Deckers Brands reported that revenues and its loss in the fiscal first quarter ended June 30 easily beat projected guidance. Sales grew 19.5 percent, led by a 17.6 percent gain for Ugg and a 53.1 percent hike at Hoka One One.

“Fiscal year 2019 is off to a solid start, with our first quarter revenue achieving a record high of $251 million and continuing the momentum we have built,” said Dave Powers, president and chief executive officer. “The Ugg Spring Summer and Hoka One One product offerings drove significant year-over-year sales growth, while Teva also produced solid gains. This quarter’s results are a testament that we are successfully progressing towards our long-term objectives and that our brands are well positioned in the marketplace.”

First Quarter Fiscal 2019 Financial Review

  • Net sales increased 19.5 percent to $250.6 million compared to $209.7 million for the same period last year. On a constant currency basis, net sales increased 17.6 percent.
  • Gross margin was 45.9 percent compared to 43.2 percent for the same period last year.
  • SG&A expenses were $154.4 million compared to $146.9 million for the same period last year. Non-GAAP SG&A expenses were $153.9 million this year compared to $144.9 million last year.
  • Operating loss was $39.4 million compared to an operating loss of $56.3 million for the same period last year.
  • Non-GAAP operating loss was $38.9 million this year compared to a loss of $54.3 million last year.
  • Diluted loss per share was $1.00 compared to a loss of $1.32 for the same period last year. Non-GAAP diluted loss per share was $0.98 this year compared to a loss of $1.28 last year.

Previously, Deckers had expected net sales to be in the range of $225.0 million to $235.0 million; a non-GAAP net loss per share is expected to be in the range of $$1.50 to $1.41.

Brand Summary

  • Ugg brand net sales for the first quarter increased 18.9 percent to $136.5 million compared to $114.7 million for the same period last year.
  • Hoka One One brand net sales for the first quarter increased 53.1 percent to $47.0 million compared to $30.7 million for the same period last year.
  • Teva brand net sales for the first quarter increased 6.2 percent to $40.0 million compared to $37.7 million for the same period last year.
  • Sanuk brand net sales for the first quarter decreased 6.6 percent to $24.4 million compared to $26.2 million for the same period last year.

Channel Summary 

  • Wholesale net sales for the first quarter increased 22.9 percent to $177.6 million compared to $144.6 million for the same period last year.
  • DTC net sales for the first quarter increased 12.0 percent to $73.0 million compared to $65.1 million for the same period last year.
  • DTC comparable sales for the first quarter increased 6.2 percent over the same period last year.

Geographic Summary

  • Domestic net sales for the first quarter increased 17.4 percent to $141.7 million compared to $120.7 million for the same period last year.
  • International net sales for the first quarter increased 22.3 percent to $108.9 million compared to $89.0 million for the same period last year.

Balance Sheet (June 30, 2018 as Compared to June 30, 2017)

  • Cash and cash equivalents were $417.9 million compared to $279.9 million.
  • Net inventories were $435.6 million compared to $441.6 million.
  • Outstanding borrowings were $31.9 million compared to $32.5 million.

Stock Repurchase Program

During the first quarter, the company repurchased approximately 86 thousand shares of its common stock for a total of $10 million. As of June 30, 2018, the company had $241 million remaining under its $400 million in stock repurchase authorizations.

Full Year Fiscal 2019 Outlook for the Twelve Month Period Ending March 31, 2019

  • Net sales are now expected to be in the range of $1.930 billion to $1.955 billion.
  • Gross margin expected to be slightly better than 49.0 percent.
  • SG&A expenses as a percentage of sales are projected to be slightly better than 36.5 percent.
  • Operating margin expected to be in the range of 12.6 percent to 12.8 percent.
  • Effective tax rate is expected to be approximately 22.0 percent.
  • Non-GAAP diluted earnings per share are now expected to be in the range of $6.25 to $6.45.
  • The earnings per share guidance excludes any charges that may occur from additional store closures, tax reform, organizational changes and other one-time or non-recurring charges. It also does not assume any impact from additional share repurchases.

Previously, Deckers expected sales to be in the range of $1.925 billion to $1.950 billion and non-GAAP diluted earnings per share are expected to be in the range of $6.20 to $6.40.

Second Quarter Fiscal 2019 Outlook for the Three Month Period Ending September 30, 2018

  • Net sales are expected to be in the range of $485.0 million to $495.0 million.
  • Non-GAAP diluted earnings per share are expected to be in the range of $1.60 to $1.70.
  • The earnings per share guidance excludes any charges that may occur from additional store closures, tax reform, organizational changes and other one-time or non-recurring charges. It also does not assume any impact from additional share repurchases.

Photo courtesy Hoka One One