Greetings, and welcome to the Skechers' third quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn this conference over to Skechers. Thank you. You may begin. Hello, everyone. My name is David Roche from the FP&A team. Thank you for joining us on Skechers conference call today. I will now read the Safe Harbor statement. Certain statements contained herein, including, without limitation, statements addressing the beliefs, plans, objectives, estimates, or expectations of the company or future results or events, may constitute forward-looking statements that involve risks and uncertainties. Such forward-looking statements involve known and unknown risks, including, but not limited to, global, national, and local economic, business, and market conditions, including the impact of inflation, foreign currency fluctuation, challenging consumer retail markets in the United States, wars, active war, and other conflicts around the world, and supply chain delays and disruptions in general, and specifically as they apply to the retail industry and the company. There can be no assurance that the actual future results, performance, or achievements expressed or implied by any of our forward-looking statements will occur. Users of forward-looking statements are encouraged to review the company's filing with the U.S. Securities and Exchange Commission, including the most recent annual report on Form 10-K, quarter reports on Form 10-Q, current reports on Form 8-K, and all other reports filed with the SEC as required by federal securities laws for a description of all other significant risk factors that may affect the company's business, financial condition, cash flows, and results of operations. With that, I would like to turn the call over to Skechers' Chief Operating Officer, David Weinberg, and Chief Financial Officer, John Vandemore. David? Good afternoon, and thank you for joining us today for our third quarter 2023 conference call. Before we discuss our record quarterly results, I would like to express our concern for those impacted by the devastating crisis in the Middle East and the ongoing war in Ukraine. This is a very difficult and uncertain time for many of our colleagues, partners, and customers, with whom we remain in close contact, offering whatever comfort and assistance we can. Once again, our financial results exceeded expectations with a new quarterly sales record of $2.025 billion, a strong gross margin of 52.9%, and earnings per share of $0.93. Along with our continued momentum in the quarter, we extended our product portfolio, which we believe will further strengthen our position in the global footwear market. We released three capsules from our new Snoop Dogg collaboration across North America, Europe, and several other key markets, creating media attention and expanding our reach with fans of the legendary entertainer. Our collection with Snoop Dogg, along with our collaborations with Martha Stewart and The Rolling Stones, heightened awareness and consumer engagement for the Skechers brand. We also launched an exciting expansion to our Skechers Performance division, Skechers Football, or soccer, as it's known in the United States, with boots built for speed and control. In support of this initiative, we signed Harry Kane, the leading striker for Bayern Munich and captain of the England National Football Team. Harry, along with a roster of athletes from the Premier League and Women's Super League, have been instrumental in testing and launching of this product. Harry's move to Bayern Munich created additional excitement and generated headlines as he made his inaugural Bundesliga appearance in Skechers boots with a goal and an assist. The SKX_01 and Skechers Razor are currently available in key football specialty retailers, select Skechers stores, and online in Europe. Just this week, we announced a further expansion of our technical performance footwear with the addition of Skechers Basketball and the unveiling of the SKX Resagrip and the SKX Float. Similar to our approach with football, we have partnered with two-time All-Star Julius Randle from the New York Knicks and local star Terance Mann from the Los Angeles Clippers, both of whom have been training and playing in Skechers basketball footwear leading up to the 2023 NBA season. Skechers Basketball will be available shortly in North America, China, and the Philippines, the world's largest basketball markets. With the launch of Skechers Football and Basketball, we expanded our Skechers Performance division with two of the biggest sports in the world, building on our assortment of award-winning running, golf, and pickleball footwear. Taken together, the expansion of Skechers Performance footwear and our collaborations with Snoop Dogg, Martha Stewart, The Rolling Stones, as well as others, illustrates our commitment to innovation and our determination to deliver comfort, style, and quality in every pair. We continue to develop fresh takes on our successful and in-demand Skechers Hands Free Slip-ins, Arch Fit, Max Cushioning, GO WALK, and Street collections, as well as many other styles. All of our key initiatives, whether they are related to performance or lifestyle, have targeted and unique marketing campaigns to drive awareness and purchase intent. This includes athletes and brand ambassadors who are admired in their respective countries, like newly signed former footballer, Fabio Cannavaro in Italy, and actress and TV personality, LiLiCo in Japan. As we review our accomplishments in the third quarter, we want to note that our goals and objectives remain unchanged. We are committed to delivering the ultimate in comfort technology products to the world, enhancing the Skechers shopping experience, and operating in an increasingly efficient, sustainable, and impactful manner. Looking at our third quarter results, we achieved record sales of $2.025 billion, an increase of 8% year-over-year. International sales increased 9%, representing approximately 61% of our total sales, and domestic sales increased 7%. Gains were driven by a 24% increase in our direct-to-consumer segment. Our wholesale sales decreased 1% due primarily to lower distributor sales in the quarter, which led to international wholesale being down 2%. Excluding distributor sales, international wholesale was up 5%. Domestic wholesale was significantly better than expected at flat to prior year, driven by accelerated deliveries in the third quarter. We are encouraged by the positive signals we continue to see in the domestic wholesale marketplace, including requests for early deliveries, solid sell-throughs, healthier inventory levels, and most importantly, booking trends for the first part of 2024. After a difficult year, we are optimistic about the prospects of a return to growth in domestic wholesale in 2024 on the back of our incredible product lineup. Turning to direct-to-consumer, where our 24% growth was the result of a 33% increase internationally, with strong performance in both online and brick-and-mortar locations, and a 14% increase domestically, driven by our stores. This includes growth of 17% in the Americas, 24% in APAC, and 61% in EMEA. At 42% of our total sales, our direct-to-consumer segment is a key driver of our long-term growth strategy. As such, we are focused on improving efficiencies and creating a more seamless experience for consumers, driving demand and ensuring we have a fresh flow of inventory. In the third quarter, we opened 72 company-owned Skechers stores and closed 23. Store openings included 43 in China, five big box stores in the United States, five in Vietnam, four in South Korea, three in both Chile and India, two each in France, Israel, and Hong Kong, and one each in Canada, Colombia, and Peru. In the period, 324 third-party stores opened, including 282 in China and 11 in India, bringing our third-party store count to 3,399, and our total worldwide count to 4,992 Skechers stores. In the fourth quarter to date, we've opened three company-owned stores in the United States and one each in the U.K., Colombia, and Chile. We expect to open 45-55 company-owned stores worldwide over the remainder of the year. Reflecting our diligent efforts to manage our inventory, levels declined 24% from year-end 2022, while simultaneously increasing our gross margins and maintaining growth. We have also begun shipping out of our new distribution centers in Canada and Chile, and we expect to be operational at our facilities in India and Panama before the end of the year. And now, I would like to turn the call over to John for more details on our financial results. Thank you, David, and good afternoon, everyone. Skechers delivered another quarter of record sales, surpassing $2 billion and growing 8%, led by the continued strength of our direct-to-consumer segment, which grew double digits in all regions. This sustained momentum highlights the strength of the Skechers brand globally and the successful execution of our long-term growth strategy. Now, let's review our third quarter financial results. Direct-to-consumer sales grew 24% year-over-year to $850.4 million, driven by increases of 33% internationally and 14% domestically. We saw continued strong performance in our retail stores globally and meaningful outperformance on our international e-commerce platforms. Consistent with what we are seeing across the industry, we experienced a slowdown in our domestic e-commerce channel as consumers shifted to our stores, which are once again at target inventory levels. The growth in direct-to-consumer reflects the continued demand for our innovative products as we deliver on our strategy to enhance our omni-channel capabilities. Wholesale sales decreased 1% year-over-year to $1.17 billion. Domestically, sales were flat versus the prior year, which was a significantly better result than we expected due to the accelerated timing of orders. International wholesale sales declined 2%, predominantly due to a decline in sales to our distributor markets, which can be influenced heavily by the timing of orders, and which we're facing a particularly difficult comparison to the prior year. Excluding distributor sales, international wholesale sales were up 5%. Overall, we were encouraged by the performance of the wholesale segment in the quarter, as well as the positive booking trends we have observed for the first half of 2024. Now, turning to our regional sales. In the Americas, sales for the third quarter increased 7% year-over-year to $1.02 billion, driven by growth across markets. We continued to see the strength of our direct-to-consumer business drive growth in the region, particularly within our retail stores. In EMEA, sales grew 2% year-over-year to $480.4 million, driven by strong direct-to-consumer growth, nearly offset by lower sales to our distributors. Excluding distributor sales from the equation, EMEA grew double-digit year-over-year, particularly reflecting the strong demand for our brand and innovative product assortment in our direct-to-consumer channels. In Asia Pacific, sales increased 14% year-over-year, $527.1 million, on the back of robust growth across segments in most markets. In China, sales grew 18%, driven by double-digit growth in all channels. As this market continues to recover, we are encouraged by the sustained growth rates and positive retail trends we have seen, which have exceeded our expectations. Third quarter gross margins were 52.9%, up 590 basis points compared to the prior year. The improvement was driven by favorable pricing and channel mix, as well as lower unit costs. Operating expenses increased 230 basis points as a percentage of sales year over year to 42.4%, reflecting increased investments in demand creation, retail store growth, and expanded distribution capabilities. Selling expenses increased 80 basis points as a percentage of sales year over year to 8.8%, mainly due to higher brand marketing expenses globally, including investments focused on brand building and driving consumer awareness for our collection of comfort technologies and newly launched categories. General and administrative expenses increased 150 basis points as a percentage of sales year-over-year to 33.6%. The increased expenses were primarily due to higher rent, depreciation, and labor to support volume-driven growth within our direct-to-consumer segment and the expansion of our distribution infrastructure to advance our capabilities worldwide. Earnings from operations were $213.2 million, a 64% increase compared to the prior year, and our operating margin for the quarter was 10.5%, compared to 6.9% in the prior year. Our effective tax rate for the third quarter was 19.5%, compared to 17.9% in the prior year. Earnings per share were $0.93 per diluted share on 156.2 million diluted shares outstanding, a 69% increase. This brings our year-to-date earnings per share to $2.93, which, when excluding unusual items, exceeds all prior full-year results, a remarkable accomplishment. Now turning to our balance sheet. We ended the quarter with $1.27 billion in cash, cash equivalents, and investments, an increase of $591.5 million versus the prior year from improved working capital management and operating efficiency. Inventory was $1.38 billion, a decrease of 22% or $397.3 million compared to the prior year, when we experienced acute capacity challenges and processing constraints at our distribution centers. Notably, we lowered inventory levels in both the Americas and EMEA by 33% or over $400 million compared to the prior year. We believe that our current inventory levels are healthy and well-positioned to support demand during the key holiday selling periods and early 2024. Accounts receivable at quarter end were $929.4 million, essentially flat compared to the prior year and in line with our wholesale business. Capital expenditures for the quarter were $91.3 million, of which $32.9 million was related to general corporate purposes, including construction of our new corporate offices and transportation. $25.6 million related to investments in our retail stores and direct-to-consumer technologies, and $19.2 million related to the expansion of our distribution infrastructure globally. Our capital investments are focused on supporting our strategic priorities, which include growing our direct-to-consumer business and expanding our brand presence globally. During the third quarter, we repurchased approximately 805,000 shares of our Class A common stock at a cost of approximately $40 million. We continue to deploy our capital consistent with our stated philosophy, while maintaining an enviable balance sheet and abundant liquidity. Now, turning to guidance. We are confident in the strength of our brand globally and underlying consumer demand for our differentiated product portfolio and compelling value proposition. However, for the balance of the year, our outlook remains cautious due to continued uncertainty around the macroeconomic environment in general and the consumer spending environment in particular. For the full year, we expect sales in the range of $7.95 billion-$8.05 billion, and net earnings per share in the range of $3.33-$3.43. This implies fourth quarter sales will be in the range of $1.91 billion to $2.01 billion, and net earnings per diluted share in the range of $0.40-$0.50. Our effective tax rate for the year is still expected to be between 19% and 20%, and we expect total capital expenditures to be between $300 million and $325 million as we continue to invest in our strategic priorities, including opening additional stores, expanding our omni-channel capabilities, and adding incremental distribution capacity in key markets like India, China, Chile. We thank all of you for your time today, and we look forward to updating you on our fourth quarter and full-year financial results, which we expect to release on Thursday, February first. With that, I will now turn the call over to David for closing remarks. Thank you, John. Skechers delivered record quarterly sales and expanded our footwear offering to two of the largest sports worldwide. ... We believe this positions us for continued growth, reflects our commitment to offering top-quality comfort and performance technologies to our consumers, and enhances the Skechers brand. We recognize that the macroeconomic and political challenge in the United States and around the world were a factor in the third quarter, and we expect that these headwinds will continue to impact our business for the remainder of the year. We are well positioned to reach our goal of $10 billion by 2026, and we believe our diverse distribution and ability to deliver our product more efficiently will allow us to continue our positive momentum as our tenets of comfort, style, innovation, and quality at an affordable price resonates with consumers. Skechers is truly for all walks of life. We are the go-to brand for comfort, lifestyle, and occupational footwear, and we deliver comfort that performs, be it on the golf course, trail, soccer pitch, pickleball court, and now basketball court. We are grateful to the entire Skechers team for delivering another successful quarter. We are excited to end the year with what we believe will be a new annual sales record, more notable achievements, and driving growth in an efficient and profitable manner in the years to come. Now, I would like to turn the call over to the operator for questions. Thank you. We will now be conducting our question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. The confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Jay Sole with UBS. Please proceed with your question. Great. Thank you so much. Dave, John, I want to ask about the guidance for the fourth quarter. You know, you mentioned obviously, there's concern about macro and the consumer spending environment, but if I look at the first three quarters of the year, earnings are up 55%, which is obviously tremendous. And the midpoint of the guidance for 4Q for earnings says the earnings will be down 7%. So just help us understand, like, what magnitude are you seeing right now in fourth quarter that tells you that you're seeing a slowdown? And give us maybe a little bit help on margins, like, what you, what you expect for margins in 4Q, if that would be, if you don't mind. Thank you. Sure, Jay. You know, for this entire year, I think we've all had concerns about, you know, the consumer spending environment. What we've continuously seen is that as we get intra-quarter, you know, things shape up better than we have expected. But we haven't adjusted our full view of the year much because the general parameters against which we plan remain relatively consistent. This quarter, another good example of really high flow through pull forward and better than expected direct-to-consumer performance, particularly internationally, flowed through, which is why we outperformed so significantly our expected range in, you know, Q3 EPS. Some of that is coming from Q4, so we're pulling a bit of that in. I would say the other wild card in Q4 is going to be how, you know, some of the international markets perform, particularly China. As you all know, China is incredibly sensitive to the events and performance surrounding Singles Day. That's been a very difficult to read market for us on the quarters. As you saw this last quarter, though, it continued to outperform our initial expectations. So, you know, what we're doing in the guidance is attempting to ensure the stuff that we know came from Q4 into Q3 that rewarded us with EPS this quarter is carried forward. We are sensitive to how China will perform in Q4, as well as kind of the consumer spending environment globally. There are certainly indicators kind of going in both directions, but we felt it was probably more important to be prudent about our expectations around consumer spending, particularly in some of those international markets. I would also note, again, you know, similarly to last quarter, when we recognized there were definitely some green shoots we were seeing in the domestic wholesale marketplace. We saw those again this quarter. It's why we were able to actually get our domestic wholesale business flat to prior year, which was substantially better than what we thought. What we haven't yet seen is the trickle-down effect of, you know, people pulling orders forward, good sell-through, good margin, good pricing, and that's a condition that's carrying on into the fourth quarter. It's entirely possible that ends up leading to some pull forward in Q4. You know, it might even be necessary from our point of view, relative to some inventory levels and sell-through rates, but we haven't yet seen that happen. We haven't seen that trigger pulled, and until we do, you know, it's tough for us to predict exactly the timing of when those orders are going to go out to domestic accounts. So those are kind of the downward pressures on the guidance for Q4 specifically. Although again, I would note, if you look at it on a full year basis, this has been a tremendous year and one we're quite proud of, and we think that carries through to the balance of the year, certainly as it relates to the full year results. And then again, I'd just point out what we made comment of in our opening remarks. You know, we are seeing some very encouraging signs for the beginning of next year, and that's an incredible positive as well. Got it. Well, that's very helpful. Maybe if I can just transition, I want to ask about basketball. You know, David, obviously, basketball has been something the company's had an ambition to grow into for a long, a long time. And also, you know, you've always been very careful to invest ahead of an opportunity once you really have confidence that that opportunity is something you can take advantage of. What gives you confidence today that basketball is something that the company can really build a business in? You know, what, what, what do you see that makes now the right time to, to, to really try to make a big push into basketball? ... I think it's not only basketball, it's the technologies that we have and the technologies around the world. And I'll tell you what gives me the most confidence, is the acceptance we've seen from the athletes we're talking to, to wear them, to promote them, to enjoy them. And it's not one of those things that we're buying our way in, in the sense that we're paying more than anybody else for an athlete, for something that they're not comfortable with, that we're gonna push them to wear. These are very serious athletes that certainly make significantly more from what they play and how they get paid, and they're very receptive to the brand. So it starts. You know, we started with pickleball, we started with running. We have great running shoes, more difficult market. There, there's not many people that you can get to, speak to them. But we win awards all over the world as far as our running shoes are concerned. When we went to soccer, football, it was great. We have a player like Harry Kane, who was very receptive, who loves the brand, who wears the brand. He's familiar with it. He played with the shoes, the black shoes, before he committed to come with us. He loves them. He, you know, we certainly helped him out. We're very receptive to him. I think people are finding out that the quality we make in our shoes is truly the quality that they can play in and enjoy. They have comments like, they don't worry about their feet as much anymore. It's very comfortable to play with, even though they can play. Harry has told us that this is the fastest start he's had, maybe in his career as far as golf. He usually works his way up into it, and he's feeling very, very comfortable. When we went to the basketball players as well, for players, I know Terance was very interested right away. He wears them. He was wearing them before there was a deal. He was on Instagram with them, talking about them, said he loved them. When we talked to Julius Randle, which is certainly on a higher level, he's very receptive. I hope you saw him on TV the other day, giving away a pair of shoes and telling how comfortable they are. He's had made some very positive comments about the brand, about the people working for him, how comfortable he is and how well he does with them, and we're speaking to others. I think it's the reception they've given us and their willingness to do it, and the fact, I believe, and I think you'll see, is they're proud of the brand, gives us confidence that it is a product that sells well, that competes well, that will be part of the NBA, and those that, that play on multiple levels and will perform as well as anything that's out there. All of those players has given us complete confidence in the brand and backing the brand and thinking the brand is certainly capable, and our people dealing with them are certainly capable of delivering something they could play with and promote, and continue their careers with. Got it. All right, very interesting. Thank you so much. Thank you. Our next question is coming from the line of Laurent Vasilescu with BNP Paribas. Please proceed with your question. Thank you so much for taking my questions. I would love to ask about the gross margin trajectory for fourth quarter. How do you think about the fourth quarter gross margin? And then I think you mentioned, John, that there was a pull forward into 3Q on U.S. wholesale. How do you think about U.S. wholesale for fourth quarter and then leading into next year? Thank you. Yeah. So for Gross Margin, you know, let me talk a little about this quarter. I mean, this quarter, we saw kind of a benefit from three different factors at once, which is a little bit unanticipated. We definitely had some mix benefit. That's channel mix. Within the channels, there was some product mix, as you know, some of the newer technologies David mentioned, you know, materialized, particularly in the Direct-to-Consumer channels. Those carry a premium price. We also had some, you know, overt pricing that we had put in place internationally last year that benefited us. Some of that we're going to be giving back because as a result of that, we did leave, I think, some opening price points that we'd like to get back into. And you'll see some of that not carry forward. And then you had some significant cost savings. I would expect for the fourth quarter, we'll still get mix benefit, and we'll still get the cost savings, kind of the international side of the pricing mechanic. Again, we expect to give back. That should put us at a very healthy improvement year-over-year, but probably not quite as significant as we've seen in the last couple of years. Insofar as the domestic wholesale market is concerned, as I mentioned, you know, this quarter, we, you know, we were actually up, I think, 0.3%. So we said flat, but we were, we were being, you know, a little bit guarded there. Because we haven't yet seen that trigger of accelerated deliveries coming out of many of the wholesale accounts, some of whom are still, you know, cautiously watching the consumer spending market, you know, our view is that our full year perspective hasn't changed much. It's up a little, but it's not, you know, distinctly different. And if you remember, coming into Q3, we said Q3 and Q4 would both be down, and that's what we expect for Q4 now on the domestic wholesale side. I would just caveat that we could see that change pretty quickly. We saw that in Q3. It's why we were able to get to flat. So we're not, you know, convinced yet that we're going to be down in Q4, but that's what we're modeling because that's what the bookings tell us at the moment. Again, if the lean inventory, the good sell-through continues to hold, you know, that's certainly a distinct possibility, but for now, from a planning perspective, we don't want to put too much of that into what we expect for the forecast. Very helpful. And then, John, maybe just, you know, there's always questions around SG&A. Love to hear about the economics of, you know, sponsoring, you know, key athletes like Harry Kane. Can you just maybe for the audience, just maybe walk through high level, how it works? And maybe just maybe, David, if you could talk about the value proposition. Obviously, it's a crowded field in global football and basketball. What do you think your value proposition will be going forward, in these two categories? Yeah, insofar as our relationships with ambassadors, you know, everyone's a little bit unique. I mean, clearly, it first has to be a relationship both parties are comfortable with. Just to David's comments earlier, I mean, we don't just go out and pay a big amount to get a big name. We're looking for folks who are going to collaborate with us, particularly when we're getting into a new category. So every one of the ambassadors that we've engaged for, you know, football, soccer, and, and really across the portfolio, is somebody we know is going to work well with the brand and with the team to help build the brand overall. It's not just about getting the biggest name for the biggest dollar. You know, clearly, there are economics. Some are shared based on success of the output, some are fixed based on, you know, appearance levels, et cetera. So I would say, you know, the recent ambassadorships that we've brought on board are a variety. Most importantly, we feel like they very much augment both our credentials in the categories in which we're entering, but also they love the brand. They're engaged with the brand. The economics fit within our overall parameters on sales and marketing, so we fit it within there. The one other thing, you know, I'd mention is, because we're, you know, just entering categories, we're trying to be very thoughtful with our partners, but also with just the numbers. You know, we want a good complement of athletes supporting the brand and the categories and the products, but we're not looking to sign, you know, everybody everywhere. That's not going to be our strategy. I think you'll see us nurture these, these entrants more than, you know, try to, you know, make them instantaneously successful, because what we want to do is build a business, not just reward a, a given quarter. So the economics fit with that structure as well. Yeah, and as far as the value proposition, I'm not sure this is a complete value proposition. What we do is we offer a multitude of shoes for a multitude of people as it goes through. And as we move through, we're starting right now only with a higher price, very competitive, top-notch basketball and football shoes. Of course, as we go forward, we know there's a great marketplace for more moderate price, for people that play, still having quality and comfort. That will give more quality and comfort and value at that particular point, not necessarily at the top end, which will then carry down to kids because we have a great kids business as well. So we think as we go out over time, we certainly will expand through all the demographics that we deal with, and we'll have something for everyone. But we're taking most pride now in delivering the best quality, top-notch, and it's not necessarily a price play. And by the way, just to add another point, everybody's been talking about wholesale and how wholesale fits and how it fits into our guidance for the coming year. You know, if you think about it, it's the difficulty now and the differential in our business is that we have such a big piece of direct-to-consumer. So a big part of the quarter will obviously depend on the holiday period, which hasn't begun yet, so it's difficult to tell. Singles' Day, which also is difficult to tell because we're just starting the pre-order period, and October is a very difficult month in which to gauge all those items. Also, from a wholesale perspective, where the big pieces come to us is at the end of the quarter, which is too early to tell. When we move forward, spring, as the sales for the holidays go through, there's a significant potential, especially on a worldwide basis, to deliver spring in late November, early December. All of that is coming towards us, and personally, I feel very positive about it, but it's way too early in the process, being October, which is a difficult month to make those reads, to make those. So we're trying to be as honest, transparent, let everybody know this is where we sit right now, but the potential both for spring coming early and our direct-to-consumer breaking out around the world certainly is a possibility, and by no means maximized in our guidance, at least from my perspective. Super helpful. Thank you, gentlemen, and best of luck. Thank you. Thank you. Our next question is coming from the line of John Kernan with TD Cowen. Please proceed with your question. Good afternoon. This is Krista Zuber, on behalf of John. Just one check on ASPs, just to get a bit of a sense of how you foresee additional pricing actions as you head into 2024. I mean, certainly you're lapping some more challenging compares, particularly in, I believe, domestic in Q4 versus last year. So if you could just shed some light on that, that'd be great. Thank you. Yeah. So I think as you look at ASPs, we wouldn't expect to be making a lot of movement on ASPs in kind of comparable products, so you know, price increases, et cetera. What you're likely to see and what we've seen a little bit this year is, you know, certainly if you're looking at after FX, some FX-inflated, you know, ASP growth, but also some mix trade, which is, you know, customers coming in and consciously choosing the higher price point product, because that's the product that has our Skechers Hands Free Slip-ins technology, has our Skechers Arch Fit technology. So you are seeing customers trade up within the portfolio for some higher priced product. That's the type of ASP activity we would expect. A little too early for us to talk specifically about 2024, but that's, I think, a good reflection of what we expect for the balance of the year. Great, thanks. Just one follow-up, if I may. Just on the inventory, kind of how do you see the balance sheet inventory levels finishing at the end of 2023? Thanks. Well, we've made a lot, I mean, we made a ton of headway on inventory, which, if you recall, you know, 12 months ago, is exactly what we said we would do when we were swimming in inventory, and we had distribution challenges. So, I mean, the fact that we can tell you today that we're down by a third in both Europe and the Americas, I think gives you every ounce of proof you need that we'll do what we say we're going to do. You know, we feel inventories are very well positioned right now for the holiday. They're very well positioned for early 2024. They do leave us a little bit of room to move things up if the opportunity permits, as David talked about a second ago. But overall, I would tell you, we're very well positioned from an inventory perspective, and we feel very good about both the inventory we have, but also the orders we have, you know, in the early part of 2024. Yeah. You know, historically, we tend to build inventory at the end of the fourth quarter because we need to build spring early, and it has to be on the water before Chinese New Year's, which, you know, comes early in the next quarter. We've now, given where we stand, we're trying to get everything in earlier this year rather than later, and we'll take it in November and December, and early January because we have positive feelings about the first quarter, and we'd rather have it early, rather than late and not take any chances and be prepared should the demand kick up and move, back into the fourth quarter of this year. Thank you. Thank you. Our next question is coming from the line of Gabby Carbone with Deutsche Bank. Please proceed with your question. Hi, good evening. Thanks for taking my question. So on the margin front, would you help us think about the path for expansion beyond this year, maybe where the biggest opportunities are? And then how should we be thinking about maybe gross margin, particularly given, you know, the potential return of wholesale and the mix shift that could happen? Thank you. Yeah, I think on gross margin, I think we just have to recognize for a moment, you know, what we've done on the year because it's a pretty, you know, astronomical- Mm-hmm. increase year over year. Some of that is certainly, some benefit of costs that are now fading out of the system, which we do expect to be a meaningful contributor to the improvement we're gonna see in the fourth quarter. You know, part of it is also, though, that we're selling, you know, more profitable product and more, you know, restraining, you know, the promotion environment as best we can, relative to the, to the competitive environment we're in. I would say, you know, as a longer horizon view, what do we expect to drive margin? It's, it's kind of the same, same factors we've talked about before. It's increasing our mix of direct to consumer. It's increasing our mix of, our international wholesale business, both of which, you know, are accretive overall. I think a part of this year's story is also that, right? Which is we've increased our overall contribution from both of those categories, in particular, the direct consumer, with its outsized growth this year, and that's been a meaningful contributor. We're certainly not looking to give any of that back, and we continue to have abundant opportunities, we think, to, you know, open stores, open doors in our, in our retail business. So those will continue to be the main factors that drive opportunity. There should be some lingering benefit, although not nearly the scale or size of what we've seen this year from cost into the early part of next year. That won't be, you know, again, as significant as we saw this year, but there'll be some trailing benefits there as well from lower freight. Those are gonna be the primary contributors. Got it. That's really helpful. I just wanted to ask a follow-up. I was wondering if you can just dig into what you're seeing in the consumer backdrop within Europe. I understand the distributor shift, but excluding that, maybe how do trends play out in that market, kind of versus your expectations? Yeah, it's kind of an interesting situation- Mm-hmm. Because it's becoming a little bit more similar to what we've seen in the domestic market, which is our direct-to-consumer business, both online and in store, in Europe and EMEA, was incredibly strong this quarter. Significantly outperformed, you know, what we thought we should expect given the situation. You know, obviously, it outdistanced the growth in our wholesale market, although even that was relatively strong. When you take out the distributors, as we mentioned, EMEA wholesale grew double digits. So, you know, that market continues to be very strong. I would say relative to the fourth quarter, it's gonna face some difficult comparisons. I mean, we had some markets last year that were up in the fourth quarter, you know, above 40, 50%. That's a really hard comp to face in Q4, which is one of the drags on Q4. I would say in general, the consumer environment remains incredibly encouraging in Europe. You know, I would also just add to that, the domestic, you know, store performance that we saw was also incredibly encouraging of the same variety. At the consumer level, things look good. Where we continue to see, you know, concern is at that wholesale customer level, you know, who has to sell through to the consumer. That's if we're seeing any concerns in order patterns, any, you know, unusual behavior, that's where it remains today. Great. Thank you so much for that. Thank you. Our next question is coming from Jim Duffy with Stifel. Please proceed with your question. Well, thanks. Good afternoon. I have a question on the inventory and then on the D2C business. Tremendous progress from you guys on the inventory. Congratulations to the team for that. I'm curious if you can comment what you're seeing with respect to channel partner inventory. Any sense that that's becoming more normalized, or are there still pockets of excess which are a challenge? I'm speaking for the industry, not Skechers specific, necessarily. Well, I would say, you know, we can speak to Skechers specifically because we can see that directly. In aggregate, I would tell you, if you compare back, you know, as far as 2019, or, you know, last year as a reference point, things looked pretty lean. I would say, you know, within that, if you look down a layer, it depends on which account, which customer you're talking about. You know, some have grown their business, some have gotten, you know, much more efficient, more turns, et cetera, and some have lagged. And so it's not in, you know, a similar environment for every account. But in aggregate, I would say, you know, things continue to look lean to us. I would remark about that in context of also seeing, again, good sell-through, good margin, good price. And, you know, we know from our own stores that the product we have is more innovative, it's new, it's fresh, you know, than a lot of other accounts out there can offer. So, you know, we feel really good about the position, both on our own account, but also, you know, downstream. It's just not yet leading to the reorders that we would expect to see under normal circumstances. And I think the concern is simply, you know, what's going to happen with consumer spending, you know, in major markets. You know, can't really speak broadly to the industry other than, you know, we have heard very similar stories and tales from other brands, so it seems like that's a pretty similar setup to what others are seeing. That, that makes sense. Thank you. Then I wanted to ask on the D2C business. You do have some unique comparisons versus a year ago when you had inventory congestions that was limiting inventory availability in the store, compromising store productivity. You've made some tremendous gains here, lapping that in the D2C business. Do you see that strength continuing, or is, you know, should we think about there being some degree of moderation, just given the uniqueness of the comparisons? Well, I would say we still expect there to be strength, and we've continued to see strength, you know, so far this quarter. You know, what really happened last year at this time is the stores, you know, were suffering from a lack of inventory. Online had much more than ever. We pushed consumers online, and online, you know, made up a lot of the detriment we saw from stores not being full. This quarter, we kind of unwound that. Stores were well stocked. They had product available, they had our newer product, and we brought down the inventory available online to a more normalized level. That's why, in part, we think there was a little bit of a slowdown on e-commerce. It was more than offset, obviously, by what happened in the stores. You know, I would tell you, we're encouraged by what we've seen thus far. You know, even getting to a point where we're lapping, you know, having comparable levels of inventory in store so far this quarter, you know, we're still seeing strength. As we said last quarter, though, I mean, it's hard to plan, you know, at, you know, at +20%, you know, levels when you think about normal retail behavior. So, we're definitely being cautious about what we're planning for. But overall, we saw, you know, really good strength at the consumer level, really good activity. And I think we're gonna start to see our e-com normalize a bit, you know, from the unfavorable comparison it had last year when it was bearing more of the burden of our direct-to-consumer performance. So overall, we still feel really good about what we see, both domestically and internationally. Obviously, to David's point, you know, made earlier, we're gonna get into the key selling period here shortly, from holidays, and that will determine a lot. So it's still too early to be able to call what we expect in holiday, because that's all ahead of us. Maybe just one last question on the D2C, if I may. What are you seeing with respect to traffic trends? Is a lot of the strength being driven by increased volume, increased conversion, or are you seeing good traffic as well? It depends on the channel. You know, in some channels, you're seeing, you know, traffic continue to drive performance. I'd say on average, it's a little bit less about traffic. Traffic has faded off in some areas, particularly, you know, regional traffic, traffic behavior. Where that's happened, though, you know, we've made up for it, you know, from a UPT perspective, and an AOV perspective. And so, you know, we're making up for it on conversion. Very good. Nice work, guys. Thanks, Jim. Thank you. Our next question is coming from the line of Alex Straton with Morgan Stanley. Please proceed with your question. Great. Congrats on a nice quarter, guys. Just a quick question on SG&A spend going forward, and maybe in particular next year. I think it typically grows a couple points below sales. I'm just trying to understand if that's the right go-forward level or just maybe what the puts and takes are around what could impact kind of your SG&A spending next year? Thanks a lot. Yeah, I mean, SG&A is always kind of a big basket of a lot of different things. You know, Alex, you know, the number one factor is always, you know, volume, where the volume happens. I think in this year, what we saw is volume was happening in areas where it wasn't allowing us to leverage as much as we would like. You know, in the future, we would expect those to come more into line. That should enable us to, you know, manage the SG&A, again, particularly that volume portion, you know, distribution, et cetera, more in line with sales growth. But we had some, you know, unusual trends this year that put us in the position of not being able to leverage the SG&A that we would normally be able to leverage and then having to put more into volume elsewhere. It's something we're focused on. We know we want to keep it within kind of the parameters of top-line growth. I would also note this quarter, although I'm not gonna give a specific amount, you know, we do have a lot of investments underway. You know, we talked about these categories that have yet to really launch, but obviously, we've been spending time and money on. We have several distribution centers that are going online this year, and usually, there's both pre-opening and sometimes when you're transitioning from one center to another, there's some duplicative costs that you have to bear. You know, those are the case. We're gonna open, you know, a meaningful number of stores this quarter. Those are always a near-term drag from an operating margin perspective, just 'cause it takes a while for them to get up and get profitable. So there's also some factors within the G&A that is less reflective of the current state of the business than preparing for the future, which I think, you know, we've shown is something we can do well and ultimately get back to a point of leverage. And then I just also mentioned, just when you think about the S side, as we've made note, this year, in particular, we are over-investing on a sales and marketing perspective. We've got, I think, a window to really make sure consumers understand that the Skechers Hands-Free technology that we're offering in our shoes is unique to us. It's a unique solution. It's something consumers, you know, really really seek out in their shopping behavior. It resonates with them, and so we wanna make sure that gets well branded this year. So we are making some conscious investments in marketing that we think will pay off, you know, for years to come, and that's why we're a little bit above trend on, you know, on the sales side as well. Thanks. Let me... Just one quick follow-up. Is gross margin in the latest quarter still being impacted at all by those higher logistics costs? And I think, like, it was some impact to inventory costs as well, that were burdening gross margin in at least the front half to some extent. Well, those weren't in gross margin. Those were, those were in SG&A. I think you're speaking about the cost last year that we mentioned we incurred to do what we've done now, which is move past a lot of that inventory congestion. You know, there is some of those costs are lingering longer than we would like, to be sure. They're not really, I think, a major driver of the overall performance, so we haven't noted them here. But, you know, we're not, you know, completely out of all of those costs, although I would note we're out of the most material components thereof. From a gross margin perspective, you know, what we really continue to see through the balance of this year is benefits from mix and pricing, and then as we got into Q2 a little bit, but definitely in Q3, favorable cost benefits from lapping that excessively high shipping that we had in, you know, in the prior year. So we're getting to a point where what you're seeing is a cleaner margin, more of a merch margin than we've ever been able to show without any sort of abnormalities impacting results, which is why, you know, it, it's significantly higher than it was last year. Thanks a lot, and good luck. Thanks. Thank you. Our next question is coming from Tom Nikic with Wedbush Securities. Please proceed with your question. Hey, guys, thanks, thanks for taking my questions. John, when we think about the, the guidance for the year, so I think, revenues, I think you beat the high end by $25 million, and you lowered the high end of the, of the full year guide by $50 million. You know, I, I know that, you know, US dollar has strengthened a lot. I, I would imagine that there's a headwind there. Can you contextualize for us, how much, FX, changes, essentially since the last time you reported, have, have impacted your guidance? Yeah, I mean, that's a little bit of it. You know, so if we think about it, midpoint to midpoint point, we, we changed things by about $25 million, which, you know, is not a big amount in, in the grand scheme of things. I would tell you that has everything to do with, you know, our conservatism around, you know, what we're actually gonna see materialize, in China during Singles Day, domestically on the wholesale front, and then, you know, the, the caution around, you know, trying to get a good handle on where holiday is gonna be. It really doesn't have a ton to do with FX. It really is more about those three factors, which I would also tell you, on the flip side, you know, if three months from now we're talking about, you know, beating the guide, that's where it's gonna come from, you know, one or more of those three factors, because those are the ones that have been hardest for us to get clean line of sight into, you know, on a quarterly basis for this year, because of all the factors that we've talked about. Understood. If I could follow up on the wholesale business. You know, all year long, you've been talking about how these sell-through trends have been better than sell-in. And that, you know, eventually, the sell-in has to normalize with the sell-through trends. Now, you know, now that you're, you know, having visibility into Spring 2024 orders, are you seeing that recovery starting to happen? Like, you know, or should we think about wholesale orders being up again in Spring 2024? You know, not, not as quickly as we think it should, in all honesty, but that's a, a decoupling that we've seen for most of the year. You know, we, we would like it to cure faster than it has. I think ultimately, you know, we take comfort in the fact that, that, that certainly those two have to match at some point. And what we've seen thus far is that mismatch. You know, the, the sell-through has definitely been stronger than the sell-in. And as, as we've said, you know, the prices are strong, the margin contribution of retailers is good. The inventories are lean. At, at some point, they've got to catch up. I think, you know, to flip the script a little bit, though, you know, when I look at our performance domestically, you know, including both our stores and the wholesale, you know, the customer is coming to the brand, and those are growing. You know, we mentioned the, you know, the international growth was up, the, the domestic growth was up overall. I mean, if you look at it within regions, you know, the vast majority of our markets are up. So the commerce, the customer is getting to the brand. You know, we'd like them to have more avenues to the brand than what they're, you know, taking advantage of right now. But because we can't control the, the sell-in to some of those wholesale partners, we have to rely on the composite of our business, which includes our own direct-to-consumer. You know, I think you also have to take a look at the order of magnitude of how big inventory was for different parts of our businesses. If you know, you take into account our statement on inventory, which predominantly is for our own use. If you look at our business, no one can say that our business hasn't grown year-over-year as far as sellout is concerned. We're finishing our third $2 billion quarter, we're at $6 billion plus. We're growing very nicely, yet we've de-inventoried by $400 million in cost, which means if you were looking at our suppliers on the other side, we'd be telling them that we're selling great, don't worry, we're going to catch up soon. But in the meanwhile, we bought $400 million less than we sold. And obviously, that has to catch up. Our inventories are in line and lean, so as our direct-to-consumer grows, we will increase them. The same, I believe, in order of magnitude, is true when you evaluate our distributors. They had inventory on a significant percentage, as we did. They've been selling out well. Their inventories are in line. They're coming in for a much stronger Q1, it seems so far, and are growing. So that perspective, that will increase as well for our purchasing. And while we don't have as much insight into our third parties, predominantly in the U.S., we do see more people chasing product outside the U.S. in some marketplaces, certainly in Europe at this particular point. But here, because it's not only Skechers product, and there's only so many hot products in the world, and everybody had to clean out at a different level, and because they are nervous about their inventory and their businesses in general, I don't know that anybody feels about their business in general as well as we do, barring a couple that obviously are well-known. So they're holding back some, but they got to be closer, and we know their self, and they'll be clean, and we know our stuff will sell. So one would assume sometime in the next year, we will get to a more normal flows all over the place. We'd like to believe it's first quarter, but it's coming in first or second quarter, I got to believe, because, by the time we get to next back to school, that will be way too much time. And I don't know anybody, anybody that has inventory issues, going through that part of the year will have bigger issues than just inventory. Got it. If I could sneak in just one more about the basketball launch, do you- Oh, we can always talk about basketball. Do you view this as an opportunity to maybe, you know, get into some doors that you're not in today? Like, I mean, I guess like Foot Locker is the obvious one that comes to mind, given, you know, their big basketball business. Yeah, I do think it's possible, but that's certainly not our control. We think we can find those consumers, and those consumers will come to us through our Direct-to-Consumer or other places they buy it. Obviously, there's some of this product that doesn't sell everywhere, and it's fairly exclusive. And as we get going, we'll certainly expand our distribution. But we think around the world, we have great opportunity to capture those consumers, and we do think on a worldwide basis, we'll get into a lot more levels of distribution that we certainly haven't penetrated yet. But it's not a today thing. That's as we grow. We're not planning on powering it through to make the biggest impact we can make at the earliest time. We want to build it carefully through a grassroots following and on the product, on the technology, on the comfort that people will wear and will continue to grow for us, and we'll grow into that as we move forward, both in soccer, football, and basketball. Sounds good. Well, I'm hoping that your shoes can help Julius elevate his game in the playoffs this year. So fingers crossed. No problem. We're working on it. Thank you. Our final question is coming from the line of Abbie Zvejnieks with Piper Sandler. Please proceed with your question. Great. Thanks so much for squeezing me in here. Just, is there any specific color you can give on how direct-to-consumer has trended domestically quarter to date? Just as a follow-up, can you... I know you gave the, you know, wholesale, international wholesale for EMEA was up digital, double digits in Europe, excluding those distributors. Can you give that same metric for APAC, if possible? So I think probably as far as we're comfortable saying about direct-to-consumer so far this quarter, things have been good. You know, continue to be strong. I would note, kind of similar to David's comment, you know, early October isn't a great read-through to holiday often, but we've seen continued strength in the direct-to-consumer business. We are getting into a period where, compared to last year, it's a much more similar situation, whereas we noted the disparity in inventory levels, particularly in store, you know, Q2 and Q3. So it's going to be a more normal comparison. There's not going to be as much of a lift this year, but within that context, it's continued to go well. And we're encouraged by some of the, some of the turnaround we've seen on the domestic e-commerce side of things. We don't—we won't, I won't really give an APAC ex-distributor number because there really isn't as much of a distributor business in APAC. I would say there wasn't also as much of a disparity between, you know, what we saw in APAC growth, and with or without distributors. It, you know, distributors are concentrated geographically, so the Asia distributors weren't seeing as much of a timing differential year-over-year. Just to put it into context, by the way, when we look at the distributor compared to last quarter, if I recollect correctly, you know, last quarter or last year, this quarter, distributors were up like 80%. So it, it's also a very unfavorable simple comparison to prior year that we're dealing with in that number, and that was a contributing factor, as well. That makes sense. Thank you. Thank you. Ladies and gentlemen, we have reached the end.