Deckers Brands on Thursday reported diluted earnings per share for the fiscal fourth quarter ended March 31 of 82 cents, up from 66 cents a year ago, and non-GAAP diluted earnings per share of 85 cents, up from 50 cents last year and ahead of Wall Street’s estimates by 79 cents.

Hoka One One was the only brand to report a sales gain for the company in Q4, as Ugg, Teva and Sanuk all saw revenues decline.

Companywide, Deckers reported net sales $394.1 million, down 1.6 percent to compared to the year-ago period (down 1.3 percent on a constant currency basis) but ahead of Wall Street’s estimates by $15.3 million.

“Fiscal 2019 represented another successful year for the Deckers organization, surpassing the milestone of $2.0 billion in revenue and doing so with exceptional levels of profitability, while achieving our long-range targets a year ahead of schedule,” said Dave Powers, president and CEO. “As we move forward in our strategic plan, we will maintain focus on positioning our brands for the future by enhancing our relationship with consumers, continuing to deliver innovative product solutions, and building brand awareness and strength across global markets.”

Fourth Quarter Fiscal 2019 Financial Review

  • Net sales decreased 1.6 percent to $394.1 million compared to $400.7 million for the same period last year. On a constant currency basis, net sales decreased 1.3 percent.
  • Gross margin was 51.6 percent compared to 48.0 percent for the same period last year.
  • SG&A expenses were $171.7 million compared to $174.1 million for the same period last year. Non-GAAP SG&A expenses were $170.4 million this year compared to $172.5 million last year.
  • Operating income was $31.6 million compared to $18.3 million for the same period last year. Non-GAAP operating income was $32.9 million this year compared to $19.9 million last year.
  • Diluted earnings per share was $0.82 compared to $0.66 for the same period last year. Non-GAAP diluted earnings per share was $0.85 this year compared to $0.50 last year.

Full Year Fiscal 2019 Financial Review

  • Net sales increased 6.2 percent to $2.020 billion compared to $1.903 billion for the same period last year. On a constant currency basis, net sales increased 5.8 percent.
  • Gross margin was 51.5 percent compared to 48.9 percent for the same period last year.
  • SG&A expenses were $712.9 million compared to $709.1 million for the same period last year.
    Non-GAAP SG&A expenses were $713.3 million this year compared to $695.2 million last year.
  • Operating income was $327.3 million compared to $222.6 million for the same period last year.
    Non-GAAP operating income was $327.0 million this year compared to $236.5 million last year.
  • Diluted earnings per share was $8.84 compared to $3.58 for the same period last year.
    Non-GAAP diluted earnings per share was $8.84 this year compared to $5.74 last year.

Brand Summary

  • UGG brand net sales for the fourth quarter decreased 7.2 percent to $239.0 million compared to $257.5 million for the same period last year. For fiscal year 2019, net sales increased 1.7 percent to $1.533 billion.
  • HOKA ONE ONE brand net sales for the fourth quarter increased 33.2 percent to $67.1 million compared to $50.4 million for the same period last year. For fiscal year 2019, net sales increased 45.4 percent to $223.1 million.
  • Teva brand net sales for the fourth quarter decreased 3.8 percent to $52.9 million compared to $55.0 million for the same period last year. For fiscal year 2019, net sales increased 2.9 percent to $137.4 million.
  • Sanuk brand net sales for the fourth quarter decreased 11.7 percent to $31.5 million compared to $35.6 million for the same period last year. For fiscal year 2019, net sales decreased 9.1 percent to $82.6 million.

 Channel Summary (included in the brand sales numbers above)

  • Wholesale net sales for the fourth quarter increased 6.4 percent to $237.5 million compared to $223.1 million for the same period last year. For fiscal year 2019, wholesale net sales increased 9.9 percent to $1.305 billion.
  • DTC net sales for the fourth quarter decreased 11.8 percent to $156.6 million compared to $177.6 million for the same period last year. DTC comparable sales for the fourth quarter decreased 0.5 percent over the same period last year. For fiscal year 2019, DTC net sales decreased 0.1 percent to $715.0 million and DTC comparable sales increased 1.9 percent.

Geographic Summary (included in the brand and channel sales numbers above)

  • Domestic net sales for the fourth quarter increased 1.2 percent to $252.0 million compared to $249.0 million for the same period last year. For fiscal year 2019, domestic net sales increased 8.9 percent to $1.278 billion.
  • International net sales for the fourth quarter decreased 6.3 percent to $142.1 million compared to $151.7 million for the same period last year. For fiscal year 2019, international net sales increased 1.8 percent to $742.1 million.

Balance Sheet (March 31, 2019 as compared to March 31, 2018)

  • Cash and cash equivalents were $589.7 million compared to $430.0 million.
  • Inventories were $278.8 million compared to $299.6 million.
  • Outstanding borrowings were $31.5 million compared to $32.1 million.

Stock Repurchase Program

During the fourth quarter, the Company did not repurchase any shares of its common stock.  As of March 31, 2019, the Company had $350 million remaining under its stock repurchase authorizations.

Full Year Fiscal 2020 Outlook for the Twelve Month Period Ending March 31, 2020

  • Net sales are expected to be in the range of $2.095 billion to $2.120 billion.
  • Gross margin is expected to be in the range of 50.0 percent to 50.5 percent.
  • SG&A expenses as a percentage of sales are projected to be at or slightly better than 36.0 percent.
  • Operating margin is expected to be in the range of 14.2 percent to 14.5 percent.
  • Effective tax rate is expected to be approximately 21 percent.
  • Non-GAAP diluted earnings per share expected to be in the range of $8.20 to $8.40.
  • The earnings per share guidance excludes any charges that may occur from additional store closures, tax reform, organizational changes and other one-time or non-recurring amounts. It also does not assume any impact from additional share repurchases.

First Quarter Fiscal 2020 Outlook for the Three Month Period Ending June 30, 2019

  • Net sales are expected to be in the range of $250.0 million to $260.0 million.
  • Non-GAAP diluted loss per share expected to be in the range of a ($1.25) to ($1.15).
  • The earnings per share guidance excludes any charges that may occur from additional store closures, tax reform, organizational changes and other one-time or non-recurring amounts. It also does not assume any impact from additional share repurchases.

Photo courtesy Hoka One One