Deckers Brands beat Wall Street expectations during its second fiscal quarter, but conservative guidance issued by the company sent share prices spiraling down 7.5 percent at the close of trading Friday.
Net income was $40.7 million, or $1.17 per diluted share, for the period ending Sept. 30. It was a 23 percent increase from the year-ago quarter, when profits were $33.1 million, or 95 cents per share. Analysts had predicted the firm’s earnings per share would be $1.03.
The Goleta, Calif.-based company announced net sales rose 24 percent to $480.3 million, from $386.7 million in the year-ago quarter.
Deckers saw revenue growth in all its brands. Particularly notable was the jump in sales for the newest brand in the portfolio, Hoka One One. Ugg also performed well, with $417.1 million in sales in wholesale and e-commerce, which partially offset a decrease in same-store sales and international distributor revenue. Teva saw international wholesale dip and Sanuk’s domestic wholesale orders slowed, but both posted significant net sales gains.
Analysts were pleased with the second-quarter results, but warned against conservative expectations. Deckers predicts $4.46 diluted earnings per share in the third quarter.
Sterne Agee & Leach Analyst Sam Poser raised expectations for the firm, and now predicts the earnings per share will be $5.08. He also said the holiday and fiscal year guidance were very conservative based on decreasing sheepskin costs and favorable market trends.
“While most of the non-athletic footwear space is directionless as pertains to trends, Ugg, Teva, Ahnu, and Hoka all fit into what we call the retro, classic, comfort trend. UGG and Teva have all three elements. Ahnu and Hoka are comfort brands, and Hoka also benefits from the athletic trends. We expect Ugg to benefit from these trends for the foreseeable future. We expect to see material acceleration in Teva, Hoka, and Ahnu beginning in 4Q15,” Poser wrote in a note.
“Our second-quarter results reaffirm that Deckers Brands is a growth company,” said Angel Martinez, president, CEO and chairman. “We believe that consumers are responding positively to the combination of sharper price points, innovation and enhanced aesthetics.”
The company lifted its guidance for fiscal year 2015 and said it expects revenues to be $1.8 billion, or 15 percent higher than 2014. Initially, the company had predicted a 14 percent increase.
Diluted EPS are forecast to be $4.71, up 15.8 percent over the previous guidance for 14.5 percent.
“We plan to continue to focus on marketing programs and omnichannel initiatives to effectively communicate our product stories and drive increased conversions in our direct-to-consumer channel,” Martinez said. “We believe that we are well positioned for another successful holiday season and, more importantly, to drive growth for many years to come.”