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Deckers Brands reports dynamic quarter

Jan 30, 2020 United States
Deckers Brands reports dynamic quarter
In the third quarter Deckers net sales grew by 7.4%. A 2.6% increase was recorded by Ugg. Sales of the Hoka One One segment jumped by 63.6%. Teva and Sanuk both suffered double-digit declines
"Our third quarter results were driven by three of our brands experiencing record levels of quarterly revenue, resulting in an updated outlook that reflects another year of strong top-line growth and earnings expansion", stated Dave Powers, President and Chief Executive Officer. "Heading into the fourth quarter, our brands are intent on maintaining the momentum seen throughout this fiscal year as we are planning continued investment in consumer engagement opportunities and compelling product introductions", he concluded.

Third Quarter Review

Deckers' net sales in the quarter increased by 7.4% totalling 938.7 million US dollars compared to 873.8 million US dollars for the same period last year. On a constant currency basis, net sales increased by 8.4%. In the same period, gross margin was 54.1% compared to 53.8% in similar period in the last year. Operating income reached 255.8 million US dollars, compared to GAAP operating income of 244.7 million Us dollars for the same period last year. Diluted earnings per share reached 7.14 US dollars compared to the GAAP diluted earnings per share of 6.68 US dollars for the same period last year.


Brand Summary

Different performances were registered by the different brands of Deckers' portfolio. UGG and HOKA ONE ONE brands net sales for the third quarter increased, respectively, by 2.6% and by 63.6%, to 781.1 million US dollars (761.0 million US dollars in 2018) and 93.1 million US dollars (56.9 million US dollars for the same period last year). Teva brand net sales for the third quarter decreased by 25.1% to 17.2 million US dollars compared to 22.9 million US dollars for the same period last year. Also, with declining sales (-34.5%), Sanuk brand net sales decrease to 8.5 million US dollars (compares to 12.9 million Us dollars for the same period last year).

Channel Summary

Wholesale net sales for the third quarter increased 8.9% to 525.1 million US dollars compared to 482.2 million US dollars for the same period last year. DTC net sales for the third quarter increased 5.6% to 413.7 million US dollars compared to 391.6 million US dollars for the same period last year. DTC comparable sales for the third quarter increased by 4.7% over the same period last year.

Geographic Summary

Domestic net sales for the third quarter increased 12.7% to 645.7 million US dollars compared to 573.0 million US dollars for the same period last year. International net sales for the third quarter decreased 2.6% to 293.1 million US dollars compared to 300.8 million US dollars for the same period last year.

Outlook

Net sales for fiscal 2020 are now expected to be in the range of 2.150 billion US dollars to 2.160 billion US dollars. Gross margin is now expected to be approximately 51.5%. Operating margin is now expected to be at or slightly better than 15.5%. Diluted earnings per share are now expected to be in the range of 9.40 US dollars  to 9.50 US dollars.
 
For the fourth quarter of Fiscal 2020
(three month period ending on the 31st of March 2020) net sales are expected to be in the range of 392 million US dollars to 402 million US dollars.

Image credits: sgbonline.com (HOKA)

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