Deckers Has Better-Than-Expected Q2, Hires Omnichannel President

Ugg-Boots
An Ugg boot style.
Zappos.

Deckers Brands saw improved sales in its second quarter and surpassed Wall Street’s estimates for revenues and profits.

On Thursday, in addition to its earnings release, the company announced that it has hired former Nike and Puma executive Stefano Caroti as its omnichannel president, effective Nov. 2.

In the second quarter, sales at Ugg remained relatively flat — rising 0.9 percent, to $421.1 million — while Teva’s revenue decreased 13.6 percent and Sanuk’s sales dropped 9 percent.

Combined revenues for the company’s other brands increased 30.5 percent, to $30.6 million, compared with $23.5 million for the same period last year. The jump was mostly attributable to a $6.9 million increase in sales for the Hoka One One brand.

Deckers just announced last week that it will move its Hoka One One team to Deckers’ Goleta, Calif., campus.

The company’s share price was up more than 13 percent in after-hours trading at press time.

Net Income: For the second quarter, ended Sept. 30, 2015, net income declined 3.05 percent year-over-year, to $36.3 million, from the year-ago quarter’s profit of $37.5 million.

EPS: Earnings per diluted share were $1.11, a decline from last year’s same-period diluted EPS of $1.17.

Net Revenue: On a reported basis, net sales rose 1.4 percent, to $486.9 million, from the comparable quarter’s net sales of $480.3 million.

Adjustments: Net sales climbed 5.4 percent, to $506.2 million on a constant-currency basis. Diluted earnings per share increased 21.4 percent, to $1.42, on a constant-currency basis.

Hit, Miss or Beat: Deckers beat Wall Street’s estimates for Q2. Analysts polled by Yahoo Finance had predicted EPS of $1.06 and revenues of $486.8 million.

Executive Insights: “We delivered record second-quarter revenue and continue to track towards achieving our financial objectives for the fiscal year,” said Deckers CEO and Chairman Angel Martinez in a release. “I’m very pleased with our current performance, which wouldn’t have been possible without the strategic investments we’ve made in key areas of the business over the past several years. From omnichannel capabilities and product innovation to marketing and people, we are in the process of transforming the company into a consumer-centric global brand operator positioned to deliver sustainable top-line growth and operating margin expansion. Even during this investment phase, we have continued to demonstrate our commitment to returning value to shareholders by repurchasing more than $417 million of our common stock since 2011. The entire organization is energized as we begin what we believe will be an exciting new chapter in Deckers’ ongoing evolution.”

Looking Ahead: The company increased its EPS outlook and lowered its expectations for SG&A expenses. SG&A expense as a percentage of sales is projected to be 35.5 percent on a reported basis. Diluted EPS are now forecast to be approximately $5.73 on a constant-currency basis, reflecting an increase of 23 percent over the 12-month period ended March 31, 2015. On a reported basis, earnings per share are expected to be approximately $5.18, an increase of 11.2 percent. The rise in earnings per share from the initial outlook reflects a lower share count due to the shares repurchased in the second quarter of fiscal 2016, the company said.