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Skechers Plots Store-Opening Spree in Philippines Shakeup

Skechers’ U.S. operation is taking control of the footwear brand’s business in the Philippines, moving away from its third-party distributor, Manila-based Trendworks International.

Suzette Pasustento, the country manager for the company’s subsidiary Skechers USA Philippines, said that the sneaker giant is in the first phase of reestablishing the brand in the market, namely by setting up new offices in Manila, launching a distribution center, and opening its first two stores in the country this month.

Skechers plans to open another 10 to 12 concept stores in the first half of 2022, introduce new product categories throughout the year and launch a comprehensive marketing campaign, according to Pasustento.

“The Philippines has immense potential for Skechers, and with our dedicated team focused on growth and delivering the integrated capabilities of Skechers, we believe this step accelerates that potential,” David Weinberg, chief operating officer of Skechers USA, Inc., said in a statement. “With Skechers’ appealing lifestyle collections, groundbreaking comfort innovations and our corporate support, we believe the Philippines can become a key market for us in Southeast Asia.”

The brand will also be available in department and specialty stores such as Planet Sports and The SM Store. Trendworks will continue to sell Skechers products through the end of 2021.

“Skechers is a global brand that many Filipino consumers already know and love. With this new dedicated approach, we will be able to reach more of the 100 million men, women and children in this country and offer them a wider selection of great Skechers products through expanded channels,” Pasustento added.

Skechers manages its international businesses through a network of global distributors, and operates in various markets under different structures. For example, the company has joint venture partners in Asia, Israel and Mexico to run the Skechers brand, and wholly-owned subsidiaries in Canada, Japan, India, Europe and Latin America.

The move comes shortly after Skechers deepened its own pockets, expanding its senior, unsecured credit facility to $750 million. The facility also retains a $250 million “accordion feature” that provides for total liquidity up to $1 billion.

Skechers sees board overhaul, activist investor calls for share restructuring

The change in organizational structure comes as the footwear company reported that four board members resigned. In a statement, the company said the resignations were “not the result of any disagreement with the company or any of its affiliates on any matter relating to the company’s operations, strategy, policies or practices.”

Jeffrey Greenberg, Geyer Kosinski, Richard Rappaport and Tom Walsh all resigned, while the board appointed its newest member, Zulema Garcia. Garcia is the senior vice president of internal audit at multilevel marketing company Herbalife Nutrition, and spent 24 years as an audit partner at accounting firm KPMG. She will also serve on Skechers’ audit committee.

The Skechers board of directors is now comprised of founder, chairman and CEO Robert Greenberg, president Michael Greenberg, chief operating officer David Weinberg, as well as independent members Katherine Blair, Morton Erlich, Richard Siskind and Garcia.

Skechers did not elaborate on why the board members resigned. The departures also follow a Dec. 1 letter to the board from activist investor Tremblant Capital Group, suggesting that the company eliminate its dual share class structure, which would remove “super-voting” shares that provide certain holders, namely the founding Greenberg family, with more voting power.

The changes, according to Tremblant, would align shareholders with management so that “unease around the founding family dynamics will dissipate, driving the multiple higher and creating tremendous value for shareholders.”

In the letter, the firm lauded the company’s improvements on board diversity, communicating on ESG topics such as sustainability and Uyghur labor concerns, and instituting annual guidance.

But the investors also shared concerns that Skechers stock traded at less than half the earnings multiples of peers such as Nike, Adidas, Puma, Under Armour and Crocs despite growing revenue faster than these rivals over the past decade. In particular, the letter called out a lack of dividends, a lack of “aggressive” buybacks and volatile selling, general and administrative (SG&A) expenses as potential factors behind the relatively lower price point.

Tremblant Capital owns 2.8 percent of the company’s shares, down from the 5.1 percent stake the firm said it held earlier in December.

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