Decker's Outdoor Corporation reported net sales for the third quarter ended Sept. 30 increased 15.8% to $228.4 million from $197.3 million in the year-ago period. Diluted EPS increased 31.5% to $2.59 versus $1.97 for the year-ago period. Domestic sales increased 10.3% to $179.0 million versus $162.3 million a year ago, while international sales increased 41.4% to $49.4 million from $35.0 million a year ago.
Angel Martinez, President, CEO and Chairman of the Board of Directors, stated: “In addition to exceeding expectations, our third quarter results highlight our efforts to further diversify our product lines, expand our share of the market, and control expenses. Our UGG brand sales continue to be led by our core boot category, with the performance of several new styles driving the strong start to the fall selling season.
“Our focus on broadening the depth of our collections has enabled us to increase shelf space and attract new consumers to the brand. At the same time, we had a positive response to our more technical line of closed toe, light hikers, which will help establish our Teva® brand as a true year-round brand and provide important momentum for spring 2010. Our Simple brand is also experiencing solid sell-through as ecoSNEAKS continue to perform well at major accounts such as Nordstrom and Journeys. We are very pleased with our ability to successfully execute our business plan in what continues to be an uncertain economic environment. We remain focused on effectively managing our expenses and inventory levels and are moving forward excited about the many long-term domestic and international growth opportunities that lie ahead for the company.”
Division Summary
UGG Brand
UGG brand net sales for the third quarter increased 19.1% to $212.8 million compared to $178.7 million for the same period last year. The sales gain was primarily attributable to an increase in domestic and international shipments of fall product versus the same period a year ago.
Teva Brand
Teva brand net sales decreased 19.5% to $9.0 million for the third quarter compared to $11.2 million for the same period last year. The decline in sales was primarily the result of lower sell-in during the third quarter compared with the same period last year.
Simple Brand
Simple brand net sales for the third quarter decreased 31.4% to $3.5 million compared to $5.2 million for the same period last year, with a lower than normal rate of reorder business in the quarter. Simple brand sales were also higher in the third quarter of 2008 in part due to the launch of Planet Walkers®, a collection which has since been discontinued.
Other Brands
Combined net sales of the Company’s other brands increased 38.9% to $3.1 million for the third quarter of 2009 compared to $2.2 million for the same period last year. The increase was attributable to reporting a full quarter of activity for all brands as the Company acquired such brands during 2008 and 2009.
eCommerce
Sales for the eCommerce business, which are included in the brand sales numbers above, decreased 21.2% to $8.4 million for the third quarter compared to $10.6 million for the same period a year ago. The decrease in sales resulted from more second quarter backorders carried into and shipped in the third quarter of 2008 than 2009 for the UGG brand and a decline in our conversion rates for all brands.
Retail Stores
Sales for the retail store business, which are included in the brand sales numbers above, increased 128.3% to $12.3 million for the third quarter compared to $5.4 million for the same period a year ago, primarily as a result of more store locations in 2009. For those stores that were open during the full three months ended September 30, 2008 and 2009, same store sales grew by 31.1%.
Inventories
At September 30, 2009, inventories increased 18.9% to $187.8 million versus $157.9 million for the same period a year ago. By division, the UGG brand increased by $40.6 million to $174.9 million compared to $134.4 million for the same period last year, the Teva brand decreased by $8.7 million to $7.0 million compared to $15.7 million for the same period last year and the Simple brand decreased by $2.4 million to $3.5 million compared to $5.9 million for the same period last year.
Based upon the UGG brand’s third quarter performance coupled with increased visibility into the fourth quarter, the Company is raising its full year revenue outlook. The Company now expects its full year revenue to increase approximately 13% over 2008, compared to previous guidance of approximately 9% to 10%.
The company is also raising its diluted earnings per share outlook for 2009 and now expects its full year non-GAAP diluted earnings per share to increase approximately 9% over the $7.27 non-GAAP diluted EPS in 2008. This compares to its previous expectation for full year non-GAAP diluted EPS to be flat to up slightly. This guidance is based on an anticipated diluted share count of approximately 13.1 million shares. This guidance also assumes a gross profit margin of approximately 44.3%, compared to its previous expectation of approximately 44.5%, and SG&A as a percentage of sales of approximately 23.4%, compared to its previous expectation of approximately 24.5%.
The company currently expects fourth quarter 2009 revenue to increase approximately 4% and non-GAAP diluted earnings per share to increase approximately 5% from 2008 levels, which excludes pre-tax, non-cash impairment charges of $20.9 million for the fourth quarter ended December 31, 2008 as described in our earnings release for that period. This is up from its previous revenue expectations of a slight decrease and non-GAAP diluted EPS expectations of an approximate 4% decrease. This guidance is based on an anticipated diluted share count of approximately 13.0 million shares. This guidance also assumes a gross profit margin of approximately 47.0%, compared to previous expectations of 47.5%, and SG&A as a percentage of sales of approximately 19.3%, slightly below the previous expectations of 20.0%.
DECKERS OUTDOOR CORPORATION | |||||||||||||||
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| Condensed Consolidated Statements of Income | |||||||||||||||
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| Three-month period ended |
| Nine-month period ended | |||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2009 | 2008 | 2009 | 2008 | ||||||||||||
| Net sales | $ | 228,414 | 197,288 | 465,188 | 385,939 | ||||||||||
| Cost of sales | 130,463 | 111,948 | 267,539 | 218,111 | |||||||||||
| Gross profit | 97,951 | 85,340 | 197,649 | 167,828 | |||||||||||
| Selling, general and administrative expenses | 44,871 | 42,259 | 121,018 | 99,731 | |||||||||||
| Impairment loss | — | — | 1,000 | 14,900 | |||||||||||
| Income from operations | 53,080 | 43,081 | 75,631 | 53,197 | |||||||||||
| Other (income) expense, net: | |||||||||||||||
| Interest income | (101 | ) | (455 | ) | (973 | ) | (2,507 | ) | |||||||
| Interest expense | 8 | 14 | (915 | ) | 85 | ||||||||||
| Other, net | (12 | ) | 20 | (54 | ) | (237 | ) | ||||||||
| Income before income taxes | 53,185 | 43,502 | 77,573 | 55,856 | |||||||||||
| Income tax expense | 19,434 | 17,445 | 28,702 | 22,325 | |||||||||||
| Net income | 33,751 | 26,057 | 48,871 | 33,531 | |||||||||||
| Less: Net loss (income) attributable to | |||||||||||||||
| noncontrolling interest | 74 | (43 | ) | 173 | < | ||||||||||
