Deckers Beats Street in Q1, Ugg Sales Down On FX Pressure

Goleta, Calif.-based Deckers Brands posted a mixed first quarter with revenues topping analysts’ forecasts but slumping sales at brands Ugg and Sanuk dragged down margins contributing to a net loss in the quarter. The Ugg declines, the company said, are attributable to foreign currency pressures and decreases in global direct-to-consumer sales stemming from lower tourist traffic.

Slower tourism—in key markets such as Hawaii, Las Vegas and New York—had already plagued the firm in Q4.

Teva brand however, saw a 6.8 percent increase in sales for the quarter while the firms other brands—Hoka One One and Ahnu—had a combined increase of 86 percent in net sales to $24 million. That combined increase was attributable mostly to Hoka’s $9.8 million sales jump, the company said.

Wholesale and distributor sales were down slightly in the quarter—increasing scarcely on a constant-currency basis—while direct-to-consumer, domestic and international showed modest gains.

Net Income: Net losses for the first quarter, ended June 30, 2015, totaled $47 million, compared to a net loss of $37 million in the comparable quarter.

EPS: Diluted loss per share was $1.43 compared to a diluted loss per share of $1.07 in the same period last year.

Net Revenue: Net sales increased 4.5 percent to $221 million on a constant currency basis compared to $211.5 million for the same period last year. On a reported basis, net sales increased 1.1 percent.

Hit, Miss or Beat: Deckers beat Wall Street’s estimates for both revenues and EPS in Q1. Analysts polled by Yahoo Finance had predicted diluted loss per share of $1.49 and revenues of $213.5 million.

Executive Insights: “Our efforts to diversify our product lines, distribution channels and global revenue streams are creating a stronger foundation to support sustainable growth,” said Angel Martinez, Deckers’ CEO, in a release. “At the same time, our enhanced omnichannel capabilities are giving us greater insight into our consumers and are allowing us to deliver a full brand experiences across all touch points. Looking ahead, we believe our merchandise and marketing strategies have us well positioned for a successful fall/winter selling season, which combined with moderating expense growth and share repurchases, should generate increased value for our shareholders this year and beyond.”

Looking Ahead: The Company expects fiscal 2016 constant-currency revenues of $2.01 billion, a 10.5 percent gain over the twelve-month period ended March 31, 2015. On a reported basis, revenues are expected to be $1.96 billion, or an increase of 8 percent.

Gross profit margin is expected to be approximately 48 percent, down 30 basis points from fiscal 2015 as a result of expectations regarding a stronger U.S. dollar, partially offset by lower input costs and favorable changes in the company’s channel mix.

SG&A expense as a percentage of sales is projected to be approximately 35.8 percent, compared to 36 percent in fiscal 2015.

The company expects fiscal 2016 diluted earnings per share to be approximately $5.68 on a constant currency basis, reflecting an increase of 22 percent over the twelve-month period ended March 31, 2015. On a reported basis, earnings per share are expected to be $5.15, or an increase of 10.5 percent. The increase in EPS, from its initial outlook, reflects a lower share count due to the shares repurchased in the first quarter fiscal 2016, the company said.

Joules SS22 Sponsored By Joules

Helping Families Spend Quality Time Outdoors

Joules delivers vibrant prints and reliable product to encourage everyone to get outdoors 'whatever the weather.'
Learn More

Access exclusive content