Deckers Outdoor Corporation reported revenues improved 24.3 percent in the fiscal first quarter to $211.5 million with strong double-digits at Ugg, Teva and Sanuk.

First Quarter Fiscal Year 2015 Financial Review

  • Net sales increased 24.3 percent to a record $211.5 million compared to $170.1 million for the same period last year.
  • Gross margin was 41.0 percent compared to 41.1 percent for the same period last year.
  • Diluted loss per share was $(1.07) compared to $(0.85) for the same period last year.
  • UGG brand sales increased 22.8 percent to $123.3 million compared to $100.4 million for the same period last year.
  • Teva brand sales increased 25.7 percent to $39.3 million compared to $31.2 million for the same period last year.
  • Sanuk brand sales increased 19.6 percent to $36.0 million compared to $30.1 million for the same period last year.
  • Direct-to-Consumer comparable sales, which include worldwide retail same store sales and worldwide comparable E-Commerce sales, increased 10.0 percent over the same period last year.
  • Retail sales increased 29.4 percent to $42.0 million compared to $32.5 million for the same period last year.
  • E-Commerce sales increased 43.7 percent to $15.4 million compared to $10.7 million for the same period last year.
  • Domestic sales increased 20.1 percent to $132.3 million compared to $110.1 million for the same period last year.
  • International sales increased 32.1 percent to $79.2 million compared to $60.0 million for the same period last year.

“We are pleased with the start of our new fiscal year,” commented Angel Martinez, president, chief executive officer and chair of the board of directors.  “Our strong top-line performance was fueled by consumer demand for our compelling spring collections from the Ugg, Teva, Sanuk and HOKA brands combined with higher initial wholesale shipments of UGG brand fall styles.  Sales trends were once again strongest in our Direct-to-Consumer division and we believe that our Omni-Channel initiatives aimed at elevating the consumer experience, strengthening customer connections and improving service levels continue to yield positive results.  As we head towards our busiest selling season, we believe we are well positioned from a merchandise, marketing and inventory standpoint to capitalize on the opportunities we are creating throughout each of our distribution channels and geographic regions.”

Division Summary

UGG Brand

UGG brand net sales for the first quarter increased 22.8 percent to $123.3 million compared to $100.4 million for the same period last year.  The increase in sales was driven by sales gains across all primary channels, including higher global wholesale and international distributor sales, the sales contribution from new worldwide retail store openings and an increase in global E-Commerce sales, partially offset by a decrease in same store sales.

Teva Brand

Teva brand net sales for the first quarter increased 25.7 percent to $39.3 million compared to $31.2 million for the same period last year.  The increase in sales was driven by sales gains across all primary channels, including higher global wholesale and international distributor sales, an increase in global E-Commerce sales and higher US retail sales.

Sanuk Brand

Sanuk brand net sales for the first quarter increased 19.6 percent to $36.0 million compared to $30.1 million for the same period last year.  The increase in sales was driven by sales gains across all primary channels, including higher global wholesale and international distributor sales, an increase in global E-Commerce sales and higher US retail sales.

Other Brands

Combined net sales of the company's other brands increased 54.5 percent to $12.9 million for the first quarter compared to $8.4 million for the same period last year.  The increase was primarily attributable to a $4.5 million increase in sales for the HOKA ONE ONE® brand compared to the same period last year.

Retail Stores

Sales for the global retail store business, which are included in the brand sales numbers above, increased 29.4 percent to $42.0 million compared to $32.5 million for the same period last year.  This increase was driven by 37 new stores opened after June 30, 2013, partially offset by a same store sales decrease of 2.8 percent for the thirteen weeks ended June 29, 2014 compared to the thirteen weeks ended June 30, 2013.

E-Commerce

Sales for the global E-Commerce business, which are included in the brand sales numbers above, increased 43.7 percent to $15.4 million compared to $10.7 million for the same period last year.  The increase was driven primarily by strong domestic and international sales for the UGG, Teva and Sanuk  brands, plus the domestic launch of the HOKA ONE ONE brand website and the addition of new international E-Commerce websites.  

Balance Sheet

At June 30, 2014, cash and cash equivalents were $158.2 million compared to $49.1 million at June 30, 2013.  The company had $3.2 million in outstanding borrowings under its credit facility at June 30, 2014 compared to $26.0 million at June 30, 2013.  The increase in cash and cash equivalents and the decrease in outstanding borrowings are primarily attributable to cash provided by operations, partially offset by $87.4 million of cash payments for capital assets primarily related to retail expansion, the company's new headquarters facility and the Moreno Valley distribution center.  

Inventories at June 30, 2014 decreased 1.7 percent to $356.0 million from $362.1 million at June 30, 2013.  By brand, UGG inventory decreased 2.2 percent to $304.4 million at June 30, 2014, Teva inventory decreased 24.6 percent to $18.7 million at June 30, 2014, Sanuk inventory increased 11.2 percent to $16.1 million at June 30, 2014, and the other brands' inventory increased 47.6 percent to $16.8 million at June 30, 2014.

Full Fiscal Year 2015 Outlook for the Twelve Month Period Ending March 31, 2015

  • The company now expects fiscal year 2015 revenues to increase approximately 14 percent over the twelve month period ended March 31, 2014, from the previous guidance of 13 percent.
  • The company now expects fiscal year 2015 diluted earnings per share to increase approximately 14.5 percent over the twelve month period ended March 31, 2014, from the previous guidance of 13.5 percent.  This guidance assumes a gross profit margin of approximately 49 percent and an operating margin of approximately 13 percent.
  • The company expects fiscal year 2015 SG&A expenses as a percentage of sales to be approximately 36 percent.  Among other items, these expenses include increased marketing and supply chain costs, investments in IT infrastructure, expenses related to management reorganization, and operating costs associated with opening new stores in 2013 and 2014.
  • The company now expects fiscal year 2015 UGG brand revenues to increase approximately 12 percent over the twelve month period ended March 31, 2014, from the previous guidance of 11 percent.
  • The company expects fiscal year 2015 Teva brand revenues to increase approximately 11 percent over the twelve month period ended March 31, 2014.
  • The company expects fiscal year 2015 Sanuk brand revenues to increase approximately 15 percent over the twelve month period ended March 31, 2014.
  • Combined fiscal year 2015 net sales of the company's other brands are expected to be approximately $82.0 million compared to $48.6 million for the twelve month period ended March 31, 2014.
  • Fiscal year 2015 guidance assumes that the company's effective tax rate will be approximately 29 percent.

Second Quarter Fiscal Year 2015 Outlook for the Three Month Period Ending September 30, 2014

The company expects second quarter 2015 revenues to increase approximately 18 percent over the three month period ended September 30, 2013, and expects to report a second quarter fiscal year 2015 diluted earnings per share of approximately $0.98 compared to a diluted earnings per share of $0.95 reported for the three month period ended September 30, 2013.