Deckers CEO Angel Martinez would probably beg to differ with that girl on the panel as well, and did a solid job providing the ICR crowd with his vision for the Teva, UGG, and Simple brands. Martinez, the former Rockport and Reebok exec that was part of the team that put Keen Footwear on the map, is clearly working hard to move Teva beyond its positioning as a sandal brand. While this challenge has been addressed over the last few years by others, Martinez is bringing an ability to tell - and sell - the new story for a brand that has been at the mercy of the weather and the season. There are clearly Keen-like influences in some of the product for Spring in the Dozer collection, and the Pro Collection, which runs from sandals to running to booties, provides a bigger picture here for the brand Martinez said he expects to be the “Brand of Choice for the New Outdoor Athlete.” He said this positioning goes beyond the traditional team sports athlete. There was also a nod to Bite Footwears collection of golf-friendly travel footwear with the Utility LX Sambago developed in partnership with Vibram. He also showed off the Terra Wraptor XCR and the Red Point “outdoor sneaker.”
Deckers will invest an additional $2.2 million in marketing the Teva brand to establish its credentials as a younger, more aggressive brand that is relevant to the younger, college-aged consumer. Part of that investment will be in in-store presence, a move they hope to create excitement around the brand at retail. “We have been invisible at retail,” said Martinez.
As part of their presentation, Martinez and CFO Scott Ash said that continued strong demand and solid retail sell-through for the UGG brand have prompted the company to update guidance for the fourth quarter. DECK now expects to exceed the high-end of its previously announced guidance of 60 cents to 64 cents per diluted share on $72 million to $75 million in sales for the fourth quarter. The company said it remains comfortable with previous guidance for the year, which called for diluted EPS of $2.00 to $2.15 per share on sales of $255 million to $265 million.
On the UGG front, Martinez said the company now sees full year sales in the $153 million to $155 million range. He said non-California sales now account for 70% of U.S. sales. In Europe, Benelux makes up 46% of sales, while the U.K. contributes another 22.5%. He sees real opportunity in other countries like Germany, which makes up only 4.2% of EU sales, and France, which contributes only 2.3% to the top-line. He also pointed to Canada, Australia, South Korea, and Japan as key performing countries.
Martinez was clearly looking past UGGs recent success in shearling boots and slippers, positioning the brand as “Luxury and Comfort.” They are also adding some tech in a new product they are supplying to the Swiss Olympic Team that features both Gore and Vibram.
At Simple, Martinez highlighted the Green Toe product that is billed as natural footwear. He said most green shoes are ugly and dont fit well, but he said these fit great and are “very good looking.”
The CEO said they see the company hitting $500 million in “relatively short order,” with international business representing half of the sales over the same timeframe. Operating margins are expected to be in the 16% to 17% range going forward versus 19.7% of sales last year. Gross margins are expected to stay between 42% and 43% of sales.
>>> Martinez talked about the “brand permission” they have to expand the Teva brand beyond sandals, but we will have to see if retailers will find room in a space already occupied by Keen and others
