Deckers Outdoor Corporation is going to sell about 1.5 million additional DECK shares into the market on top of roughly two million shares that will be sold by company management and board members, including chairman and CEO Doug Otto. The proceeds from the company stock sale will be used to pay down various debt obligations and will add a little extra to the cash line as well.

For the fourth quarter, DECK saw net sales increase 38.7% to $35.7 million versus $25.8 million in the same period last year. Teva sales increased 24.2% to $13.3 million in Q4 versus $10.7 million in Q4 2002. Simple sales were off 5.5% to $1.7 million compared to $1.8 million last year and Ugg sales increased 55.6% to $20.7 million in the fourth quarter compared to $13.3 million for the fourth quarter of last year.

Deckers shipped 1.3 million pair of footwear in Q4 at an average wholesale price of $25.07.

Ugg dominated the company’s direct Internet business in Q4, delivering roughly $1.5 million of the $2.3 million in sales. Teva was $659,000 of Internet sales and Simple sold $162,000. International sales for all brands grew 31.8% to $5.8 million in the fourth quarter versus $4.4 million in Q4 2002.

Net income for Q4 rose 80.8% to $2.5 million, or 19 cents per diluted share, compared to net income of $1.4 million, or 13 cents per diluted share, in Q4 2002.

Full Year International sales for all brands increased 7.2% to $22.3 million in 2003, compared to $20.8 million for full year 2002. Domestic sales increased 26.1% to $98.7 million compared to $78.3 million last year. Ugg recorded its sixth consecutive year of double-digit growth in 2003. Internet sales totaled $6.5 million for the year.

The increase in the gross margin for 2003 is primarily due to the addition of the higher gross margin internet and catalog business, a favorable impact of the stronger Euro and lower overhead cost prepared partially offset by an increased intact of closeout sales.

SG&A expenses for the year improved to 26.4%, cutting 890 basis points from 35.3% of sales in 2002. due primarily to the elimination of Teva royalty expenses among other factors. These cost reductions were partially offset by increased operating expenses related to the newly acquired Internet and catalog retailing business. Restructuring International operations to take advantage of Hong Kong’s 17% tax rate will help drive the average tax rate down to 36.5% in 2004.

The increase in inventory was due to an increase in Teva inventory in anticipation of Spring shipments, partially offset by a decrease in Ugg and Simple inventory.
Teva's largest customer is REI. Neiman-Marcus featured Ugg in its spring catalog in February and sold out within four hours of its release.

Otto said someone counted more than 38 Ugg knockoff brands at the WSA show. The company looks to knock itself off with its Simple branded product as well. The Simple product has a suede upper and is lined in fleece as opposed to twin-faced sheepskin that is used in Ugg. The company said it is “encouraged” by the sell-through of its Simple brand athletic and Shearling products that it is selling into the mid-market.

DECK increased guidance for 2004, estimating diluted earnings per share in the $1.25 to $1.35 range on sales between $153 million and $162 million. Teva sales are expected to be in the range of $84 to $86 million, Simple ales are seen between $9 million and $11 million and Ugg sales are seen in the $60 million to $65 million range.
First quarter EPS are estimated to be in the range of 44 cents to 45 cents per diluted share on sales of $40 million to $42 million.