Ugg Parent Crushes Q2 Profit Forecasts

The earnings hot streak continues for Deckers Brands.

The Goleta, Calif.-based company reported second-quarter earnings that topped estimates across the board led by ongoing gains at Hoka One One and a more stable performance at Ugg.

The company — which also owns the Sanuk and Teva shoe brands — said its Q2 profits advanced 50 percent year over year to $74.4 million, or $2.48 per diluted share. On an adjusted basis, profits were $2.38 per diluted share, significantly outpacing analysts’ bets for $1.72 per diluted share.

Net sales also increased 4 percent to $501.9 million, topping market watchers’ estimates for sales of $493.4 million as Hoka One One put up another straight quarter of double-digit gains — climbing 28.4 percent to $52.1 million. Sales at Ugg — which emerged from several quarters of unevenness this year — dipped a modest 1 percent to $396.3 million. Teva sales increased less than 1 percent to $21.5 million and Sanuk decreased 9.4 percent to $13.8 million.

“The continued profitability gains in the Ugg brand and top-line growth within the Hoka One One brand drove second quarter results, as both sales and earnings per share exceeded expectations,” said president and CEO Dave Powers. “Profitability in the second quarter was aided by a 350 basis point increase in gross margin over last year. While a portion of the increase in gross margin came from one-time savings in the quarter, the company continues to execute well on our long-term plan of improving levels of profitability.”

Deckers chief said the firm’s ongoing momentum led management to raise fiscal year 2019 guidance.

The company now expects sales in the range of $1.935 billion to $1.960 billion and adjusted diluted earnings per share between $6.65 to $6.85 — this compares to previous ranges of $1.930 billion to $1.955 billion and  $6.25 to $6.45 respectively.

As of 4:30 p.m. EST, Deckers shares were in the red 2 percent, to $106.76.

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