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Skechers USA (SKX -4%) is tripping up a bit following its Q1 report last night. The footwear company reported in-line EPS results while revenue rose 7.1% yr/yr to a record $2.41 bln. Both metrics were in-line, which is decent but not great. However, the main problem is that SKX withdrew its 2025 guidance due to macro uncertainties with tariff uncertainties being the main driver. That is spooking investors.

• Growth by region was pretty similar with both domestic and international sales increasing by 7%. Growth of 14% in EMEA and 8.3% in the Americas was partially offset by 2.6% decline in APAC. This was primarily due to soft consumer spending in China. However, when excluding China, APAC sales grew 12%. SKX continues to view international as its primary growth engine.
• Wholesale sales increased 7.8%, with growth of 4.2% domestically and 9.5% internationally. Domestic wholesale growth reflected broad-based demand while international wholesale experienced solid growth across many regions. On the DTC (direct-to-consumer) side, sales increased 6% with domestic growth of 11%, including a strong performance in e-commerce. International DTC increased 2.9%, but when excluding China, that jumps to 12%.
• In terms of withdrawing guidance, SKX said that the world is significantly more uncertain today than it was three months ago. SKX described tariffs as a similar level of uncertainty to what was observed during the initial phase of the COVID pandemic. On the positive side, SKX noted that two-thirds of its business is outside of the US, which is much less impacted or minimally impacted by the current situation.
• SKX says it is taking a multi-lever approach to dealing with tariffs. These include cost sharing with vendors, sourcing optimization, and price increases. SKX is in the midst of pulling these levers while simultaneously monitoring the environment for needed adjustments and closely watching consumer behavior. Ultimately, SKX remains confident in its ability to navigate these challenges. It also noted that consumer demand for the Skechers brand and its comfort technology remains extremely robust.

Overall, the Q1 results were a bit disappointing. However, we think its decision to withdraw guidance is having a bigger impact on the stock today. With that said, shares are hanging in there pretty well. Keep in mind that the stock has pulled back aggressively (-36%) from its January high of $78.85. As such, we think a lot of the bad news was priced in already. Whether SKX withdrew guidance or guided lower maybe does not make a lot of difference as sentiment may remain pretty bearish until the tariff issue is resolved. Nike (NKE -3%) is down in sympathy.