Have you noticed all the advertising that Skechers USA Inc. has been doing lately, especially with celebrities and athletes?

Well, for the Manhattan Beach footwear manufacturer and distributor, it is translating into increased sales. 

Revenue in the first quarter hit $2 billion for the first time in the company’s 31-year history, an increase of 10% from the same period in the previous year. 

David Weinberg, chief operating officer of Skechers, attributed the growth to strong sales overseas and in the direct-to-consumer channels the company has established through its e-commerce platform and retail stores. 

“Our record sales, expanded gross margins of 48.9% and meaningfully improved inventory levels are an indication of the strength of our comfort technology products and impactful marketing worldwide,” Weinberg said in a statement announcing the company’s quarterly results released on April 27. “With plans to reach $10 billion in annual sales by 2026, we couldn’t be more positive about the many meaningful growth opportunities we see ahead.”

A company spokesperson said that Skechers would not comment on its advertising campaigns. 

The company said its marketing philosophy is a targeted and 360-degree approach to drive traffic, build brand recognition and properly position its diverse lines within the marketplace.

Its marketing strategy uses an omni-channel approach — print, outdoor, television, radio and digital advertising along with public relations, influencers and social media, promotions and in-store events. 

“In addition, we utilize celebrity and athlete endorsers in some of our advertisements,” the company added. 

Creating heat

In a conference call with analysts to discuss first-quarter results, Weinberg specifically mentioned how the company keeps its brands “top of mind” through memorable advertising. 

“This quarter, we launched marketing campaigns that included a Super Bowl ad with Snoop Dogg, Martha Stewart, Tony Romo and Howie Long, and national television commercials for Skechers Slip-ins with (television personalities) Amanda Kloots and Brooke Burke among others, and targeted digital and out-of-home advertising for Skechers Uno with (“Emily in Paris” actress) Ashley Park.”

Abbie Zvejnieks, a senior research analyst with Piper Sandler & Co., in New York, said that Skechers has been investing in advertising and marketing and trying to connect to the consumer and create some heat behind the Skechers brand. 

“They have been using celebrities like Martha Stewart and even Snoop Dogg,” Zvejnieks said. “I think everyone knows of the Skechers brand, but reminding people and spreading new product awareness … like Slip-ins is a product that comes to mind that they have really been advertising.”

Weinberg called the celebrities endorsing Skechers is a “diverse team” that includes Park, Snoop Dogg, and movie and “A-Team” actor Mr. T, whose ad campaign launched in mid-April.

“We also connect on the field, thanks to Dodgers pitcher Clayton Kershaw, and on the course with elite golfers and Skechers ambassadors Brooke Henderson and Matt Fitzpatrick,” Weinberg said. “With pickleball pros Tyson McGuffin and Catherine Parenteau on our roster playing in our Skechers Viper Court pickleball shoes and as the official footwear sponsor of the Professional Pickleball Association Tour and U.S. Open, we are connecting to the fastest-growing sport in America.”

Analyst call

In a research report on Skechers published on April 27, Zvejnieks said that she was maintaining her neutral rating on the company’s stock while raising the target price from $47 to $52, although it traded above $50 last week.

She wrote that the company’s domestic wholesale business was challenging; it declined in the first quarter by 18% compared to the first quarter of the prior year. 

“We anticipate an even further decline in 2Q as wholesale partners continue to have issues with excess inventory and are displaying caution on the state of the consumer,” she added. 

Zvejnieks said she expects an improvement in the second half of the year as retailers work through inventory. 

“While wholesale will likely weigh on growth in (North, Central and South Americas) this year, international trends seem to be strong with a recovery in China as a significant tailwind for both topline and margins,” Zvejnieks wrote in the report. 

Among its competitors, Skechers falls squarely in the middle of the pack when it comes to market capitalization, which was $7.9 billion as of May 24. By comparison, the Washington State footwear giant Nike Inc. had a market cap of $166 billion, while Goleta-based Deckers Outdoor Corp. had a market cap of $11.6 billion. 

Crocs Inc., the footwear manufacturer based in Broomfield, Colorado, had a market cap of $6.5 billion as of May 24, while Steven Madden Ltd., a shoe distributor in Long Island City, New York, that sells the brands Dolce Vita, Betsey Johnson and Blondo, among others, had a market cap of $2.3 billion. 

In last year’s Business Journal list of largest public companies ranked by market cap as of June 30, 2022, Skechers was No. 20 with a capitalization of $5.5 billion.