Deckers Beats Street to Show Turnaround Potential in Q4

While the Goleta, Calif.-based company behind Ugg brand and Teva suffered soft demand in Q3, its fourth quarter results shows evidence of increasing momentum. Deckers Brands served up a street beat and gains in sales and profits—compared to a net loss in the comparable quarter. Looking ahead, the company’s CEO Angel Martinez said he is committed “to leveraging the investments made over the past several years” which “along with [the] current share repurchase authorization, will help to partially offset the impact of the stronger U.S. dollar in fiscal 2016.”

Net Income: The company’s net income, for the fourth quarter ended March 31, 2015, rose to $1.4 million compared to the same year-ago quarter’s net loss of $2.7 million.

EPS: Earnings per diluted share were also up year-over-year to 4 cents compared to a loss of 8 cents per diluted share in the prior year’s same quarter.

Net Revenue: Net sales increased 16 percent to $340.6 million compared to $294.7 million for the same period last year. On a constant currency basis, net sales increased 19 percent.

Hit, Miss or Beat: Deckers beat the Street on both revenues and EPS. Analysts polled by Yahoo Finance had predicted revenues of $321.2 million and EPS of 0 cents (break-even). The high estimate of the 23 analysts polled was 4 cents per diluted share while the low estimate was a loss of 3 cents per share.

Executive Insights: “We ended fiscal 2015 with solid momentum highlighted by approximately 16 percent revenue growth in the fourth quarter despite unfavorable foreign exchange rate headwinds…”

“The work we’ve done to continue to excite our consumers with compelling new products and to continue to connect with them on a more frequent and personalized basis through our advanced omnichannel capabilities is fueling increased demand across our brand portfolio…”

“…we believe the shift in the Ugg brand’s fall order book towards more non-core collections such as specialty classics, weather, and casual boots better aligns with current trends and positions us for a successful fall/holiday season…”—Angel Martinez, Deckers’ CEO in a release.

Looking Ahead: The company said it expects fiscal 2016 constant currency revenues to be approximately $2.01 billion, a 10.5 percent increase over the prior year. 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 expenses as a percentage of sales are projected to be approximately 35.8 percent compared to 36 percent in fiscal 2015. The company expects diluted earnings per share to be approximately $5.60 on a constant currency basis, reflecting an increase of 20 percent over the twelve-month period ended March 31, 2015. On a reported basis, earnings per share are expected to be $5.09, or an increase of 9 percent.

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