Deckers Outdoor Corp. pulled past its projected sales in the first quarter as a result of the UGG brand's positive holiday momentum that has continued into spring. Consumers were introduced to new lines of UGG spring-colored boots, sandals, casuals and slippers for both men and woman, which management said attracted new consumers and created repeated purchases by consumers who were only familiar with UGG as a cold weather product.

However, the UGG momentum was offset somewhat by the company's Teva and Simple brands, with both experiencing first quarter declines in sales compared to last year.
Deckers saw revenues increase 37.6% to $134.2 million for the first quarter. Net income was up 9.4% to $12.4 million, or 93 cents per diluted share.
UGG brand net sales for the first quarter surged 66.9% to $91.4 million, representing the second consecutive quarter with sales increasing more than 60%. On a trailing 12-month basis, UGG brand net sales have now surpassed $600 million. UGG inventory increased 61.3% to $43.4 million at quarter-end, attributed to an increase in spring and fall orders and an expanded owned-retail presence.

UGG added five new owned-retail stores since last spring, one each in San Francisco, New York, Beijing and two in London. Same-store sales growth of 29.3%, pushing total UGG retail sales up 162% to almost $14 million in the first quarter. UGG plans are to open two additional domestic locations and five overseas locations in 2009. They also plan to open 30 to 40 shop-in-shops in the U.S. in 2009, as well as 50 shop-in-shops overseas. These are on top of the 40 added in the U.S. and 29 overseas last year.
Teva saw net sales decrease 5.7% to $35.6 million for the first quarter compared to $37.7 million for the same period last year. In a conference call with analysts, Angel Martinez, DECK chairman and CEO, attributed the decline to weak retail conditions and the bankruptcy filings of three “meaningful” accounts; GI Joe's, Boater's World, and Sportsman's Warehouse. He also said that many retailers were taking delivery of spring product closer to season and they had hoped to make up for the shift with more at-once orders in the first quarter, but that that business apparently didn't materialize to the levels they had projected. He cited the challenging retail environment and its impact on open-to-buy dollars, as well as cold or wet weather in many parts of the country. Still, Teva inventories were down 17.8% to $15.1 million at quarter-end.
Simple brand net sales for the first quarter decreased 13.0% to $4.4 million. Simple Internet sales were up in double-digits. Simple sales were negatively impacted by a higher than normal rate of order cancellations, which management attributed to the general retail environment combined with lower reorders and the loss of international sales, partly as a result of the termination of the brand's distributor in Japan. Simple inventory increased 18.3% to $5 million.
Combined net sales of the company's other brands, TSUBO and Anhu, which DECK did not own during the first quarter of 2008, were $2.9 million for the first quarter of 2009. Management suggested that, since pre-books of the TSUBO brand have been “harder to come by,” they will pull back on some of the additional marketing investments for this year and will reduce the original plan of an incremental $10 million spend for TSUBO and Simple by about half.
Sales for the e-commerce business increased 3.5% to $16.2 million for the first quarter compared to $15.6 million for the year-ago period.
Total Q1 international sales increased 71.0% to $32.2 million and total domestic sales increased 29.6% to $102 million.
Deckers is adjusting its full year revenue outlook upward based on the UGG Q1 results and partially offset by lower projected sales forecasts for Teva, Simple, and TSUBO. DECK now expects full year revenue to increase 7% to 9%, compared to previous guidance of approximately 6% to 9% growth. UGG brand sales are expected to increase 8% to 10%, up from previous a forecast of 6% to 8% growth. Teva sales are now seen declining 4% to 7% for the year, compared to previous outlook for a 2% to 5% decline. Simple brand sales are now expected sales to increase approximately 5% to 10%, down from previous expectations for growth of 20% to 25% for the year. TSUBO brand sales are now expected to come in at $5 million to $7 million, down from the $7 million to $9 million forecast. They expect Anhu brand sales to be $4 million to $6 million for the year.
Full year diluted EPS is expected to be flat to up slightly over the $7.27 non-GAAP diluted EPS in 2008, which excluded pre-tax impairment charges of $35.8 million, compared to previous guidance of flat to down slightly.
DECK expects second quarter revenue to increase approximately 10% and expects to report a diluted loss per share of approximately 15 cents to 10 cents.