Deckers Outdoor Corporation saw fourth quarter net sales increase 56.2% to $194.2 million versus $124.4 million last year.  Diluted EPS increased to $2.69 versus 95 cents on a GAAP basis. On a non-GAAP basis excluding the restatement adjustments of $0.3 million, or 2 cents per diluted share, and the impairment charge of $11.0 million, or 85 cents per diluted share, both incurred in the fourth quarter of fiscal 2006, fourth quarter 2007 diluted EPS increased 47.8% over last year.
Total domestic sales increased 54.9% to $177.7 million compared to $114.7 million in the prior year. Total international sales increased 71.1% to $16.5 million compared to $9.7 million last year.


For the fiscal year, net sales increased 47.5% to $448.9 million versus $304.4 million in 2006. Diluted EPS increased to $5.06 versus $2.38 in 2006 on a GAAP basis. On a non-GAAP basis excluding the restatement adjustments of $0.9 million, or 7 cents per diluted share, and the impairment charge of $11.0 million, or 85 cents per diluted share, both incurred in fiscal 2006, fiscal 2007 diluted EPS increased 53.3% over fiscal 2006. Total domestic sales increased 45.3% to $386.6 million versus $266.1 million a year ago. Total international sales increased 62.6% to $62.3 million compared to $38.3 million last year. Cash, cash equivalents and short-term investments increased to $168.1 million compared to $98.9 million a year ago.


Angel Martinez, president and CEO, stated, “Our record fourth quarter results, which underscore the growing popularity of the UGG Brand worldwide, represent a great way to end another strong year for Deckers. During fiscal 2007 we significantly increased sales and diluted earnings per share, consistently exceeded internal and external expectations, and ended the year with more than $168 million in cash, cash equivalents and short-term investments on our balance sheet. From a strategic standpoint, we further diversified the UGG Brand and expanded its selling season year round, repositioned the Teva® Brand as an outdoor, performance-oriented brand, and leveraged the Simple® Brand’s position as the leader in sustainable footwear into broader market opportunities. In addition, we expanded our international presence and grew our Consumer Direct business by opening two new retail stores and enhancing our websites. Looking ahead, we believe our growth prospects have never been more compelling, and we are confident that we will continue to take the right approach toward achieving our long-term objectives and creating value for our shareholders.”

Division Summary


UGG


UGG Brand net sales for the fourth quarter increased 61.8% to $177.7 million versus $109.9 million for the same period a year ago. Consumer demand for the entire women’s fall line, including boots, slippers, casuals and the fashion collection, contributed to the UGG Brand’s better than expected performance. In addition, the expanded men’s and kids’ offerings performed very well. For the full year, UGG Brand sales increased 64.4% to a record $347.6 million versus $211.5 million in 2006.


Teva


Teva Brand net sales for the fourth quarter increased 6.8% to $13.9 million compared to $13.0 million for the same period last year. This increase was primarily driven by solid sell-through of fall product. For the full year, Teva product sales increased 9.2% to $87.9 million compared to $80.5 million in the prior year.


Simple


Simple Brand net sales increased 76.2% to $2.6 million for the fourth quarter compared to $1.5 million for the same period last year. Simple product sales were fueled by strong sell-through of ecoSNEAKS throughout the fourth quarter. For the full year, the Simple Brand’s sales increased 8.2% to $13.5 million compared to $12.5 million a year ago.


Consumer Direct


Sales for the Consumer Direct business, which are included in the brand sales numbers above, increased 84.5% to $36.0 million for the fourth quarter compared to $19.5 million for the same period a year ago. This includes sales of $23.9 million from the company’s eCommerce division and sales of $12.1 million from the company’s seven retail stores. For the full year, sales for the Consumer Direct business increased 78.0% to $63.9 million compared to $35.9 million a year ago. This includes sales of $45.5 million from the company’s eCommerce division and sales of $18.4 million from the company’s seven retail stores.


Full-Year 2008 Outlook


The company introduced a full year revenue growth target of approximately 25% over 2007. The company also introduced its full year diluted earnings per share target of approximately 20% over 2007, based on a gross margin of approximately 45.0% versus 46.2% in 2007.
Fiscal 2008 guidance includes approximately $8.8 million of stock compensation expense.

 

First Quarter Outlook


The company currently expects first quarter 2008 revenue to increase approximately 25% over 2007, and expects first quarter 2008 diluted earnings per share to be the same as or modestly higher than 2007. It is important to note that a significant portion of the company’s operating expenses are fixed and spread evenly, on an absolute dollar basis, throughout each quarter. Therefore, the company expects earnings to grow at a slower rate during the first half of the year, which historically has included its lowest volume sales quarters.

 





















































































































































































































































































































































DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)
(Amounts in thousands, except for per share data)
 
 
  Three-month period ended   Year ended
December 31, December 31,
2007   2006 2007   2006
 
Net sales $ 194,243 124,376 $ 448,929 304,423
Cost of sales 100,593 64,256 241,458 163,692
Gross profit 93,650 60,120 207,471 140,731
 
Selling, general and administrative expenses 36,693 23,305 101,918 73,989
Impairment loss  

 

15,300

 

 

 

15,300
Income from operations 56,957 21,515 105,553 51,442
 
Other (income) expense, net:
Interest income (1,351) (447) (4,855) (2,432)
Interest expense and other, net (412) 166 369 522
Income before income taxes 58,720 21,796 110,039 53,352
 
Income taxes 23,331 9,565 43,602 22,743
 
Net income $ 35,389 12,231 $ 66,437 30,609
 
Net income per share:
Basic $ 2.72 0.97 $ 5.18 2.45
Diluted 2.69 0.95 5.06 2.38
 
Weighted-average shares:
Basic 12,989 12,565 12,835 12,519
Diluted 13,158 12,922 13,129 12,882