Deckers Outdoor Corporation reported that second quarter net sales increased 67% to $40.5 million compared to $24.3 million in the same period last year. Net earnings for the quarter increased 154% to $5.1 million, compared to net earnings of $2.0 million last year, and diluted earnings per share increased 153% to $0.43 compared to diluted earnings per share of $0.17 in the second quarter of 2003.

For the six months ended June 30, 2004, net sales increased 40% to $84.8 million compared to $60.4 million in the same period last year. Net earnings for the first half of fiscal 2004 increased 69% to $10.5 million, compared to net earnings of $6.2 million last year. Diluted earnings per share increased 69% to $0.91 compared to diluted earnings per share of $0.54 in the first half of fiscal 2003.

Douglas Otto, Chairman & CEO, stated, “These record results were driven by meaningful sales increases across all of our brands combined with continued leverage of our operating expenses. Our ability to grow our top line by 67% and achieve a 153% increase in diluted earnings per share during the quarter underscores the strength of our business, our strong brands, and our high degree of execution. Most importantly, we expect this positive momentum to continue, and we are increasing our guidance for the remainder of the year.”

Including sales from both the wholesale divisions and the Internet and catalog retailing business, Teva sales for the second quarter increased 21% to $27.1 million from $22.4 million in the same period a year ago, while UGG sales were up dramatically to $11.7 million versus $0.4 million last year. Simple sales increased 21% to $1.8 million compared to $1.5 million a year ago. Sales for the Internet and catalog retailing business, which are included in the brand sales numbers above, aggregated approximately $4.9 million for the second quarter of 2004, up 218% from $1.5 million for the second quarter of 2003.

Mr. Otto further commented, “Teva's double digit sales gain during the second quarter capped off a record spring season for the brand which was fueled by strong sales of our core sport sandals across all channels of distribution, as well as increases in our thong business and our expansion into closed toe footwear. We are very encouraged as we head into fall and as we increase penetration in the much larger rugged outdoor market through increased offerings of our Teva closed toe product. UGG revenues were up significantly during spring driven by robust growth at our major retail partners, which reflects the strength of the brand and the continuing heightened demand for UGG product. Furthermore, we announced a licensing agreement for UGG Australia outerwear as we look to further leverage the brand's growing status in the luxury goods sector. Simple sales were up 21%, which represents the brand's strongest quarterly increase in four years, and illustrates the significant progress we have made during the last year. We were particularly pleased with Simple's success this spring in sneakers and sandals and are very excited about our new offering of suede, fleece-lined boots for fall and holiday, as well as the successful re-launch of the clog collection.”

Gross margin for the quarter was 46.6% compared to 48.6% in the second quarter of last year, due in part to the significant increase in UGG sales during the quarter, which generally carry a lower gross margin than Teva, an increased impact of closeout sales, and the non-recurrence of last year's gain caused by the favorable impact of selling in Euros in the European markets in 2003, whereas all sales are denominated in U.S. dollars in 2004. Selling, general and administrative expenses decreased to 23.8% of net sales, compared to 31.4% in the second quarter of 2003, largely due to the continued leverage of operating costs on the increased sales volume, and a decrease in bad debts and marketing costs during the second quarter. Also, during the second quarter of last year, the Company had $500,000, or $0.03 per diluted share, of litigation income resulting from a European anti-dumping matter. Despite the non-recurrence of this matter, the operating margin improved considerably to 22.9% of sales for the three months ended June 30, 2004 compared to 19.2% for the three months ended June 30, 2003.

During the quarter, Deckers successfully completed a follow-on public stock offering, raising approximately $36 million. With a portion of the net proceeds, the Company repaid all of the outstanding debt previously incurred for the purchase of the worldwide rights to Teva in November 2002. In connection with the early repayment of debt during the second quarter of 2004, the Company incurred approximately $0.7 million, or $0.04 per diluted share, of expenses related to the write-off of financing costs and prepayment fees. As a result of the stock offering and the subsequent repayment of debt, the Company's balance sheet at June 30, 2004 reflects no outstanding long-term debt and approximately $24 million in cash.

Due to the better-than-expected second quarter results and the ongoing strength in our overall business, the Company has increased its guidance for fiscal year 2004. Deckers now anticipates net sales for fiscal year 2004 to range from $182 million to $190 million and expects diluted earnings per share to range from $1.70 to $1.75, up from the previous guidance of $1.42 to $1.51 per share. Deckers currently expects third quarter 2004 net sales to range from $45 million to $49 million and diluted earnings per share to range from $0.33 to $0.36 per share. For the fourth quarter, Deckers currently forecasts net sales to range from $52 million to $56 million and diluted earnings per share to range from $0.45 to $0.47.

Deckers now expects 2004 Teva sales to be $87 million to $89 million, Simple sales to be $9 million to $11 million and UGG sales to be $86 million to $90 million.

Mr. Otto concluded, “We are extremely pleased by our record performance for the first half of fiscal 2004, highlighted by the ongoing strength of Teva, the growing popularity of UGG and the resurgence of Simple. All three of our brands performed well in their respective categories, our balance sheet is clean as a result of our recent public offering, and our prospects are bright. We remain committed to capitalizing on the many opportunities that lie ahead and returning value to our stockholders.”

            DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES
           Condensed Consolidated Statements of Earnings
                           (Unaudited)

                      Three-month period ended  Six-month period ended
                              June 30,                June 30,
                      ------------------------ -----------------------
                             2004        2003        2004        2003
                       ----------- ----------- ----------- -----------

Net sales             $40,546,000  24,342,000  84,818,000  60,444,000
Cost of sales          21,640,000  12,510,000  45,506,000  32,372,000
                       ----------- ----------- ----------- -----------
  Gross profit         18,906,000  11,832,000  39,312,000  28,072,000

Selling, general and
 administrative
 expenses               9,632,000   7,654,000  20,410,000  15,807,000
Litigation income           -----    (500,000)      -----    (500,000)
                       ----------- ----------- ----------- -----------
  Earnings from
   operations           9,274,000   4,678,000  18,902,000  12,765,000

Other expense
 (income):
  Interest, net         1,171,000   1,334,000   2,289,000   2,431,000
  Other                     1,000       1,000      (4,000)    (14,000)
                       ----------- ----------- ----------- -----------
Earnings before income
 tax expense            8,102,000   3,343,000  16,617,000  10,348,000

Income tax expense      3,015,000   1,337,000   6,148,000   4,139,000
                       ----------- ----------- ----------- -----------

Net earnings          $ 5,087,000   2,006,000  10,469,000   6,209,000
                       =========== =========== =========== ===========


Net earnings per
 share:
  Basic               $      0.47        0.21        1.02        0.65
  Diluted                    0.43        0.17        0.91        0.54