Skechers, a renowned shoe company, is set to go private through a significant acquisition by investment firm 3G Capital, valued at over $9 billion.
This move arrives amidst concerns surrounding the potential repercussions of President Donald Trump’s tariffs on foreign imports, particularly for companies heavily reliant on overseas manufacturing, like in China. Athletic shoe manufacturers have heavily invested in Asian production, sparking anxiety about future operations.
The acquisition offer stands at $63 per share, marking a 30% premium over Skechers’ 15-day volume-weighted average stock price. This proposal received unanimous approval from the board of Skechers.
Following the announcement, Skechers’ stock saw a substantial rise, climbing nearly 25% to reach $61.56. In their official release, the entities involved in the acquisition did not directly address the tariffs’ potential effects on their business strategy moving forward.
Skechers disclosed that approximately two-thirds of its revenue stems from overseas sales, with China contributing significantly, making up 15% of its revenue. Amidst Trump’s fluctuating tariff decisions, Skechers, like many other companies, withheld future business guidance in the recent quarterly earnings report.
The company’s CFO, John Vandemore, stated that the unpredictable nature of the operational environment makes planning for successful outcomes challenging.
Furthermore, Skechers is assessing ways to reduce reliance on importing to the U.S. from costly production locations affected by tariffs. While the specifics of overseas manufacturing have not been disclosed, much of Skechers’ footwear bears the “Made in China” label.
Trump escalated tariffs on Chinese imports to 125% earlier this year after China increased duties on American goods as part of a growing trade conflict between the two economic giants.
Last month, Skechers executives pointed out several strategies to combat tariff impacts: cost-sharing with suppliers, optimizing sourcing, and adjusting prices. Vandemore indicated efforts to minimize global tariff impacts while contemplating production shifts. He stated that with current tariffs effectively at 159%, importing from China to the U.S. has become untenably costly.
Skechers operates around 5,300 retail stores worldwide, with 1,800 being company-owned.
The American Apparel & Footwear Association notes that a substantial proportion of apparel and footwear sold in the U.S. (about 97%) is imported, largely from Asia. Overseas production has been critical in maintaining low labor costs for American companies, but the recent tariff hikes present a significant challenge.
Upon finalizing the deal, Skechers will continue under the leadership of Chairman and CEO Robert Greenberg, along with his management team. The headquarters will remain in its long-time location in Manhattan Beach, California.
Skechers reported impressive financial results in 2024, achieving a record $9 billion in revenue and $640 million in net earnings.
The acquisition by 3G Capital is anticipated to conclude in the third quarter of this year.