Skechers executives are looking back at their COVID playbook for some answers on how to navigate the tariff turmoil taking over the industry.

In its first quarter earnings call on Thursday, Skechers chief financial officer John Vandemore told analysts that the company — which reported robust demand in the first quarter and record sales — is presented with a “similar level of uncertainty to that observed during the initial phase of the COVID pandemic.”

As such, the executive noted that Skechers leaders are “pulling the same levers” it has used in the past — cost sharing with suppliers and factories, sourcing optimization that includes moving production away from high-cost locations like China and selective price increases.

But while some may get spooked at the sound of higher prices, management made it clear on Thursday’s call that it does not want to increase prices solely due to more tariffs, and that it’s willing to sacrifice gross margin percent maintain the brand’s value proposition.

“One of the things you have to be very careful about in explaining any price action to the customer and the rationale behind it,” Vandemore said. “And what we’ve generally seen is when it’s contextualized in the consumer’s mind as to why it makes sense, we find they’re much more receptive to absorbing that [cost]. But the honest answer is, at the moment, [price increases are] still something we’re deciding upon. If we try one approach and it’s ineffective, we’ll very quickly move to another. We’re not afraid to change tactics if that’s what conditions dictate.”

As far as China goes, Skechers management provided context about the additional 145 percent tariffs currently imposed on goods from the country. Several times the executives pointed to the fact that it sources goods from a variety of countries and that it is a “truly global brand” with international sales representing 65 percent of its business.

“Obviously, in the current environment, we will be looking to minimize production going to the United States from high-cost locations including tariffs,” the CFO noted. “With an effective tariff rate at about 159 percent (the new 145 percent plus the pre-existing 14 percent tariff), products from China to the U.S. are prohibitively expensive. So that will be an anchor behind some of our thinking.”

According to Williams Trading analyst Sam Poser, 40 percent of the company’s production comes from China, but likely ships little, other than kid’s shoes, from there to the U.S.

“We estimate kid’s shoes make up about 20 percent of Skechers revenue,” Poser wrote in a note this week. “China is the best equipped country to make kid’s footwear. Given the additional 145 percent tariff on Chinese goods, Skechers inferred that there would be no goods shipped from there to the U.S., which will result in a shortage of kid’s shoes in second half of 2025. While we believe providing more details on the percent of U.S. bound shipments from China would have been helpful for the stock, we understand that the situation is fluid.”

But in this current environment, Vandemore reiterated that the company is “going to stay away from absolutes” because they want to remain flexible. “But certainly, we’ll look to optimizing for the lowest overall landed cost in total and by market when we make those decisions and shifting around production by destination market will be a feature of that,” he said.

This comes as the Manhattan Beach, Calif.-based footwear company reported net sales in the first quarter of fiscal 2025 of $2.41 billion, a 7.1 percent increase from $2.25 billion the same time last year.

But while sales were high, net earnings dipped in Q1 to $202.4 million and diluted earnings per share were $1.34, a 2.0 percent decline compared with prior year net earnings of $206.6 million and diluted earnings per share of $1.33 in Q1 2024.

Looking ahead, Skechers said it will not provide financial guidance at this time due to “macroeconomic uncertainty stemming from global trade policies.”

As such, the company is withdrawing its annual 2025 guidance provided in its earnings release on Feb. 6, which called for sales between $9.70 billion and $9.80 billion and diluted earnings per share between $4.30 and $4.50 for the full year.