Deckers Outdoor Corporation Reports Fourth Quarter and Fiscal 2012 Financial Results

  Deckers Outdoor Corporation Reports Fourth Quarter and Fiscal 2012 Financial
  Results

        Fourth Quarter Sales Increased 2.2% to a Record $617.3 Million
      Company Reports Fourth Quarter Diluted Earnings Per Share of $2.77
         Fiscal 2012 Sales Increased 2.7% to a Record $1.414 Billion
       Company Reports Fiscal 2012 Diluted Earnings Per Share of $3.45

Business Wire

GOLETA, Calif. -- February 28, 2013

Deckers Outdoor Corporation (NASDAQGS: DECK) today announced financial results
for the fourth quarter and fiscal year ended December 31, 2012.

Fourth Quarter Review

  *Net sales increased 2.2% to a record $617.3 million compared to $603.9
    million for the same period last year.
  *Gross margin was 46.3% compared to 51.0% for the same period last year.
  *Diluted earnings per share was $2.77 compared to $3.18 for the same period
    last year, which takes into account repurchases of the Company’s common
    stock under its stock repurchase program.
  *UGG® brand sales increased 2.9% to $584.8 million compared to $568.5
    million for the same period last year.
  *Sanuk® brand sales increased 39.2% to $15.3 million compared to $11.0
    million for the same period last year.
  *Teva® brand sales decreased 29.5% to $13.7 million compared to $19.4
    million for the same period last year.
  *Retail sales increased 37.1% to $135.5 million compared to $98.8 million
    for the same period last year; same store sales decreased 3.4% for the
    thirteen weeks ending December 30, 2012 compared to the thirteen weeks
    ending January 1, 2012.
  *eCommerce sales increased 30.6% to $87.6 million compared to $67.1 million
    for the same period last year.
  *Domestic sales decreased 2.1% to $446.7 million compared to $456.3 million
    for the same period last year.
  *International sales increased 15.6% to $170.5 million compared to $147.6
    million for the same period last year.

Fiscal 2012 Review

  *Net sales increased 2.7% to a record $1.414 billion compared to $1.377
    billion last year.
  *Gross margin was 44.7% compared to 49.3% last year.
  *Diluted earnings per share was $3.45 compared to $5.07 last year, which
    takes into account repurchases of the Company’s common stock under its
    stock repurchase program.
  *UGG brand sales decreased 1.5% to $1.184 billion compared to $1.202
    billion last year.
  *Sanuk brand net sales were $94.0 million for the fiscal year ending
    December 31, 2012 and were $26.6 million for the six months commencing on
    July 1, 2011, the acquisition date, and ending December 31, 2011.
  *Teva brand sales decreased 7.4% to $115.5 million compared to $124.8
    million last year.
  *Retail sales increased 30.1% to $246.0 million compared to $189.0 million
    last year; same store sales decreased 3.4% for the 52 weeks ending
    December 30, 2012 compared to the 52 weeks ending January 1, 2012.
  *eCommerce sales increased 22.6% to $130.6 million compared to $106.5
    million last year.
  *Domestic sales increased 2.9% to $973.0 million compared to $945.1 million
    last year.
  *International sales increased 2.1% to $441.4 million compared to $432.2
    million last year.

“There are several aspects of our fourth quarter performance that we believe
underscore the health and relevancy of the UGG brand,” stated Angel Martinez,
President, Chief Executive Officer and Chair of the Board of Directors. “We
experienced strong sales for the UGG brand on our eCommerce websites while at
the same time it was widely reported that “UGG” was one of the most searched
terms on the internet during the holiday season. Our fourth quarter retail
store performance improved versus third quarter trends, while at the same
time, weekly sell-through in our domestic wholesale channel accelerated as the
fourth quarter progressed culminating in a period of robust full-price selling
in late December 2012. While cancellations were higher as a result of the late
start to the season, we believe the improved trends we witnessed as
temperatures got colder helped our customer account base with improved
inventory levels versus a year ago. In the U.K., wholesale sales grew double
digits as better than expected sell-through resulted in a meaningful level of
reorders during the quarter. Lastly, we are pleased with the performance of
the Sanuk brand as demonstrated by double digit sales growth in the fourth
quarter.”

Division Summary

UGG Brand

UGG brand net sales for the fourth quarter increased 2.9% to $584.8 million
compared to $568.5 million for the same period last year. The increase in
sales was driven by higher sales from new retail store openings and an
increase in global eCommerce sales, partially offset by lower domestic and
international wholesale sales and a decline in same store sales. For the full
year, UGG brand net sales decreased 1.5% to $1.184 billion compared to $1.202
billion last year.

Sanuk Brand

Sanuk brand net sales for the fourth quarter increased 39.2% to $15.3 million
compared to $11.0 million for the same period last year. The increase in sales
was primarily attributable to higher domestic wholesale and eCommerce sales.
Sanuk brand net sales were $94.0 million for the fiscal year ending December
31, 2012 and were $26.6 million for the six months commencing on July 1, 2011,
the acquisition date, and ending December 31, 2011.

Teva Brand

Teva brand net sales for the fourth quarter decreased 29.5% to $13.7 million
compared to $19.4 million for the same period last year. The sales decline was
driven primarily by a decrease in international distributor sales. For the
full year, Teva brand sales decreased 7.4% to $115.5 million compared to
$124.8 million last year.

Other Brands

Combined net sales of the Company’s other brands decreased 29.6% to $3.5
million for the fourth quarter compared to $5.0 million for the same period
last year. The decrease in sales was primarily attributable to the impact of
phasing out the Simple® brand, which we ceased distributing at the end of
2011. For the full year, combined net sales of the Company’s other brands
decreased 11.4% to $21.3 million compared to $24.1 million last year.
Excluding the impact of the Simple brand, combined net sales of the Company’s
other brands increased 43.2% to $3.5 million for the fourth quarter compared
to $2.5 million for the same period last year and full year combined net sales
increased 69.4% to $21.2 million.

Retail Stores

Sales for the global retail store business, which are included in the brand
sales numbers above, increased 37.1% to $135.5 million for the fourth quarter
compared to $98.8 million for the same period last year. This increase was
driven by 30 new stores opened after the fourth quarter of 2011, partially
offset by a same store sales decrease of 3.4% for the thirteen weeks ending
December 30, 2012 compared to the thirteen weeks ending January 1, 2012. For
the full year, sales for the retail store business increased 30.1% to $246.0
million compared to $189.0 million last year.

eCommerce

Sales for the global eCommerce business, which are included in the brand sales
numbers above, increased 30.6% to $87.6 million for the fourth quarter
compared to $67.1 million for the same period last year. The sales increase
was driven primarily by strong domestic and international sales for the UGG
brand, increased domestic sales of the Sanuk brand, plus the addition of new
international eCommerce websites. For the full year, sales for the eCommerce
business increased 22.6% to $130.6 million compared to $106.5 million last
year.

Stock Repurchase Program

During the fourth quarter of 2012, the Company repurchased approximately
932,000 shares of its common stock, at an average price per share of $38.64,
for a total of $36.0 million under its stock repurchase program. This brings
the Company’s total stock repurchases over the past year to $220.7 million. As
of December 31, 2012, the Company had $79.3 million authorized repurchase
funds remaining under its $200.0 million stock repurchase program announced in
July 2012. Depending on market conditions and other factors, such repurchases
may be commenced or suspended at any time without prior notice.

Balance Sheet

At December 31, 2012, cash and cash equivalents were $110.2 million compared
to $263.6 million at December 31, 2011. The Company had $33.0 million in
outstanding borrowings under its credit facility at December 31, 2012 and no
outstanding borrowings at December 31, 2011. The decrease in cash and cash
equivalents and the increase in outstanding borrowings are primarily
attributable to $220.7 million of cash payments for stock repurchases and
$61.6 million of cash expenditures primarily related to retail expansion and
the Company’s new headquarters facility, offset in part by cash provided by
operations.

Inventories at December 31, 2012 increased 18.5% to $300.2 million from $253.3
million at December 31, 2011. By brand, UGG inventory increased $46.5 million
to $248.3 million at December 31, 2012, Teva inventory decreased $1.4 million
to $27.8 million at December 31, 2012, Sanuk inventory decreased $1.6 million
to $14.5 million at December 31, 2012, and the other brands’ inventory
increased $3.4 million to $9.6 million at December 31, 2012.

Full-Year 2013 Outlook

  *Based upon current visibility, the Company expects full year revenues to
    increase approximately 7% over 2012 levels.
  *The Company expects full year diluted earnings per share to increase
    approximately 5% over 2012 levels. This guidance assumes a gross profit
    margin of approximately 46.5% and an operating margin of approximately
    12.5%.
  *The Company expects full year UGG brand revenues to increase approximately
    4% over 2012 levels.
  *The Company expects full year Teva brand revenues to increase
    approximately 6% over 2012 levels.
  *The Company expects full year Sanuk brand revenues to increase
    approximately 15% over 2012 levels.
  *Combined full year net sales of the Company’s other brands are expected to
    be approximately $40 million.
  *Fiscal 2013 guidance also assumes that the Company’s effective tax rate
    will be approximately 32%.

First Quarter Outlook

  *The Company currently expects first quarter 2013 revenues to remain flat
    as compared to first quarter 2012 levels, and expects to report a first
    quarter 2013 diluted loss per share of approximately $(0.12) compared to a
    diluted earnings per share of $0.20 reported in the first quarter of 2012.
  *As a reminder, a significant amount of our operating expenses are fixed
    and spread evenly on an absolute dollar basis throughout each quarter.
    This includes the costs associated with the 24 new stores that were not
    open until the second half of 2012. Therefore, we expect our earnings to
    decline in the first half of 2013 as compared to the first half of 2012,
    which are typically our lowest volume sales quarters, and increase over
    2012 in the back half of the year.

Mr. Martinez concluded, “We exited a very challenging year with valuable
insights that we believe will serve the Company well in 2013 and beyond. We’ve
made modifications to the UGG brand footwear collections to broaden
accessibility, reduce exposure to sheepskin price fluctuations, and better
bridge the summer and holiday selling seasons. We’ve adjusted receipts and
reduced future purchase commitments as we continue to work diligently to
better align inventory and sales growth. At the same time, we’re making
strategic investments that we believe are integral to our long-term success.
These include expanding our global retail footprint, adding key personnel to
our Asian subsidiaries, and enhancing our sales and marketing programs. We
believe continued focus on the success of the Sanuk brand in 2013 will help
improve overall margins. As always, creating shareholder value remains our top
priority and we believe the combination of our growth strategies and recent
share repurchases will yield positive returns.”

Conference Call Information

The Company’s conference call to review fourth quarter 2012 results will be
broadcast live over the internet today, Thursday, February 28, 2013 at 4:30 pm
Eastern Time. The broadcast will be hosted at www.deckers.com. You can access
the broadcast by clicking on the “Investors” tab and then clicking on the
microphone icon on the right side of the screen. The broadcast will be
available for at least 30 days following the conference call. You can also
access the broadcast at www.earnings.com.

About the Company

Deckers Outdoor Corporation strives to be a premier lifestyle marketer that
builds niche brands into global market leaders by designing and marketing
innovative, functional and fashion-oriented footwear developed for both high
performance outdoor activities and everyday casual lifestyle use. UGG®
Australia, Teva®, Sanuk®, TSUBO®, Ahnu®, and MOZO® are registered trademarks
of Deckers Outdoor Corporation.

Forward Looking Statements

This press release contains “forward-looking statements” within the meaning of
Section27A of the Securities Act of 1933, as amended, and Section21E of the
Securities Exchange Act of 1934, as amended, that concern matters that involve
risks and uncertainties that could cause actual results to differ materially
from those anticipated or projected in the forward-looking statements. These
forward-looking statements are intended to qualify for the safe harbor from
liability established by the Private Securities Litigation Reform Act of 1995.
All statements other than statements of historical fact contained in this
press release, including statements regarding our future financial performance
and business strategies, are forward-looking statements. We have attempted to
identify forward-looking statements by using words such as “anticipate,”
“believe,” “estimate,” “expect,” “intend,” “may,” “project,” “plan”,
“predict”, “should,” “will,” and similar expressions, or the negative of these
expressions, as they relate to us, our management and our industry, to
identify forward-looking statements. We have based our forward-looking
statements on our current expectations and projections about trends affecting
our business and industry and other future events. Although we do not make
forward-looking statements unless we believe we have a reasonable basis for
doing so, we cannot guarantee their accuracy. As a result, actual results may
differ materially from the results stated in or implied by our forward-looking
statements. Some of the risks, uncertainties and assumptions that may cause
actual results to differ from these forward-looking statements include, but
are not limited to: changes in economic or market conditions; the financial
success of our customers and the risk of losing one or more of our key
customers; our ability to adequately protect our intellectual property rights
and deter counterfeiting; the sensitivity of our sales to seasonality and the
effect of weather conditions; the quality and price of raw materials, most
notably sheepskin; our ability to realize returns on our new and existing
retail stores; our ability to accurately forecast consumer demand; our ability
to anticipate fashion trends; our ability to successfully implement our growth
strategies, including enhancing the position of our brands and expanding our
distribution channels; the impairment of our goodwill and other intangible
assets; our dependence on independent manufacturers located outside of the
U.S., and the challenge of maintaining a continuous supply of quality finished
goods; risks of conducting business outside the U.S., including foreign
currency and global liquidity risks; our ability to protect sensitive customer
and company information and prevent the failure or interruption of key
business processes; our ability to attract and retain key personnel; the loss
of our warehouses; the international markets in which we sell our products are
subject to a variety of laws and political and economic risks; risks related
to international trade, import regulations and security procedures, liquidity
and market risks for our cash and cash equivalents; risks associated with our
revolving credit facility, including negative covenants that may restrict our
ability to take certain actions; tax laws applicable to our business are very
complicated and we could be subject to additional income tax liabilities; our
ability to compete effectively with our competition; the effect of existing
and future litigation on our business; and the volatility of the price of our
common stock. Certain of these risks and uncertainties are more fully
described in the section entitled “Risk Factors” in our Annual Report on Form
10-K for the fiscal year ended December 31, 2011, which we filed with the
Securities and Exchange Commission, or the SEC, on February 29, 2012, as well
as in our other filings with the SEC. In addition, actual results may differ
as a result of additional risks and uncertainties of which we are currently
unaware or which we do not currently view as material to our business.

You are cautioned not to place undue reliance on forward-looking statements
contained in this press release, which speak only as of the date of this press
release. You should read this press release with the understanding that our
future results may be materially different from what we currently expect. We
qualify all of our forward-looking statements by these cautionary statements
and we expressly disclaim any intent or obligation to update any
forward-looking statements after the date hereof to conform such statements to
actual results or to changes in our opinions or expectations, except as
required by applicable law or the rules of the NASDAQ Stock Market.

DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)
                                                            
                                                                  
                                                 December 31,     December 31,
               Assets                            2012             2011
                                                                  
Current assets:
    Cash and cash equivalents                  $ 110,247          263,606
    Trade accounts receivable, net               190,756          193,375
    Inventories                                  300,173          253,270
    Prepaid expenses                             14,092           8,697
    Other current assets                         59,028           84,540
    Deferred tax assets                          17,290          14,414     
        Total current assets                     691,586          817,902
                                                                  
Property and equipment, net                      125,370          90,257
Goodwill                                         126,267          120,045
Other intangible assets, net                     98,423           94,449
Deferred tax assets                              13,372           13,223
Other assets                                     13,046          10,320     
                                                                  
        Total assets                           $ 1,068,064       1,146,196  
                                                                  
               Liabilities and Stockholders'
               Equity
                                                                  
Current liabilities:
    Short-term borrowings                      $ 33,000           -
    Trade accounts payable                       133,457          110,853
    Accrued payroll                              15,896           32,594
    Other accrued expenses                       59,597           57,744
    Income taxes payable                         25,067          30,888     
        Total current liabilities                267,017          232,079
                                                                  
Long-term liabilities                            62,246           72,687
                                                                  
Stockholders' equity:
Deckers Outdoor Corporation stockholders'
equity:
    Common stock                                 344              387
    Additional paid-in capital                   139,046          144,684
    Retained earnings                            600,811          692,595
    Accumulated other comprehensive loss         (1,400     )     (1,730     )
        Total Deckers Outdoor Corporation        738,801          835,936
        stockholders' equity
Noncontrolling interest                          -               5,494      
        Total equity                             738,801         841,430    
                                                                  
        Total liabilities and equity           $ 1,068,064       1,146,196  
                                                                  

DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(Unaudited)
(Amounts in thousands, except for per share data)
                                                          
                                                                   
                       Three-month period          Twelve-month period ended
                       ended
                       December 31,                December 31,
                       2012          2011          2012            2011
                                                                   
Net sales            $ 617,264       603,852     $ 1,414,398       1,377,283
Cost of sales          331,270      296,100      782,244        698,288   
  Gross profit         285,994       307,752       632,154         678,995
                                                                   
Selling, general
and administrative     141,880      130,972      445,206        394,157   
expenses
  Income from          144,114       176,780       186,948         284,838
  operations
                                                                   
Other expense          2,803        (293    )     2,830          (424      )
(income), net
  Income before        141,311       177,073       184,118         285,262
  income taxes
                                                                   
Income tax expense     43,254       49,865       55,104         83,404    
  Net income           98,057        127,208       129,014         201,858
                                                                   
Other
comprehensive
(loss) income, net
of tax
  Unrealized gain
  (loss) on            313           (178    )     (633      )     (931      )
  foreign currency
  hedging
  Foreign currency
  translation          (1,410  )     (999    )     963            (1,952    )
  adjustment
     Total other
     comprehensive     (1,097  )     (1,177  )     330            (2,883    )
     (loss) income
  Comprehensive      $ 96,960       126,031    $ 129,344        198,975   
  income
                                                                   
Net income
attributable to:
  Deckers Outdoor      98,057        124,729       128,866         199,052
  Corporation
  Noncontrolling       -            2,479        148            2,806     
  interest
                     $ 98,057       127,208    $ 129,014        201,858   
                                                                   
Comprehensive
income
attributable to:
  Deckers Outdoor      96,960        123,552       129,196         196,169
  Corporation
  Noncontrolling       -            2,479        148            2,806     
  interest
                     $ 96,960       126,031    $ 129,344        198,975   
                                                                   
Net income per
share attributable
to Deckers
Outdoor
Corporation common
stockholders:
  Basic              $ 2.81          3.23        $ 3.49            5.16
  Diluted            $ 2.77         3.18       $ 3.45           5.07      
                                                                   
Weighted-average
common shares
outstanding:
  Basic                34,930        38,633        36,879          38,605
  Diluted              35,373       39,188       37,334         39,265    
                                                                             

Contact:

Deckers Outdoor Corporation
Tom George, 805-967-7611
Chief Financial Officer
or
Investor Relations:
ICR
Brendon Frey, 203-682-8200
 
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