Deckers Outdoor Corporation
) posted fourth-quarter 2013 earnings of $4.04 per share that
surpassed the Zacks Consensus Estimate of $3.81, and surged 45.8%
from $2.77 earned in the prior-year quarter. Expanding
direct-to-consumer operations, omnichannel strategies, effective
inventory management and optimum capital allocation contributed
to bottom-line growth.
Despite sturdy results, shares of this Goleta, California
based company tumbled approximately 13.8% during aftermarket
trading hours yesterday, as management projected loss for the
first quarter of 2014 that surprised investors, since analysts
were expecting profit per share.
Deckers' total net sales jumped 19.2% year over year to $736
million and came ahead of the Zacks Consensus Estimate of $708
During the quarter, the company's domestic sales grew 14.3%
year over year to $510.7 million, while international sales
increased 32.1% to $225.3 million. Direct-to-Consumer comparable
sales, comprising worldwide retail comparable-store sales and
e-Commerce sales, rose 19%.
Rising sheepskin costs has always been a concern for Deckers.
In order to safeguard against rising sheepskin costs and other
raw materials, the company has undertaken certain long-term
programs, which include increasing the mix of non-sheepskin
merchandises, new casual footwear materials less prone to the
weather, and innovative production technologies. Also, Deckers
has developed a new material namely UGG Pure to safeguard against
The company is also targeting other profitable markets, and
remains focused on product introductions, store augmentation
along with geographic expansion. Management is eyeing
opportunities for store expansion in Asia, mainly Japan and
brand net sales rose 18.1% to $690.9 million, primarily due to
sales generation from new retail outlets and comparable-store
sales growth, rise in global e-Commerce sales, and increase in
domestic and international wholesale sales.
brand net sales showed an increase of 13.6% to $15.5 million,
reflecting a rise in domestic and international wholesale sales
and international distributor sales.
Sales for the
brand, known for its exclusive sandals and shoes, were $22.2
million, up 45.2% from the year-ago quarter, reflecting increased
domestic wholesale sales and higher international distributor
Combined net sales of Deckers'
brands for the quarter were $7.4 million that surged 110.1% year
over year on the back of HOKA ONE ONE brand and Ahnu brand.
sales ascended 31.4% to $178 million, propelled by the opening of
40 new stores after fourth-quarter 2012 and comparable-store
sales growth of 6.1%. Deckers witnessed comps growth in the
mid-single digit in China, a double-digit increase in Japan, and
low single-digit rise in the U.S. and European region.
sales surged 33.9% to $117.3 million, reflecting robust demand of
the UGG brand globally, higher domestic sales of Sanuk brand and
the inclusion of new international eCommerce websites.
Gross profit climbed 31.5% to $376.2 million from the
comparable prior-year quarter, whereas gross margin expanded 480
basis points to 51.1% due to a decline in product costs on
account of fall in sheepskin prices. Deckers reported operating
income of $201.5 million, up 39.8% from the prior-year period,
whereas operating margin increased 410 basis points to 27.4%.
Deckers plans to open 25 stores during 2014. The company
currently operates 117 company-owned retail stores, of which 113
are UGG brand stores and the remaining is a mix of Sanuk and Teva
brands. The company in the long run remains optimistic of
achieving the target of 200 stores.
Other Financial Aspects
Deckers ended the quarter with cash and cash equivalents of
$237.1 million, up significantly from $110.2 million in the
prior-year quarter. Shareholders' equity was $888.1 million at
the end of the quarter. Inventories declined 13.1% year over year
to $260.8 million.
Management anticipates capital expenditures of $90 million for
2014. During 2013, the company made capital expenditures of $83.5
This Zacks Rank #2 (Buy) stock now projects total revenue
growth of 10% for 2014, anticipating an increase of 9% in UGG
brand, 5% in Teva brand, 10% in Sanuk brand and sales worth $65
million from other brands. Management now envisions an 8% rise in
2014 earnings per share.
Deckers for the first quarter of 2014 forecasts 6% revenue
growth but anticipate a loss of 16 cents a share.
The current Zacks Consensus Estimate for the first quarter and
2014 are 11 cents and $4.79 per share, respectively, and could
witness revisions in the coming days.
Other Stocks to Consider
Besides Deckers, other stocks worth considering include
Iconix Brand Group, Inc.
) carrying a Zacks Rank #1 (Strong Buy) and
Francesca's Holdings Corporation
Skechers USA Inc.
) sporting a Zacks Rank #2 (Buy).
DECKERS OUTDOOR (DECK): Free Stock Analysis
FRANCESCAS HLDG (FRAN): Free Stock Analysis
ICONIX BRAND GP (ICON): Free Stock Analysis
SKECHERS USA-A (SKX): Free Stock Analysis
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