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
Deckers Outdoor Corporation Reports Fourth Quarter and Fiscal 2012 Financial Results
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