Business
As competitors falter, SoCal's Skechers is surging with strategy of 'try and try again'
In a crowded sneaker market roiled by the stumbles of its longtime king, Manhattan Beach-based Skechers has been climbing its way up the ranks.
While Nike, which has dominated the athletic footwear landscape for years, made headlines last month for its plummeting stock price and gloomy outlook, Skechers announced record sales in the first quarter of 2024 of $2.25 billion, a 12.5% increase over last year. Since 2019, it has increased its annual revenue by more than 50%.
In June, Bank of America upgraded its rating on Skechers’ stock to a strong buy, and this week Morgan Stanley followed suit — notable votes of confidence in the fundamentals of a company that has seen its stock price rise more than 20% over the last year. Shares closed at $65.10 on Tuesday.
Analysts and company leadership attribute the brand’s success to a strategy built around constant innovation and a diverse array of footwear products. Sam Poser, a footwear and apparel analyst at Williams Trading, said Skechers is navigating choppy waters better than its rivals.
“It’s not like the macro environment is different for Skechers than it is for Nike or New Balance or Adidas,” Poser said. “One of the reasons they’re outperforming is because they’re executing in this difficult environment.”
While Skechers offers a wide variety of footwear — from soccer cleats to work boots to summer sandals — it has still managed to find a strong company identity, Poser said.
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1. Skechers and Snoop Dogg collaborated on shoes. 2. Skechers offers a wide variety of footwear — soccer cleats, work boots, summer sandals and more. 3. Children’s shoes on display at the Skechers store in Manhattan Beach. (Christina House / Los Angeles Times)
“Skechers owns the comfort business,” Poser said. “What they’re doing is bigger than I think a lot of people appreciate.”
Skechers brought in $8 billion in sales in 2023 compared with $7.4 billion in 2022. The company has a near-term goal of reaching $10 billion in sales by 2026, said Chief Financial Officer John Vandemore.
The self-proclaimed “comfort technology company” has seen success with recent releases such as Hands Free Slip-ins and podiatrist-certified Arch Fit shoes. Its website lists 14 different footwear technologies, with names like Glide-Step and Hyper Burst.
“You have to be innovative and you have to deliver newness,” Vandemore said in an interview. “There was no analogy in the marketplace when we started Slip-ins, and it’s done exceedingly well.”
The company is scheduled to announce its second-quarter results on Thursday, with analysts estimating revenue of $2.21 billion, up 10% from the same period a year ago, and earnings of 92 cents a share, down 6.1% from a year earlier, according to Zacks Equity Research.
Not all of Skechers’ gambles have paid off, Vandemore acknowledged. Introduced in 2009, Shape-up sneakers were immensely popular until the company was sued by the Federal Trade Commission over its claims that the shoes would help customers lose weight and tone their muscles. Skechers paid $40 million to settle the class-action lawsuit in 2013.
Other Skechers models have seen longer-term success, such as the children’s line of light-up Twinkle Toes sneakers, introduced in 2008 and still widely available.
Caleigh Hopson, 7, browses shoes with her mother, Laura, at the Skechers store in Manhattan Beach.
(Christina House / Los Angeles Times)
“I think that willingness to try and try again until you succeed is noteworthy and it’s led to a significant amount of success,” Vandemore said. He praised the company’s chief executive, Robert Greenberg, for his willingness to take risks.
“One of Robert’s key talents is being able to tolerate risks and, quite frankly, not dwell upon them,” Vandemore said. “In our culture we try a lot of different things. Some of them work and some of them don’t.”
In contrast, Poser said, Nike has not been able to come up with fresh offerings for consumers in recent years.
“Nike was not innovating enough and putting a lot of non-compelling product into the marketplace,” he said.
When Nike released its tepid first-quarter earnings report in March, its chief financial officer, Matthew Friend, said the company was “taking action to build a faster, more efficient Nike and maximize the impact of our new innovation cycle.”
Along with a pipeline of new products, Vandemore said, value and affordability are among the brand’s top priorities. Several models featuring the popular Slip-in technology are available for less than $100.
“They’re delivering a quality product that has comfort and style at a reasonable price,” said Jim Duffy, a sports and lifestyle analyst at Stifel. “In an environment where the consumer is facing pressures to their discretionary spending capacity, Skechers is doing a very good job of offering value.”
In a trend brought on by COVID-19, Duffy said, more consumers of all income levels are buying and wearing athletic footwear. A nice dinner out may have required dress shoes before the global pandemic, he said, but standards have changed.
“COVID was an accelerator for casualization and that’s really expanded the wearable occasions for sneakers and comfort footwear,” Duffy said. “Skechers has done well to capitalize on that.”
Skechers’ customer base is mostly children and older adults, Duffy said, not teens and young adults. But Poser said the customer demographic varies largely across markets, both in the U.S. and internationally.
“It’s much broader than you think,” Poser said. “They have K-pop bands wearing their shoes.”
Last year, international sales accounted for 62% of the company’s global revenue. Vandemore said Skechers’ investment in growing its international footprint has provided the company an important boost in growth.
Store manager Diane Morales unboxes a pair of shoes for a customer at the Skechers store in Manhattan Beach.
(Christina House / Los Angeles Times)
At the end of March, the company had slightly more than 1,100 international stores, 565 domestic locations and more than 3,500 “distributor, licensee and franchise stores,” according to company figures. The corporate offices in Manhattan Beach house 1,280 employees.
Vandemore also said the company’s balance of wholesale and direct-to-consumer sales set it apart from other brands in the industry.
“Some of our competitors have chosen to primarily focus on their own stores or their own online sales at the expense of wholesale partners, which is not our strategy,” Vandemore said. “We embrace all avenues.”
In 2023, 44% of Skechers’ annual profits came from direct-to-consumer sales and 56% came from wholesale business.
Looking to the future, Vandemore said Skechers will stick to its core strategy while adapting to new trends and demands.
“We’ve been very successful focusing on developing and delivering great products, growing our direct-to-consumer channel and growing internationally,” he said. “That formula, we do believe, will continue to yield results.”
Business
Why companies are making this change to their office space to cater to influencers
For the trendiest tenants in Hollywood office buildings, it’s the latest fad that goes way beyond designer furniture and art: mini studios
To capitalize on the never-ending flow of stars and influencers who come through Los Angeles, a growing number of companies are building bright little corners for content creators to try products and shoot short videos. Athletic apparel maker Puma, Kim Kardashian’s Skims and cheeky cosmetics retailer e.l.f. have spaces specifically designed to give people a place to experience and broadcast about their brands.
Hollywood, which hasn’t historically been home to apparel companies, is now attracting the offices of fashion retailers, says CIM Group, one of the neighborhood’s largest commercial property landlords.
“When we’re touring a space, one of the first items they bring up is, ‘Where can I build a studio?’” said Blake Eckert, who leases CIM offices in L.A.
Their studio offices also serve as marketing centers, with showrooms and meeting spaces where brands can host proprietary events not open to the public.
“For companies where brand visibility is really important, there is a trend of creating spaces that don’t just function as offices,” said real estate broker Nicole Mihalka of CBRE, who puts together entertainment property leases and sales.
Puma’s global entertainment marketing team is based in its new Hollywood offices, which works with such musical celebrity partners as Rihanna, ASAP Rocky, Dua Lipa, Skepta and Rosé, said Allyssa Rapp, head of Puma Studio L.A.
Allyssa Rapp, director of entertainment marketing at Puma, is shown in the Puma Studio L.A. The company keeps a closet full of Puma products on hand to give VIP guests. Visits to the studio sanctum are by invitation only, though.
(Kayla Bartkowski / Los Angeles Times)
Hollywood is a central location, she said, for meeting with celebrities, stylists and outside designers, most of whom are based in Los Angeles.
The office is a “creation hub,” she said, where influencers can record Puma’s design prototyping lab supported by libraries of materials and equipment used to create Puma apparel. The company, founded in 1948, is known for its emblematic sneakers such as the Speedcat and its lunging feline logo, and makes athletic wear, accessories and equipment.
Puma’s entertainment marketing team also occupies the office and sometimes uses it for exclusive events.
“We use the space as a showroom, as a social space that transforms from a traditional workplace into more of an experiential space,” Rapp said.
Nontraditional uses include content creation, sit-down dinners, product launches, album listening parties and workshops.
“Inviting people into our space and being able to give them high-touch brand experiences is something tangible and important for them,” she said. “The cultural layer is really important for us.”
The company keeps a closet full of Puma products on hand to give VIP guests. Visits to the studio sanctum are by invitation only, though. There’s no retail portal to the exclusive Hollywood offices.
Puma shoes are on display in the Puma Studio L.A.
(Kayla Bartkowski / Los Angeles Times)
Puma is also positioning its L.A studio as a connection point for major upcoming sporting events coming to Los Angeles, including the World Cup this summer, the 2027 Super Bowl and 2028 Olympics.
In-office studios don’t need to be big to be impactful, Mihalka said. “These are smaller stages, closer to green screen than a massive soundstage.”
Social media is the key driver of content created by most businesses, which may set up small booth-like stages where influencers can hawk hot products while offering discounts to people watching them perform.
Bigger, elevated stages can accommodate multiple performers for extended discussions in front of small audiences, with towering screens behind them to set the mood or illustrate products.
Among the tricked-out offices, she said, is Skims. The company, which is valued at $5 billion, is based in a glass-and-steel office building near the fabled intersection of Hollywood Boulevard and Vine Street.
The fashion retailer declined to comment on the studio uses in its headquarters, but according to architecture firm Odaa, it has open and private offices, meeting rooms, collaboration zones, photo studios, sample libraries, prototype showrooms, an executive lounge and a commissary for 400 people.
Pieces of a shoe sit on a workbench in the Puma Studio L.A.
(Kayla Bartkowski / Los Angeles Times)
The brands building studios typically want to find the darkest spot on the premises to put their content creation or podcast spaces, Eckert said, where they can limit outside light and sound. That’s commonly near the center of the office floor, far from windows and close to permanent shear walls that limit sound intrusion.
They also need space for green rooms and restrooms dedicated to the talent.
Spotify recently built a fancy podcast studio in a CIM office building on trendy Sycamore Avenue that is open by invitation-only to video creators in Spotify’s partner program.
“Ambitious shows need spaces that support big ideas,” Bill Simmons, head of talk strategy at Spotify, said in a statement. “These studios give teams room to experiment and keep pushing what’s possible.”
Business
A new delivery bot is coming to L.A., built stronger to survive in these streets
The rolling robots that deliver groceries and hot meals across Los Angeles are getting an upgrade.
Coco Robotics, a UCLA-born startup that’s deployed more than 1,000 bots across the country, unveiled its next-generation machines on Thursday.
The new robots are bigger, tougher and better equipped for autonomy than their predecessors. The company will use them to expand into new markets and increase its presence in Los Angeles, where it makes deliveries through a partnership with DoorDash.
Dubbed Coco 2, the next-gen bots have upgraded cameras and front-facing lidar, a laser-based sensor used in self-driving cars. They will use hardware built by Nvidia, the Santa Clara-based artificial intelligence chip giant.
Coco co-founder and chief executive Zach Rash said Coco 2 will be able to make deliveries even in conditions unsafe for human drivers. The robot is fully submersible in case of flooding and is compatible with special snow tires.
Zach Rash, co-founder and CEO of Coco, opens the top of the new Coco 2 (Next-Gen) at the Coco Robotics headquarters in Venice.
(Kayla Bartkowski/Los Angeles Times)
Early this month, a cute Coco was recorded struggling through flooded roads in L.A.
“She’s doing her best!” said the person recording the video. “She is doing her best, you guys.”
Instagram followers cheered the bot on, with one posting, “Go coco, go,” and others calling for someone to help the robot.
“We want it to have a lot more reliability in the most extreme conditions where it’s either unsafe or uncomfortable for human drivers to be on the road,” Rash said. “Those are the exact times where everyone wants to order.”
The company will ramp up mass production of Coco 2 this summer, Rash said, aiming to produce 1,000 bots each month.
The design is sleek and simple, with a pink-and-white ombré paint job, the company’s name printed in lowercase, and a keypad for loading and unloading the cargo area. The robots have four wheels and a bigger internal compartment for carrying food and goods .
Many of the bots will be used for expansion into new markets across Europe and Asia, but they will also hit the streets in Los Angeles and operate alongside the older Coco bots.
Coco has about 300 bots in Los Angeles already, serving customers from Santa Monica and Venice to Westwood, Mid-City, West Hollywood, Hollywood, Echo Park, Silver Lake, downtown, Koreatown and the USC area.
The new Coco 2 (Next-Gen) drives along the sidewalk at the Coco Robotics headquarters in Venice.
(Kayla Bartkowski/Los Angeles Times)
The company is in discussion with officials in Culver City, Long Beach and Pasadena about bringing autonomous delivery to those communities.
There’s also been demand for the bots in Studio City, Burbank and the San Fernando Valley, according to Rash.
“A lot of the markets that we go into have been telling us they can’t hire enough people to do the deliveries and to continue to grow at the pace that customers want,” Rash said. “There’s quite a lot of area in Los Angeles that we can still cover.”
The bots already operate in Chicago, Miami and Helsinki, Finland. Last month, they arrived in Jersey City, N.J.
Late last year, Coco announced a partnership with DashMart, DoorDash’s delivery-only online store. The partnership allows Coco bots to deliver fresh groceries, electronics and household essentials as well as hot prepared meals.
With the release of Coco 2, the company is eyeing faster deliveries using bike lanes and road shoulders as opposed to just sidewalks, in cities where it’s safe to do so. Coco 2 can adapt more quickly to new environments and physical obstacles, the company said.
Zach Rash, co-founder and CEO of Coco.
(Kayla Bartkowski/Los Angeles Times)
Coco 2 is designed to operate autonomously, but there will still be human oversight in case the robot runs into trouble, Rash said. Damaged sidewalks or unexpected construction can stop a bot in its tracks.
The need for human supervision has created a new field of jobs for Angelenos.
Though there have been reports of pedestrians bullying the robots by knocking them over or blocking their path, Rash said the community response has been overall positive. The bots are meant to inspire affection.
“One of the design principles on the color and the name and a lot of the branding was to feel warm and friendly to people,” Rash said.
Coco plans to add thousands of bots to its fleet this year. The delivery service got its start as a dorm room project in 2020, when Rash was a student at UCLA. He co-founded the company with fellow student Brad Squicciarini.
The Santa Monica-based company has completed more than 500,000 zero-emission deliveries and its bots have collectively traveled around 1 million miles.
Coco chooses neighborhoods to deploy its bots based on density, prioritizing areas with restaurants clustered together and short delivery distances as well as places where parking is difficult.
The robots can relieve congestion by taking cars and motorbikes off the roads. Rash said there is so much demand for delivery services that the company’s bots are not taking jobs from human drivers.
Instead, Coco can fill gaps in the delivery market while saving merchants money and improving the safety of city streets.
“This vehicle is inherently a lot safer for communities than a car,” Rash said. “We believe our vehicles can operate the highest quality of service and we can do it at the lowest price point.”
Business
Trump orders federal agencies to stop using Anthropic’s AI after clash with Pentagon
President Trump on Friday directed federal agencies to stop using technology from San Francisco artificial intelligence company Anthropic, escalating a high-profile clash between the AI startup and the Pentagon over safety.
In a Friday post on the social media site Truth Social, Trump described the company as “radical left” and “woke.”
“We don’t need it, we don’t want it, and will not do business with them again!” Trump said.
The president’s harsh words mark a major escalation in the ongoing battle between some in the Trump administration and several technology companies over the use of artificial intelligence in defense tech.
Anthropic has been sparring with the Pentagon, which had threatened to end its $200-million contract with the company on Friday if it didn’t loosen restrictions on its AI model so it could be used for more military purposes. Anthropic had been asking for more guarantees that its tech wouldn’t be used for surveillance of Americans or autonomous weapons.
The tussle could hobble Anthropic’s business with the government. The Trump administration said the company was added to a sweeping national security blacklist, ordering federal agencies to immediately discontinue use of its products and barring any government contractors from maintaining ties with it.
Defense Secretary Pete Hegseth, who met with Anthropic’s Chief Executive Dario Amodei this week, criticized the tech company after Trump’s Truth Social post.
“Anthropic delivered a master class in arrogance and betrayal as well as a textbook case of how not to do business with the United States Government or the Pentagon,” he wrote Friday on social media site X.
Anthropic didn’t immediately respond to a request for comment.
Anthropic announced a two-year agreement with the Department of Defense in July to “prototype frontier AI capabilities that advance U.S. national security.”
The company has an AI chatbot called Claude, but it also built a custom AI system for U.S. national security customers.
On Thursday, Amodei signaled the company wouldn’t cave to the Department of Defense’s demands to loosen safety restrictions on its AI models.
The government has emphasized in negotiations that it wants to use Anthropic’s technology only for legal purposes, and the safeguards Anthropic wants are already covered by the law.
Still, Amodei was worried about Washington’s commitment.
“We have never raised objections to particular military operations nor attempted to limit use of our technology in an ad hoc manner,” he said in a blog post. “However, in a narrow set of cases, we believe AI can undermine, rather than defend, democratic values.”
Tech workers have backed Anthropic’s stance.
Unions and worker groups representing 700,000 employees at Amazon, Google and Microsoft said this week in a joint statement that they’re urging their employers to reject these demands as well if they have additional contracts with the Pentagon.
“Our employers are already complicit in providing their technologies to power mass atrocities and war crimes; capitulating to the Pentagon’s intimidation will only further implicate our labor in violence and repression,” the statement said.
Anthropic’s standoff with the U.S. government could benefit its competitors, such as Elon Musk’s xAI or OpenAI.
Sam Altman, chief executive of OpenAI, the company behind ChatGPT and one of Anthropic’s biggest competitors, told CNBC in an interview that he trusts Anthropic.
“I think they really do care about safety, and I’ve been happy that they’ve been supporting our war fighters,” he said. “I’m not sure where this is going to go.”
Anthropic has distinguished itself from its rivals by touting its concern about AI safety.
The company, valued at roughly $380 billion, is legally required to balance making money with advancing the company’s public benefit of “responsible development and maintenance of advanced AI for the long-term benefit of humanity.”
Developers, businesses, government agencies and other organizations use Anthropic’s tools. Its chatbot can generate code, write text and perform other tasks. Anthropic also offers an AI assistant for consumers and makes money from paid subscriptions as well as contracts. Unlike OpenAI, which is testing ads in ChatGPT, Anthropic has pledged not to show ads in its chatbot Claude.
The company has roughly 2,000 employees and has revenue equivalent to about $14 billion a year.
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