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Deckers Outdoor Corporation Reports First Quarter 2013 Financial Results



  Deckers Outdoor Corporation Reports First Quarter 2013 Financial Results

        First Quarter Sales Increased 7.1% to a Record $263.8 Million

      Company Reports First Quarter Diluted Earnings Per Share of $0.03

Business Wire

GOLETA, Calif. -- April 25, 2013

Deckers Outdoor Corporation (NASDAQGS: DECK) today announced financial results
for the first quarter ended March 31, 2013.

First Quarter Review

  * Net sales increased 7.1% to a record $263.8 million compared to $246.3
    million for the same period last year.
  * Gross margin was 46.8% compared to 46.0% for the same period last year.
  * Diluted earnings per share was $0.03 compared to $0.20 for the same period
    last year.
  * UGG® brand sales increased 7.9% to $170.6 million compared to $158.1
    million for the same period last year.
  * Teva® brand sales increased 3.6% to $51.6 million compared to $49.8
    million for the same period last year.
  * Sanuk® brand sales decreased 4.4% to $30.9 million compared to $32.4
    million for the same period last year.
  * Retail sales increased 37.6% to $63.6 million compared to $46.2 million
    for the same period last year; same store sales increased 6.6% for the
    thirteen weeks ending March 31, 2013 compared to the thirteen weeks ending
    April 1, 2012.
  * eCommerce sales increased 22.6% to $26.6 million compared to $21.7 million
    for the same period last year.
  * Domestic sales increased 7.1% to $182.7 million compared to $170.6 million
    for the same period last year.
  * International sales increased 7.0% to $81.1 million compared to $75.7
    million for the same period last year.

“We’re pleased to start the year with first quarter sales and earnings that
were ahead of projections,” stated Angel Martinez, President, Chief Executive
Officer and Chair of the Board of Directors. “The investments we are making in
our product lines, direct to consumer channel and international markets are
creating strong growth pillars for our brands. At the same time, the new
innovation we’ve developed has the potential to provide meaningful cost
savings and open new expansion opportunities in the future. We feel good about
our current course and continue to be optimistic that our strategies will lead
to sustainable growth and increased shareholder value.”

Division Summary

UGG Brand

UGG brand net sales for the first quarter increased 7.9% to $170.6 million
compared to $158.1 million for the same period last year. The increase in
sales was driven by higher global retail sales from new store openings and an
increase in same store sales, combined with an increase in global eCommerce
sales, partially offset by lower domestic and international wholesale sales.

Teva Brand

Teva brand net sales for the first quarter increased 3.6% to $51.6 million
compared to $49.8 million for the same period last year. The increase in sales
was driven by gains in domestic wholesale and international distributor sales,
partially offset by lower international wholesale sales.

Sanuk Brand

Sanuk brand net sales for the first quarter decreased 4.4% to $30.9 million
compared to $32.4 million for the same period last year. Increased domestic
wholesale and eCommerce sales were offset by a decline in international
distributor sales due primarily to inventory build up at some key
distributors.

Other Brands

Combined net sales of the Company’s other brands increased 76.3% to $10.6
million for the first quarter compared to $6.0 million for the same period
last year. The increase was primarily attributable to the addition of the HOKA
ONE ONE® brand which was acquired in September 2012.

Retail Stores

Sales for the global retail store business, which are included in the brand
sales numbers above, increased 37.6% to $63.6 million for the first quarter
compared to $46.2 million for the same period last year. This increase was
driven by 29 new stores opened after the first quarter of 2012 and a 6.6% same
store sales increase for the thirteen weeks ended March 31, 2013 compared to
the thirteen weeks ending April 1, 2012.

eCommerce

Sales for the global eCommerce business, which are included in the brand sales
numbers above, increased 22.6% to $26.6 million for the first quarter compared
to $21.7 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, and the addition of new
international eCommerce websites.

Balance Sheet

At March 31, 2013, cash and cash equivalents were $64.6 million compared to
$228.6 million at March 31, 2012. The Company had $10.0 million in outstanding
borrowings under its credit facility at March 31, 2013 and no outstanding
borrowings at March 31, 2012. The decrease in cash and cash equivalents and
increase in outstanding borrowings are primarily attributable to $200.7
million of cash payments for common stock repurchases and $62.5 million of
cash expenditures primarily related to retail expansion and the Company’s new
headquarters facility, partially offset by cash provided by operations.

Inventories at March 31, 2013 increased 23.3% to $257.1 million from $208.5
million at March 31, 2012. By brand, UGG inventory increased $42.5 million to
$201.5 million at March 31, 2013, Teva inventory increased $0.5 million to
$31.3 million at March 31, 2013, Sanuk inventory increased $3.0 million to
$15.1 million at March 31, 2013, and the other brands’ inventory increased
$2.6 million to $9.2 million at March 31, 2013.

Full-Year 2013 Outlook

  * Based on first quarter results and current visibility, the Company still
    expects full year revenues to increase approximately 7% over 2012 levels.
  * The Company still expects full year diluted earnings per share to increase
    approximately 5% over 2012 levels with a gross profit margin of
    approximately 46.5% and an operating margin of approximately 12.5%.

Second Quarter Outlook

  * The Company currently expects second quarter 2013 revenue to be
    approximately flat with 2012.
  * The Company currently expects to report a second quarter 2013 diluted loss
    per share of approximately $(1.10) compared to the diluted loss per share
    of $(0.53) reported in the second 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.

Conference Call Information

The Company’s conference call to review first quarter 2013 results will be
broadcast live over the internet today, Thursday, April 25, 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®, MOZO®, and HOKA ONE ONE® are
registered trademarks of Deckers Outdoor Corporation.

Forward Looking Statements

This press release contains “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E 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, 2012, which we filed with the
Securities and Exchange Commission, or the SEC, on March 1, 2013, 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
Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)
                                                                 
                                                                   
                                                    March 31,     December 31,
           Assets                                   2013          2012
                                                                   
Current assets:
Cash and cash equivalents                         $ 64,591        110,247
Trade accounts receivable, net                      110,319       190,756
Inventories                                         257,096       300,173
Prepaid expenses                                    11,115        14,092
Other current assets                                69,832        59,028
Income taxes receivable                             7,702         -
Deferred tax assets                                 16,557        17,290      
Total current assets                                537,212       691,586
                                                                   
Property and equipment, net                         129,836       125,370
Goodwill                                            128,725       126,267
Other intangible assets, net                        93,875        98,423
Deferred tax assets                                 13,522        13,372
Other assets                                        14,273        13,046      
                                                                   
Total assets                                      $ 917,443       1,068,064   
                                                                   
           Liabilities and Stockholders'
           Equity
                                                                   
Current liabilities:
Short-term borrowings                             $ 10,000        33,000
Trade accounts payable                              57,490        133,457
Accrued payroll                                     16,031        15,896
Other accrued expenses                              40,298        59,597
Income taxes payable                                3,333         25,067      
Total current liabilities                           127,152       267,017
                                                                   
Long-term liabilities                               45,416        62,246
                                                                   
Stockholders' equity:
Deckers Outdoor Corporation stockholders'
equity:
Common stock                                        344           344
Additional paid-in capital                          143,257       139,046
Retained earnings                                   601,818       600,811
Accumulated other comprehensive loss                (544    )     (1,400     )
Total stockholders' equity                          744,875       738,801     
                                                                   
Total liabilities and equity                      $ 917,443       1,068,064   
                                                                              

 
DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(Unaudited)
(Amounts in thousands, except for per share data)
                                                                    
                                                                      
                                                      Three-month period ended
                                                      March 31,
                                                      2013           2012
                                                                      
Net sales                                           $ 263,760        246,306
Cost of sales                                         140,201        133,018  
Gross profit                                          123,559        113,288
                                                                      
Selling, general and administrative expenses          120,907        101,355  
Income from operations                                2,652          11,933
                                                                      
Other expense (income), net                           142            (401    )
Income before income taxes                            2,510          12,334
                                                                      
Income tax expense                                    1,503          4,299    
Net income                                            1,007          8,035
                                                                      
Other comprehensive income (loss), net of tax
Unrealized gain (loss) on foreign currency            1,530          (1,068  )
hedging
Foreign currency translation adjustment               (674     )     738      
Total other comprehensive income (loss)               856            (330    )
Comprehensive income                                $ 1,863          7,705    
                                                                      
Net income attributable to:
Deckers Outdoor Corporation                           1,007          7,887
Noncontrolling interest                               -              148      
                                                    $ 1,007          8,035    
                                                                      
Comprehensive income attributable to:
Deckers Outdoor Corporation                           1,863          7,557
Noncontrolling interest                               -              148      
                                                    $ 1,863          7,705    
                                                                      
Net income per share attributable to Deckers
Outdoor Corporation common stockholders:
Basic                                               $ 0.03           0.20
Diluted                                             $ 0.03           0.20     
                                                                      
Weighted-average common shares outstanding:
Basic                                                 34,404         38,614
Diluted                                               34,788         39,094   
                                                                              

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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