“We believe that the overall guidance for the balance of the year may prove conservative,” Sterne Agee Analyst Sam Poser wrote in an earnings note. “We do not believe that the Ugg mania of [the past] will return. However, if the fall ’14 offerings are on point from a fashion perspective, Ugg Pure should pay off … It offers a more stable construction platform and takes color better than natural shearling.”
While Susquehanna Financial analyst Chris Svezia agreed that the revised guidance could prove overly cautious, he said the company still faces challenges as it tries to revive sales in the second half of the year.
“We also believe there are risks given that virtually all of the earnings is weighted to the fourth quarter and very weather dependent,” he wrote in a note. “ Ugg inventories are much cleaner moving into [the back half of the year] than in the recent past, but retailers clearly remain cautious and any hint of another warm winter could bring risk.”
The Goleta, Calif.-based firm raised its guidance and now expects full-yearearnings per share to increase 8 percent over 2012. Sales are also expected to rise 8 percent.
For its second quarter ended June 30, the company reported a net loss of $29.3 million, or 85 cents a share, compared with a loss of $20.1 million, or 53 cents, for the year-ago period. Net sales during the quarter declined 2.5 percent to $170.1 million, versus $174.4 million a year ago.
Analysts polled by Yahoo Finance had expected a loss of $1.04 per share on revenue of $179.1 million.
For his part, Chairman, President and CEO Angel Martinez said the firm is undergoing a transitional period and he remains optimistic about the coming months.
“We are pleased with the second quarter, and while it is our smallest quarter, it was an important transition period for the Ugg brand that has positioned the company for a good back half of the year,” Martinez said in a statement. “We experienced solid sell-through of the Ugg brand’s spring line in our wholesale and e-commerce channels, and we believe the consumer response to the initial deliveries of our new transitional fall product has been very positive.”
Martinez continued: “While less-than-favorable weather negatively impacted sandal sales for the Teva and Sanuk brands, we reacted quickly to deliver bottom-line results that were better than planned. We remain optimistic about our ability to expand sales and margins as we head into our highest-volume sales quarters, and we continue to be excited about the many long-term growth opportunities that we believe exist for our business.”
During the quarter, Ugg sales decreased 6.9 percent to $100.4 million; Teva declined 8.4 percent to $31.2 million; and Sanuk increased 7.5 percent to $30.1 million.