Deckers fourth quarter net sales increased 108% to a record of $74.2 million versus $35.7 million in the same period last year. Net income for the quarter rose 275% to $9.2 million, compared to net income of $2.5 million last year, and income per diluted share increased 279% to 72 cents, versus income per diluted share of 19 cents in the fourth quarter of 2003. Income per diluted share for the fourth quarter of 2003 was negatively impacted by 2 cents related to the repurchase of preferred stock and the repayment of subordinated debt during the quarter.
For the year ended December 31, 2004, net sales increased 77% to a record $214.8 million versus $121.1 million last year. Net income increased 179% to $25.5 million, or $2.10 per diluted share, compared to net income of $9.2 million, or $0.77 per diluted share last year.
Chief Executive Officer, Doug Otto, stated, “We are extremely pleased with our record fourth quarter performance as robust demand for UGG footwear, coupled with improved deliveries from the factories and strong retail sell-throughs, allowed us to once again exceed expectations. Importantly, based on feedback from retailers at the recent WSA Shoe Show we expect this positive trend for UGG to continue going forward. In addition, we were able to further leverage our fixed costs to drive significant gains in operating income and income per share for the fourth quarter. These results represent a tremendous ending to an outstanding year for our Company and we are excited as this momentum continues into 2005.”
Including sales from both the wholesale divisions and the Internet and catalog retailing business, Teva net sales for the year ended December 31, 2004 increased 15% to a record $88.2 million from $76.5 million in 2003; UGG net sales in 2004 increased 215% to $116.2 million versus $36.9 million last year; and, Simple net sales increased 34% to $10.3 million compared to $7.7 million a year ago. Net sales for the Internet and catalog retailing business, which are included in the brand sales numbers above, aggregated approximately $19.9 million for the year ended December 31, 2004, up 206% from $6.5 million for 2003.
Mr. Otto further stated, “During fiscal 2004, we experienced solid growth in all three brands and made tremendous strides to expand the breadth, depth and reach of each of our product lines. This was evident in Teva’s continued strength in the sport sandal category and growing thong and slide business, combined with the ongoing development of closed toe product to reach the much broader overall rugged outdoor footwear market. We continued to experience phenomenal growth for our entire line of UGG footwear, led by boots, slippers, and casual footwear. The successful launch of UGG licensed handbags and outerwear in 2004, as well as the 2005 introduction of UGG licensed cold weather accessories, provides the ideal complement to our footwear products and significantly enhances the true lifestyle nature of the brand.
“UGG was also named Brand of the Year by Footwear Plus and was recognized with the ACE Award for the “it” accessory of the year by the Accessories Counsel, both tremendous honors. Throughout 2004 we witnessed a resurgence of Simple in the marketplace, including strong performances by the brand’s clog and sneaker offerings. We are confident we are on the right track with Simple and that our new product and distribution initiatives will provide further growth opportunities going forward.”
“During the year, we also took a number of important steps to improve our balance sheet and better position the company for the long-term,” continued Mr. Otto. “This was highlighted by our successful secondary offering of Deckers common stock in May which allowed us to repay all of our outstanding loans associated with our acquisition of Teva and end fiscal 2004 free of long term debt and with more than $25 million of cash.”
Mr. Otto further commented, “Looking ahead, we are extremely confident about our business both for the first half and second half of fiscal 2005. For Teva, our Spring business is off to a great start and we expect another record season in 2005. At the same time, the first half of 2005 for UGG will include both carryover of Fall 2004 products as well as the shipment of UGG’s first ever Spring line, with deliveries beginning in the first quarter of 2005. Our Fall 2005 UGG orders are coming in strong, once again led by our Classic and Ultra boots and slipper collection, as well as demand for our newly introduced cold weather, waterproof, Gortex (R) products and our Metropolitan category which combines sheepskin with high grade suedes and leathers. We will continue to expand our product offerings into additional footwear categories and new licensed products in order to build on UGG’s growing status in the luxury goods market.”
Deckers also increased its guidance for 2005. The Company now expects net sales to range from $250 million to $260 million and income per diluted share to range from $2.45 to $2.55, up from the previous guidance of $220 million to $230 million and $2.15 to $2.25 per diluted share, respectively. The Company currently expects annual net sales in 2005 to be approximately $97 to $100 million for Teva, $13 to $15 million for Simple and $140 to $145 million for UGG. For the first quarter ending March 31, 2005, the Company currently expects sales to range from $63 million to $65 million and income per diluted share to range from $0.68 to $0.70.
Mr. Otto concluded, “Fiscal 2004 was an extraordinary year for Deckers on a number of different levels. Financially, we consistently outperformed expectations for sales and profits; strategically we expanded the lifestyle status of our brands; and operationally we continued to leverage our brands while setting the path for future growth. Our success throughout the year was directly attributable to our powerful portfolio of leading niche brands and the hard work and dedication of our outstanding team. And while we are proud of what we have accomplished to date, we believe that many opportunities still lie ahead. We move forward with a clear and compelling growth strategy and an organization committed to delivering substantial value to our shareholders.”
DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)Three-month period ended Year ended
December 31, December 31,
------------------------ --------------------------
2004 2003 2004 2003
----------- ----------- ------------ ------------Net sales $74,172,000 35,717,000 214,787,000 121,055,000
Cost of sales 45,286,000 21,946,000 124,354,000 69,710,000
----------- ----------- ------------ ------------
Gross profit 28,886,000 13,771,000 90,433,000 51,345,000Selling, general
and administrative
expenses 14,684,000 8,880,000 47,971,000 32,407,000
Litigation income ----- ----- ----- (500,000)
----------- ----------- ------------ ------------
Net income from
operations 14,202,000 4,891,000 42,462,000 19,438,000Other expense
(income):
Interest, net (25,000) 1,145,000 2,236,000 4,557,000
Other 3,000 12,000 3,000 (3,000)
----------- ----------- ------------ ------------
Net income before
income taxes 14,224,000 3,734,000 40,223,000 14,884,000Income taxes 4,976,000 1,270,000 14,684,000 5,730,000
----------- ----------- ------------ ------------Net income 9,248,000 2,464,000 25,539,000 9,154,000
Less preferred
stock redemption
premium ----- (438,000) ----- (438,000)
----------- ----------- ------------ ------------Income applicable
to common
stockholders $ 9,248,000 2,026,000 25,539,000 8,716,000
=========== =========== ============ ============Net income per
share:
Basic $ 0.78 0.21 2.32 0.91
Diluted 0.72 0.19 2.10 0.77
=========== =========== ============ ============Weighted-average
shares:
Basic 11,894,000 9,693,000 11,005,000 9,610,000
Diluted 12,817,000 10,889,000 12,142,000 11,880,000
=========== =========== ============ ============
