Skechers is making a bold exit from Wall Street, striking a $9 billion deal to go private. With rising tariffs and shifting global supply chains reshaping the footwear landscape, the popular sneaker brand is placing a big bet on a future beyond the stock market. Read on to find out what this major move means for Skechers—and what it could signal for the entire shoe industry.
Investment Firm 3G Capital to Acquire Skechers in $9 Billion Deal
Skechers is embarking on a new chapter as investment firm 3G Capital has agreed to acquire the company for over $9 billion, taking it private. The attractive offer of $63 per share, a 30% premium over Skechers’ recent average stock value, received unanimous approval from the company’s board, signaling strong confidence in the deal. The market responded enthusiastically, with Skechers’ stock price leaping almost 25% to $61.56 on Monday following the announcement.
Looking ahead, the familiar leadership of Chairman and CEO Robert Greenberg will remain at the helm, and Skechers will continue to operate from its long-standing headquarters in Manhattan Beach, California, after the acquisition closes, which is anticipated in the third quarter of this year.
Why Skechers Chose to Privatize
While the official announcement of Skechers’ privatization deal made no direct reference to the potential fallout from Trump’s tariffs, the move occurs against a backdrop of increasing apprehension regarding the impact of these tariffs on companies with overseas manufacturing, notably in China.
Skechers executives had previously indicated their intent to reduce the flow of goods to the U.S. from “high-cost locations” due to factors including tariffs. Although the company has not specified its foreign production breakdown, many Skechers shoes are labeled “Made in China.”
Mirroring a growing trend among businesses since the widespread tariff announcements, Skechers refrained from issuing future financial guidance during its first-quarter earnings call in April. Chief Financial Officer John Vandemore explained to investors that “the current environment is simply too dynamic from which to plan results with a reasonable assurance of success.”
America’s imposition of tariffs on Chinese goods escalated in early April when the duty was raised to 125%. This move came just hours after China retaliated by increasing its tariffs on American goods to 84%, intensifying a trade conflict with potentially significant global economic repercussions.
In response to these growing tariff pressures, Skechers executives stated last month that the company possessed several “levers” to mitigate the impact, including cost sharing with suppliers, optimizing sourcing strategies, and adjusting prices for consumers.
Addressing the complexities of global tariff management, Chief Financial Officer John Vandemore commented last month, “We’re looking at how we optimize the global cost of tariffs in all markets when we look to move production around. Obviously, with an effective tariff rate at about 159%, products from China to the U.S. are prohibitively expensive.”
Globally, Skechers operates approximately 5,300 retail locations, with around 1,800 being company-owned. Notably, the company reports that roughly two-thirds of its revenue originates from international sales, with China accounting for 15% of its revenue, according to data from FactSet.
In 2024, Skechers achieved a record revenue of $9 billion, accompanied by net earnings of $640 million.
Will Skechers’ Privatization Spark a Trend Among Shoe Brands?
While Skechers stands out as an early major player in the shoe industry to pursue privatization amidst escalating tariffs and evolving global supply chains, it might not be alone for long. Should trade tensions persist in disrupting operations and eroding profitability, other companies could very well follow suit.
The enhanced flexibility and control afforded by private ownership could become increasingly attractive to brands grappling with similar challenges. However, the decision to exit the public market will ultimately hinge on each company’s unique circumstances, financial stability, and appetite for the risks involved.
Given the significant shifts already underway in the shoe industry, Skechers’ move could indeed signal the start of a wider trend towards privatization as a strategic response to the changing market dynamics.
Source: Associated Press