Deckers Outdoor Corporation Reports Record Third Quarter Financial Results
Company Reports Third Quarter Sales Increased 52.5% to a Record of $197.3 Million Third Quarter Diluted EPS Increased 34.0% to a Record of $1.97 Company Raises Fourth Quarter and Full Year Outlook
GOLETA, Calif.--(BUSINESS WIRE)--
Deckers Outdoor Corporation (NASDAQGS: DECK) today announced financial results for the third quarter ended September 30, 2008.
Third Quarter Highlights
-- Net sales increased 52.5% to $197.3 million versus $129.4
million last year.
-- Diluted EPS increased 34.0% to $1.97 versus $1.47 a year ago.
-- Domestic sales increased 40.9% to $162.3 million compared to
$115.2 million last year.
-- International sales increased 146.7% to $35.0 million versus
$14.2 million a year ago.
-- UGG(R) brand sales increased 57.1% to $178.7 million compared
to $113.7 million last year.
Angel Martinez, President, Chief Executive Officer and Chairman of the Board of Directors, stated, "Our record third quarter performance was fueled primarily by the growing global demand for our diversified line of UGG footwear products. We continue to see robust full price selling for our UGG brand throughout our retail account base which is particularly rewarding given the difficult macroeconomic environment and further underscores the strength of the brand. We were also pleased with the results from our Teva(R) brand's first truly complete fall performance and lifestyle line of closed-toe footwear as consumers responded positively to several new styles from the collection. Meanwhile, our Simple(R) brand's performance was highlighted by the growing popularity of ecoSNEAKS(TM) which is benefitting from broader distribution and better placement at retail. In addition, the recent launch of PlanetWalkers(R) contributed nicely to the brand's overall results. Looking ahead, we remain optimistic about our future prospects, reflected in both our heightened outlook for the remainder of 2008 and our recently raised long-term growth target of $1 billion in sales by 2012."
Division Summary
UGG(R)
UGG brand net sales for the third quarter increased 57.1% to $178.7 million compared to $113.7 million for the same period last year. The significant year-over-year improvement was driven by increased orders for the expanded fall line from domestic retailers coupled with higher shipments to international distributors.
Teva(R)
Teva brand net sales were $11.2 million for the third quarter, the same as last year over the same period. Consumer demand for new fall closed-toe product was offset by declines in core sandal sales.
Simple(R)
Simple brand net sales for the third quarter increased 16.6% to $5.2 million compared to $4.4 million for the same period last year. The increase was driven by strong retail sell-through of ecoSNEAKS combined with the launch of PlanetWalkers that began at the end of the second quarter of 2008.
TSUBO(R)
TSUBO was acquired in the second quarter of 2008. TSUBO brand net sales were $2.2 million in the third quarter.
eCommerce
Sales for the eCommerce business, which are included in the brand sales numbers above, increased 36.0% to $10.6 million for the third quarter compared to $7.8 million for the same period a year ago.
Retail Stores
Sales for the retail store business, which are included in the brand sales numbers above, increased 92.3% to $5.4 million for the third quarter compared to $2.8 million for the same period a year ago.
Full-Year 2008 Outlook
-- Based upon the Company's better than expected third quarter
results coupled with its increased expectation for the fourth
quarter, the Company currently expects its full year revenue
to increase approximately 52% over 2007, up from previous
guidance of approximately 43%.
-- The Company currently expects its full year diluted earnings
per share to increase approximately 40% over 2007, up from
previous guidance of approximately 34%. These percentages
exclude the impact of the non-cash charge related to the
second quarter write-down of the Teva trademarks as previously
disclosed in the Company's press release announcing its
financial results for the three months ended June 30, 2008.
This guidance also assumes a gross profit margin of
approximately 45% and SG&A as a percentage of sales of
approximately 23%, both consistent with previous expectations.
-- Fiscal 2008 guidance includes approximately $10.5 million of
stock compensation expense, compared to $6.6 million in 2007.
Fourth Quarter Outlook
-- The Company is also increasing its fourth quarter 2008 revenue
growth target to approximately 52% and its diluted earnings
per share growth target to approximately 44%, each as compared
to the fourth quarter of 2007. This is up from its previous
revenue and diluted earnings per share growth targets of 45%
and 42%, respectively.
The Company's conference call to review third quarter fiscal 2008 results will be broadcast live over the internet today, Thursday, October 23, 2008 at 4:30 pm Eastern Time. The broadcast will be hosted at www.deckers.com and www.earnings.com.
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(R) Australia, Teva(R), Simple(R) Shoes, TSUBO(R), and Deckers(R) Brand are registered trademarks of Deckers Outdoor Corporation.
This news release contains statements regarding our expectations, beliefs and views about our future financial performance which are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "project," or future or conditional verbs such as "will," "would," "should," "could," or "may" or by the fact that such statements relate to future, and not just historical, events or circumstances, including statements related to anticipated revenues, expenses, earnings, operating cash flows, the outlook for the Company's markets and the demand for its products. The forward-looking statements in this news release regarding our future financial performance are based on currently available information as of the date of this release, and because our business is subject to a number of risks and uncertainties, some of which may be beyond our control, actual operating results in the future may differ significantly from the future financial performance expected at the current time. Those risks and uncertainties include, among others: our ability to anticipate fashion trends, consumer demand or inventory needs; whether the UGG brand will continue to grow at the same rate it has experienced in the recent past; impairment charges related to the Teva or TSUBO brand's goodwill and intangible assets if Teva or TSUBO product sales or operating performance decline to a point that the fair value of our Teva or TSUBO reporting units do not exceed their carrying values; shortages or price fluctuations of raw materials that could interrupt product manufacturing and increase product costs; increased costs of manufacturing in China and actions by the Chinese government; currency fluctuations; our ability to implement our growth strategy; the success of our customers, their ability to perform in an adverse economic environment and the risk of losing one or more of our key customers; our ability to develop and protect our brands and intellectual property; the risk that counterfeiting can harm our sales or our brand image; our dependence on independent manufacturers to supply our products; the risk that retailers could postpone or cancel existing orders; unpredictable events and circumstances and currency risks related to our international operations; a downturn in key market economies; volatile credit markets; liquidity and market risks for our short-term investments; the risk of losing key personnel; a delay or interruption in the delivery of merchandise to our customers, and the sensitivity of our sales to seasonal and weather conditions. Certain of these risks and uncertainties, as well as others, are more fully described under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2007, which we filed with the Securities and Exchange Commission on February 29, 2008. Readers are cautioned not to place undue reliance on forward-looking statements contained in this news release, which speak only as of the date of this release. The Company undertakes no obligation to publicly release or update the results of any revisions to forward-looking statements, which may be made to reflect new information, events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. The risks and uncertainties highlighted herein should not be assumed to be the only items that could affect the future performance or valuation of the Company.
DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)
September 30, December 31,
Assets 2008 2007
------------- ------------
Current assets:
Cash and cash equivalents $ 35,087 54,525
Restricted cash 440 250
Short-term investments 32,857 113,567
Trade accounts receivable, net 112,960 72,209
Inventories 157,933 51,776
Prepaid expenses and other current assets 5,171 3,276
Deferred tax assets 5,959 5,964
------------- ------------
Total current assets 350,407 301,567
Restricted cash 700 1,000
Property and equipment, at cost, net 25,406 10,579
Intangible assets, less applicable
amortization 44,857 54,131
Deferred tax assets 2,682 2,682
Other assets 80 73
------------- ------------
$ 424,132 370,032
============= ============
Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable $ 48,341 36,221
Accrued expenses 17,979 17,629
Income taxes payable 11,817 17,544
------------- ------------
Total current liabilities 78,137 71,394
------------- ------------
Long-term liabilities 3,392 ----
Minority interest 533 ----
Stockholders' equity:
Common stock 130 130
Additional paid-in capital 113,567 103,659
Retained earnings 228,055 194,567
Accumulated other comprehensive income 318 282
------------- ------------
Total stockholders' equity 342,070 298,638
------------- ------------
$ 424,132 370,032
============= ============
DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)
(Amounts in thousands, except for per share data)
Three-month Nine-month period
period ended ended
September 30, September 30,
-----------------
2008 2007 2008 2007
-------- -------- -------- --------
Net sales $197,288 129,381 $385,939 254,686
Cost of sales 111,948 70,666 218,111 140,865
-------- -------- -------- --------
Gross profit 85,340 58,715 167,828 113,821
Selling, general and
administrative expenses 42,259 28,055 99,731 65,225
Impairment loss --- --- 14,900 ---
Income from operations 43,081 30,660 53,197 48,596
------- ------- ------- -------
Other (income) expense, net:
Interest income (455) (851) (2,507) (3,504)
Interest expense 14 171 85 667
Other, net 20 36 (237) 114
Minority interest 43 ---- 43 ----
-------- -------- -------- --------
Income before income taxes 43,459 31,304 55,813 51,319
Income tax expense 17,445 11,974 22,325 20,271
-------- -------- -------- --------
Net income $ 26,014 19,330 $ 33,488 31,048
======== ======== ======== ========
Net income per share:
Basic $ 1.99 1.49 $ 2.57 2.43
Diluted 1.97 1.47 2.54 2.37
======== ======== ======== ========
Weighted-average shares:
Basic 13,054 12,973 13,031 12,784
Diluted 13,199 13,117 13,183 13,095
======== ======== ======== ========
Source: Deckers Outdoor Corporation
Released October 23, 2008