Deckers Outdoor Q1 Beats Projections

In late February when reporting fourth-quarter results, the company said it expected first quarter 2013 revenues to remain flat and EPS to show a loss of 12 cents a share.

Division Summary

UGG Brand

UGG brand net sales for the first quarter increased 7.9 percent to $170.6 million compared to $158.1 million for the same period last year. The increase in sales was driven by higher global retail sales from new store openings and an increase in same store sales, combined with an increase in global eCommerce sales, partially offset by lower domestic and international wholesale sales.

Teva Brand

Teva brand net sales for the first quarter increased 3.6 percent to $51.6 million compared to $49.8 million for the same period last year. The increase in sales was driven by gains in domestic wholesale and international distributor sales, partially offset by lower international wholesale sales.

Sanuk Brand

Sanuk brand net sales for the first quarter decreased 4.4 percent to $30.9 million compared to $32.4 million for the same period last year. Increased domestic wholesale and eCommerce sales were offset by a decline in international distributor sales due primarily to inventory build up at some key distributors.

Other Brands

Combined net sales of the Companys other brands increased 76.3 percent to $10.6 million for the first quarter compared to $6.0 million for the same period last year. The increase was primarily attributable to the addition of the HOKA ONE ONE® brand which was acquired in September 2012.

Retail Stores

Sales for the global retail store business, which are included in the brand sales numbers above, increased 37.6 percent to $63.6 million for the first quarter compared to $46.2 million for the same period last year. This increase was driven by 29 new stores opened after the first quarter of 2012 and a 6.6 percent same store sales increase for the thirteen weeks ended March 31, 2013 compared to the thirteen weeks ending April 1, 2012.

eCommerce

Sales for the global eCommerce business, which are included in the brand sales numbers above, increased 22.6 percent to $26.6 million for the first quarter compared to $21.7 million for the same period last year. The sales increase was driven primarily by strong domestic and international sales for the UGG brand, increased domestic sales of the Sanuk brand, and the addition of new international eCommerce websites.

Balance Sheet

At March 31, 2013, cash and cash equivalents were $64.6 million compared to $228.6 million at March 31, 2012. The Company had $10.0 million in outstanding borrowings under its credit facility at March 31, 2013 and no outstanding borrowings at March 31, 2012. The decrease in cash and cash equivalents and increase in outstanding borrowings are primarily attributable to $200.7 million of cash payments for common stock repurchases and $62.5 million of cash expenditures primarily related to retail expansion and the Companys new headquarters facility, partially offset by cash provided by operations.

Inventories at March 31, 2013 increased 23.3 percent to $257.1 million from $208.5 million at March 31, 2012. By brand, UGG inventory increased $42.5 million to $201.5 million at March 31, 2013, Teva inventory increased $0.5 million to $31.3 million at March 31, 2013, Sanuk inventory increased $3.0 million to $15.1 million at March 31, 2013, and the other brands inventory increased $2.6 million to $9.2 million at March 31, 2013.

Full-Year 2013 Outlook

    Based on first quarter results and current visibility, the Company still expects full year revenues to increase approximately 7 percent over 2012 levels.
    The Company still expects full year diluted earnings per share to increase approximately 5 percent over 2012 levels with a gross profit margin of approximately 46.5 percent and an operating margin of approximately 12.5 percent.

Second Quarter Outlook

    The Company currently expects second quarter 2013 revenue to be approximately flat with 2012.
    The Company currently expects to report a second quarter 2013 diluted loss per share of approximately $(1.10) compared to the diluted loss per share of $(0.53) reported in the second quarter of 2012.
    As a reminder, a significant amount of our operating expenses are fixed and spread evenly on an absolute dollar basis throughout each quarter. This includes the costs associated with the 24 new stores that were not open until the second half of 2012. Therefore, we expect our earnings to decline in the first half of 2013 as compared to the first half of 2012, which are typically our lowest volume sales quarters, and increase over 2012 in the back half of the year.