Deckers Outdoor Corporation Reports First Quarter Financial Results
Company Reports First Quarter Sales Increased 29.6% to a Record of $72.6 Million First Quarter Diluted EPS Increased 70.5% to a Record of $0.75 Company Increases Fiscal 2007 Guidance Growth Targets
GOLETA, Calif.--(BUSINESS WIRE)--
Deckers Outdoor Corporation (NASDAQ: DECK) today announced financial results for the first quarter ended March 31, 2007.
First Quarter Highlights
-- Net sales increased 29.6% to $72.6 million versus $56.0
million last year.
-- Gross margin increased 210 basis points to 46.2% compared to
44.1% a year ago.
-- Diluted EPS increased 70.5% to $0.75 versus $0.44 last year.
Angel Martinez, President and Chief Executive Officer, stated, "We begin 2007 with a solid first quarter highlighted by double digit sales increases for Teva(R), UGG(R) and Simple(R). Our ability to once again exceed expectations was primarily driven by strong full price selling for the UGG(R) brand coupled with positive consumer reaction to our reengineered Teva(R) product line, which underscores our ongoing efforts to revitalize the brand at retail and our strategic decision to target a younger, more active demographic. At the same time, Simple(R) continued to gain important shelf space at retail while further building its leadership position in sustainable footwear. Looking ahead, we believe we are well positioned to capitalize on our future growth opportunities and we remain confident in our ability to achieve both our near- and long-term objectives."
Segment Summary
Teva(R)
Teva Brand net sales for the first quarter increased 11.6% to $38.7 million compared to $34.7 million for the same period last year. Sales were driven by demand for new styles, particularly the performance water series featuring higher price point products such as the Karnali Wraptor, Toachi and Sunkosi, along with solid sell-through of men's and women's casuals including updated versions of the Dozer.
UGG(R)
UGG Brand net sales for the first quarter increased 67.7% to $29.8 million compared to $17.8 million for the same period a year ago. The improvement in sales was attributable to greater demand and increased distribution for the expanded spring line which now consists of espadrilles, sandals, flip flops and boots.
Simple(R)
Simple Brand net sales increased 14.0% to $4.0 million for the first quarter compared to $3.5 million for the same period last year. Simple product sales were up year-over-year as a result of heightened brand awareness, a broader product assortment, and the addition of several new influential accounts, including Urban Outfitters, Bloomingdales, David Z. and Kitson.
Consumer Direct
Sales for the Consumer Direct business, which are included in the brand sales numbers above, increased 69.7% to $11.1 million compared to $6.5 million for the same period a year ago, mostly due to an increase in UGG Brand internet sales. In addition, results for the first quarter of 2007 included sales from the Company's new UGG Brand flagship store in New York City and two new retail outlet stores in Wrentham, MA and Riverhead, NY, which were not in operation in the first quarter of 2006.
Full-Year 2007 Outlook
-- The Company increased its full year revenue growth target to
approximately 25% over 2006, up from previous guidance of
approximately 15%.
-- The Company increased its full year diluted earnings per share
growth target to approximately 15% over 2006 before the
impairment charge, up from previous guidance of approximately
5%
-- Fiscal 2007 guidance includes approximately $5.2 million of
stock compensation expense, an increase of $3.1 million over
2006.
Second Quarter Outlook
-- The Company currently expects second quarter 2007 revenue to
increase approximately 15% and diluted earnings per share to
decrease approximately 80% compared to 2006.
The Company's conference call to review first quarter fiscal 2007 results will be broadcast live over the internet today, Thursday, April 26, 2007 at 4:30 pm Eastern Time. The broadcast will be hosted at www.deckers.com and www.earnings.com.
Deckers Outdoor Corporation builds niche products into global lifestyle brands by designing and marketing innovative, functional and fashion-oriented footwear developed for both high performance outdoor activities and everyday casual lifestyle use. Teva(R), Simple(R) and UGG(R) 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, 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; shortages or price fluctuations of raw materials that could interrupt product manufacturing and increase product costs; our ability to implement our growth strategy; the success of our customers 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; the risk of losing key personnel; 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, 2006 which we filed with the Securities and Exchange Commission on March 16, 2007. 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 of the Company.
DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)
March 31, December 31,
Assets 2007 2006
------------ ------------
Current assets:
Cash and cash equivalents $ 25,553 34,255
Short-term investments 84,234 64,637
Trade accounts receivable, net 36,400 49,571
Inventories 34,157 32,375
Prepaid expenses and other current assets 2,447 2,199
Deferred tax assets 4,386 4,386
------------ ------------
Total current assets 187,177 187,423
Restricted cash 1,000 ----
Property and equipment, at cost, net 8,224 7,770
Intangible assets, less applicable
amortization 54,322 54,399
Deferred tax assets 327 327
Other assets 53 54
------------ ------------
$ 251,103 249,973
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable $ 15,279 21,053
Accrued expenses 5,064 7,204
Income taxes payable 5,492 7,478
------------ ------------
Total current liabilities 25,835 35,735
------------ ------------
Stockholders' equity:
Common stock 126 126
Additional paid-in capital 82,967 81,761
Retained earnings 141,656 131,958
Accumulated other comprehensive income 519 393
------------ ------------
Total stockholders' equity 225,268 214,238
------------ ------------
$ 251,103 249,973
============ ============
DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)
(Amounts in thousands, except for per share data)
Three-month period ended
March 31,
------------------------
2007 2006
------------ -----------
Net sales
$ 72,575 56,004
Cost of sales 39,054 31,304
------------ -----------
Gross profit 33,521 24,700
Selling, general and administrative expenses 18,345 15,786
------------ -----------
Income from operations 15,176 8,914
Other (income) expense
Interest, net (989) (580)
Other 1 - - -
------------ -----------
Income before income taxes 16,164 9,494
Income taxes 6,466 3,845
------------ -----------
Net income
$ 9,698 5,649
============ ===========
Net income per share:
Basic
$ 0.77 0.45
Diluted 0.75 0.44
============ ===========
Weighted-average shares:
Basic 12,595 12,468
Diluted 12,932 12,763
============ ===========
Source: Deckers Outdoor Corporation
Released April 26, 2007