious 12- to 24-year-olds with footwear that boasts playful colors and materials. Since its inception, the firm has extended its reach to younger and older audiences from 5 to 40 years old to give its products portfolio more traction and its brand a heightened awareness. Skechers steers clear of competing alongside high-dollar, technical performance footwear makers, such as NIKE and adidas, as its footwear is not targeted to hard-core athletes. To protect its brand, in 2011 Skechers filed suit against Sears Holdings, for allegedly selling footwear that infringes on its Shape-ups, Twinkle Toes, and Z-Strap product lines.
Chairman and CEO Robert Greenberg and his family own 58% of the company and control about 44% of its voting power. – less