Deckers Brands reported net sales in the first quarter ended June 30 increased 20.3 percent to $209.7 million compared to $174.4 million for the same period last year.

The year-over-year increase was primarily due to earlier than planned global wholesale shipments, an increase in direct-to-consumer (DTC) comparable sales, and stronger than expected sales in the Hoka One One brand. On a constant currency basis, net sales increased 21.5 percent.

Gross margin was 43.2 percent compared to 43.7 percent for the same period last year. Gross margin was slightly better than expected, and included an 80 basis point headwind from changes in foreign currency exchange rates.

SG&A expenses were $146.9 million compared to $154.6 million for the same period last year. The year-over-year improvement was primarily the result of the execution of our cost savings plan.

Non-GAAP SG&A expenses were $144.9 million. Operating loss was $56.3 million compared to $78.3 million for the same period last year. Non-GAAP operating loss was $54.3 million.

The net loss was reduced to $42.1 million, or $1.32 a share, from $58.9 million, or $1.84, in the same period a year ago. Non-GAAP diluted loss per share was $(1.28).

“Our first quarter results reflect solid consumer demand for our spring product offering across our brands combined with earlier than planned shipments of certain fall orders,” commented Dave Powers, President and Chief Executive Officer. “While it is still early in the year, we are encouraged by our recent top-line performance. Looking ahead, we believe the product, marketing and distribution strategies we’ve implemented across our brand portfolio, along with the anticipated benefits from our cost savings initiatives, have us well positioned to achieve the operating profit improvement targets we established for fiscal 2018 and longer-term.”

Brand Summary

Ugg brand net sales for the first quarter increased 24.9 percent to $114.7 million compared to $91.9 million for the same period last year. On a constant currency basis, sales increased 26.6 percent. The increase in sales was driven by earlier than expected global wholesale shipments originally planned for the second quarter, and an increase in DTC comparable sales fueled by strong sell through of new spring product.

Hoka One One brand net sales for the first quarter increased 74.2 percent to $30.7 million compared to $17.6 million for the same period last year. On a constant currency basis, sales increased 75.3 percent. The increase in sales was primarily driven by better than expected DTC and wholesale sales.

Teva brand net sales for the first quarter increased 8.6 percent to $37.7 million compared to $34.7 million for the same period last year. On a constant currency basis, sales increased 9.8 percent. The increase in sales was primarily driven by better global wholesale and DTC sales, as well as strong global reorder business.

Sanuk brand net sales for the first quarter were $26.2 million compared to $26.7 million for the same period last year, a decrease of 2.0 percent on both a reported and constant currency basis. The decrease in sales was primarily driven by the transfer of a retail store to a partner at the end of the last fiscal year.

Channel Summary (included in the brand sales numbers above)

Wholesale net sales for the first quarter increased 24.5 percent to $144.6 million compared to $116.1 million for the same period last year. On a constant currency basis, sales increased 25.1 percent. The increase in sales was driven by earlier than expected global shipments, and stronger than expected Hoka One One brand sales.

DTC net sales for the first quarter increased 11.8 percent to $65.1 million compared to $58.3 million for the same period last year. On a constant currency basis, sales increased 14.3 percent. DTC comparable sales for the first quarter increased 12.7 percent over the same period last year.
Geographic Summary (included in the brand and channel sales numbers above)

Domestic net sales for the first quarter increased 10.2 percent to $120.7 million compared to $109.5 million for the same period last year.

International net sales for the first quarter increased 37.2 percent to $89.0 million compared to $64.9 million for the same period last year. On a constant currency basis, sales increased 40.8 percent.

Balance Sheet

At June 30, 2017, cash and cash equivalents were $279.9 million compared to $291.8 million at March 31, 2017. The company had no outstanding borrowings under its credit facility at June 30, 2017 compared to $110.6 million at June 30, 2016.

company-wide inventories at June 30, 2017 decreased 5.9 percent to $441.6 million from $469.2 million at June 30, 2016, and was largely the result of higher than expected sales in the first quarter combined with improved inventory management.

Full Year Fiscal 2018 Outlook for the Twelve Month Period Ending March 31, 2018

The following outlook for fiscal year 2018 remains unchanged from the previously issued guidance in May 2017:

  • Net sales are expected to be in the range of down 2 percent to flat.
  • Gross margin is expected to be approximately 47.5 percent.
  • SG&A expenses as a percentage of sales are projected to be approximately 37 percent.
  • Non-GAAP diluted earnings per share are expected to be in the range of $3.95 to $4.15. This excludes any charges that may occur from additional store closures, restructuring and other charges.

Second Quarter Fiscal 2018 Outlook for the Three Month Period Ending September 30, 2017

The company expects second quarter fiscal 2018 net sales to be down approximately 10 percent versus the same period last year, primarily as a result of store closures, and the earlier than planned shipments in the first quarter.

Non-GAAP diluted earnings per share is expected to be approximately $1.00 to $1.05 compared to $1.23 for the same period last year.

Photo courtesy Hoka One One