After witnessing a sudden growth in e-commerce sales during the pandemic, the US-based footwear brand Skechers looks to bolster its fulfilment and distribution capacity to meet the growing demand.
Skechers, which owned and operated 4 million square feet of facility space before the pandemic, now plans to increase its capacity by more than two times by the next summer, informed the Chief Financial Officer John Vandemore.
The footwear retailer in recent years sought greater capacity to strengthen its e-commerce business in India. However, the challenges caused by the coronavirus pandemic in India delayed its efforts.
The company has experienced higher demand than expected for its products in recent months, accelerating the need for more capacity, Mr Vandemore said.
In July this year, the company reported a sale of $1.66 billion for the quarter ended June 30, compared with $729.5 million for the prior-year period. Its net income totalled $137.4 million, compared with a net loss of $68.1 million in the prior-year period.
What we’ve seen is a tremendous rebound in demand, which really puts us back on the growth trajectory we were experiencing pre-pandemic. Once we got confident that we were going to return to our growth trajectory, we absolutely were going to need that capacity.”
~ John Vandemore, Chief Financial Officer, Skechers
He further attributed the higher overall demand in part to consumers becoming more familiar with online shopping and increasingly integrating casual footwear into their work attire.
Skechers, which held 5.1 million square feet of distribution space at the end of last year, owns and operates facilities in nations like the U.S., China, Belgium, the U.K., Japan, Chile, Peru and Colombia.
Earlier in July, the company opened a 1.6 million-square-foot distribution centre in China and is now set to open a 325,000-square-foot centre in the U.K. later this month. In addition to this, Skechers is also in the process of building out its 1.8 million-square-foot warehouse in Moreno Valley, Calif., by adding an additional 767,000 square feet. Furthermore, the company revealed its plans to add a second facility in China and looking to acquire a space in India, the company said.
Apart from the investments in the warehouse space, Skechers is also investing in automating its systems and processes within the facilities, for example, for locating inventory and picking and packing individual items.
To bolster its worldwide distribution efforts, the company is expecting to spend up to $200 million in CAPEX in the second half of the year.
