Footwear brand Skechers pulls annual forecast on trade uncertainty, shares drop

Skechers on Thursday (Apr 24) withdrew its annual results forecast as the Trump administration’s erratic trade policies fuel economic uncertainty, sending the footwear maker’s shares down 7 per cent in extended trading.

The US-based company is also looking to minimise production in “high-cost locations” by re-routing and diversifying its sourcing base, executives said on a post-earnings call.

China production makes up nearly 38 per cent of US sales for Skechers, according to a Bank of America note dated Apr 9.

US President Donald Trump has ratcheted up import tariffs on Chinese goods to 145 per cent. Higher levies push up input costs for US companies with significant exposure to China, and ultimately result in price increases for American consumers.

The administration’s back-and-forth on tariffs has also made it difficult for businesses to make major spending decisions.

“The current environment is simply too dynamic from which to plan results with a reasonable assurance of success,” Skechers’ chief operating officer, David Weinberg, said.

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The company will begin to feel sizeable impacts of the current tariff regime at the end of the current quarter and “fairly acutely” in the third quarter, executives warned.

California-based Skechers also missed its first-quarter sales estimates on Thursday, logging growth of 7.1 per cent, compared with expectations for a 7.9 per cent jump, per data compiled by LSEG.

Its China sales slid about 16 per cent in the quarter that ended Mar 31, steeper than a 11.5 per cent decline in the prior three-month period.

The company is among footwear makers such as Adidas, Nike and Puma that have significant exposure to manufacturing hubs in Asia, especially China. Skechers stock has lost about 25 per cent of its value so far this year, as at its last close.

Several consumer-facing companies including PepsiCo, Procter & Gamble and Kimberly-Clark have lowered their annual forecasts, as tariff uncertainty ramps up supply chain pressures. REUTERS