Deckers Brands reported net sales increased 15.6 percent to a record $340.6 million in the fiscal fourth quarter ended March 31, capping off a record year despite strong currency headwinds. 

The owner of Ugg, Teva and Sanuk footwear brands reported sales grew 19.1 percent during the period in currency-neutral (c-n) terms.

Gross margins, however, plunged 420 basis points to 44.7 percent compared to 48.9  percent for the same period last year.

SG&A expenses as a percentage of sales were 44.5  percent compared to 49.1  percent for the same period last year.
Diluted earnings per share was $0.04 compared to a diluted loss per share of $(0.08) for the same period last year.

Fiscal 2015 results

For the fiscal year ended March 31, net sales increased 14.5  percent to a record $1.817 billion compared to $1.588 billion last year. On a currency-neutral basis, net sales increased 15.6  percent.

Gross margin improved 60 basis points to 48.3  percent compared to 47.7  percent last year.

SG&A expenses as a percentage of sales were 36.0  percent compared to 34.8  percent last year.

Diluted earnings per share increased 14.5  percent to $4.66 compared to $4.07 last year.

“We ended fiscal 2015 with solid momentum highlighted by approximately 16  percent revenue growth in the fourth quarter despite unfavorable foreign exchange rate headwinds,” commented Angel Martinez, Chief Executive Officer and Chair of the Board of Directors. “The work we've done to continue to excite our consumers with compelling new products and to continue to connect with them on a more frequent and personalized basis through our advanced Omni-Channel capabilities is fueling increased demand across our brand portfolio. These actions are helping us to further diversify our business and create new opportunities for growth.

“Looking ahead,” Martinez continued, “we believe the shift in the Ugg brand's fall order book towards more non-core collections such as specialty classics, weather, and casual boots better aligns with current trends and positions us for a successful fall/holiday season.  Furthermore, we are committed to leveraging the investments we've made over the past several years, which along with our current share repurchase authorization, will help to partially offset the impact of the stronger U.S. dollar in fiscal 2016 and drive increased earnings power and greater shareholder value over the long-term.”

Brand Summary

  • Ugg  brand net sales for the fourth quarter increased 9.7  percent to $216.8 million compared to $197.6 million for the same period last year. The increase in sales was driven by an increase in global wholesale and distributor sales, higher global E-Commerce sales, sales contributions from new worldwide retail store openings, partially offset by a decrease in same store sales. For fiscal 2015, Ugg brand sales increased 12.6  percent to $1.49 billion.
  • Teva  brand net sales for the fourth quarter increased 13.4  percent to $53.1 million compared to $46.8 million for the same period last year. The increase in sales was driven by an increase in international wholesale and distributor sales, partially offset by a decrease in domestic wholesale sales. For fiscal 2015, Teva brand sales increased 13.5  percent to $126.7 million.
  • Sanuk  brand net sales for the fourth quarter increased 27.9  percent to $39.2 million compared to $30.7 million for the same period last year. The increase in sales was driven by an increase in domestic wholesale sales and higher international distributor sales. For fiscal 2015, Sanuk brand sales increased 13.1  percent to $114.7 million.
  • Other brands combined net sales increased 60.9  percent to $31.5 million compared to $19.6 million for the same period last year. The increase was primarily attributable to an $8.8 million increase in sales for the Hoka One One  brand compared to the same period last year. For fiscal 2015, combined net sales of the company's other brands increased 69.5  percent to $82.4 million.

Channel Summary (included in the brand sales numbers above)

  • Wholesale and distributor sales for the fourth quarter increased 16.6  percent to $205.1 million compared to $176.0 million for the same period last year. The increase in sales was driven by an increase in both domestic wholesale sales and international wholesale and distributor sales. For fiscal 2015, wholesale and distributor sales increased 12.9  percent to $1.2 billion.
  • Direct-to-Consumer sales for the fourth quarter increased 14.1  percent to $135.5 million compared to $118.7 million for the same period last year. Direct-to-Consumer comparable sales for the fourth quarter, which include worldwide comparable retail store sales and worldwide comparable E-Commerce sales, increased 4.7  percent over the same period last year. For fiscal 2015, Direct-to-Consumer sales increased 17.6  percent to $617.4 million and Direct-to-Consumer comparable sales increased 7.8  percent. 

For the fourth quarter, sales for the global retail store business increased 7.7  percent to $86.3 million compared to $80.1 million for the same period last year. The increase was driven by 30 new stores opened after March 31, 2014, partially offset by a same store sales decrease of 6.5  percent for the thirteen weeks ended March 29, 2015 compared to the thirteen weeks ended March 30, 2014. For fiscal 2015, global retail store sales increased 12.0  percent to $384.3 million.

For the fourth quarter, sales for the global E-Commerce business increased 27.4  percent to $49.2 million compared to $38.6 million for the same period last year. The increase was driven primarily by an increase in global Ugg brand sales. For fiscal 2015, global E-Commerce sales increased 28.4  percent to $233.1 million.

Geographic Summary (included in the brand and channel sales numbers above)

  • Domestic sales for the fourth quarter increased 9.8  percent to $217.7 million compared to $198.3 million for the same period last year. For fiscal 2015, domestic sales increased 10.2  percent to $1.165 billion.
  • International sales for the fourth quarter increased 27.5  percent to $122.9 million compared to $96.4 million for the same period last year. In currency-neutral sales increased 38.3  percent to $133.3 million. For fiscal 2015, international sales increased 23.0  percent to $651.7 million compared to $529.7 million last year. In currency-neutral sales increased 26.6  percent to $670.5 million.

Gross Margins
Gross margin was 44.7  percent in the fourth quarter compared to 48.9  percent for the same period last year. The 420 basis point decline was driven by a 160 basis point impact from changes in foreign currency exchange rates, namely the strengthening of the U.S. dollar versus the British Pound, Euro and Yen compared to the same period last year. The remaining 260 basis point change is attributable to a higher proportion of closeout sales including inventory associated with the Tsubo brand for which the company is currently seeking strategic alternatives, as well as higher air freight charges in order to avoid the West Coast port delays and deliver scheduled fourth quarter shipments on-time.

Stock Repurchase Program
During the fourth quarter of fiscal 2015 the company repurchased approximately 1.3 million shares of its common stock at an average purchase price of $73.45, for a total of $93.9 million. As of March 31, the company had used all of the authorized repurchase funds under its $200.0 million stock repurchase program announced in July 2012 and had $172.1 million authorized repurchase funds remaining under its $200.0 million stock repurchase program announced in January 2015.

Balance Sheet
As of March 31, cash and cash equivalents were $225.1 million compared to $245.0 million at March 31, 2014. The company had $5.4 million in outstanding borrowings under its credit facility at March 31 compared to $6.7 million at March 31, 2014. The decreases in cash and cash equivalents and outstanding borrowings are primarily attributable to cash used for share repurchases and for purchases of capital expenditures and intangibles, partially offset by cash provided by operations and proceeds from the loan on the corporate headquarters.

Inventories at March 31 increased 12.9  percent to $238.9 million from $211.5 million at March 31, 2014. By brand, Ugg inventory increased 11.0  percent to $166.5 million at March 31, Teva inventory decreased 19.9  percent to $27.4 million at March 31, Sanuk inventory increased 93.2  percent to $25.7 million at March 31, and the other brands' inventory increased 37.9  percent to $19.3 million at March 31.

Fiscal 2016 Outlook
The company expects fiscal 2016 currency-neutral revenues to be approximately $2.01 billion, reflecting a 10.5  percent increase over the 12 month period ended March 31. On a reported basis, revenues are expected to be $1.96 billion, or an increase of 8  percent.

Gross
profit margin for fiscal 2016 is expected to be approximately 48 percent,
down 30 basis points from fiscal 2015 as a result of expectations regarding a
stronger U.S. dollar, partially offset by lower input costs and favorable
changes in the company's channel mix.
SG&A expenses as a percentage of sales are projected to be approximately
35.8  percent, compared to 36.0  percent in fiscal 2015.
The company expects fiscal 2016 diluted earnings per share to be approximately
$5.60 in c-n terms, reflecting an increase of 20  percent over the 12
month period ended March 31. On a reported basis, earnings per share are
expected to be $5.09, or an increase of 9 percent.

First Quarter Fiscal 2016 Outlook
The company expects first quarter fiscal 2016 currency-neutral revenues to be
up slightly over the same period last year and flat on a reported basis. The
company expects a diluted loss per share of approximately $(1.52) on both a
currency-neutral and reported basis compared to a diluted loss per share of
$(1.07) for the same period last year.
As a reminder, a significant amount of our operating expenses are fixed and
spread evenly on an absolute dollar basis throughout each quarter. We expect
the majority of our earnings increase in fiscal 2016 to come in the third and
fourth quarters.


DECKERS OUTDOOR CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Comprehensive (Loss) Income

(Unaudited)

(Amounts in thousands, except for per share data)






























Three-month period ended


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