Skechers USA Inc. is considering strategic options for its Asia business, people with knowledge of the matter said.

The Manhattan Beach, California-based shoemaker has held preliminary talks with advisers to evaluate possibilities including a Hong Kong initial public offering of the business, said the people, who asked not to be identified as the information is private. An IPO could raise about $1.5 billion, the people said.

Such a plan could involve the firm buying out its joint venture partners, one of the people said. The company formed Skechers China with Luen Thai Enterprises in 2007 according to a press release. Its joint ventures in Asia also include units in South Korea and Southeast Asia, the 2020 annual report shows.

Deliberations are at an early stage, and Skechers could decide not to pursue alternative strategic options, the people said.

Skechers is constantly evaluating opportunities to increase shareholder value, including relative to its business in Asia, which the company believes is meaningfully undervalued by the market, chief financial officer John Vandemore said in response to a query from Bloomberg News.

Luen Thai didn’t immediately respond to requests for comment.

The shoemaker’s proposed listing would see it joining other global consumer firms such as Yum! Brands, Inc. and McDonald’s Corp. in separating Asian units from their other operations. Yum! Brands in 2016 spun off Yum China Holdings Inc. to list in the US, and subsequently dual-listed in Hong Kong in 2020.

Skechers designs and sells contemporary casual and sporty shoes as well as clothing for men, women and kids in more than 170 countries globally, according to its website. It has a network of more than 4,000 company- and third-party-owned stores worldwide.

The company had $4.6 billion sales last year, nearly 60 percent of which came from outside the United States, according to the 2020 annual report. China accounted for $924.5 million, or about 20 percent of the total.

Skechers was among four fashion brands targeted in an investigation by a French prosecutor’s office that started in June, over allegations the companies have profited from exploiting forced labour in the Chinese Uyghur community to manufacture their products. The company declined to comment on pending litigation, but said previous supplier audits found no use of forced labour.

By Vinicy Chan, Julia Fioretti and Crystal Tse

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