Deckers Outdoor Corporation
) posted second-quarter 2013 loss of 85 cents a share that fared
better than the Zacks Consensus Estimate of a loss of $1.06.
Also, this compared favorably with management's guidance of a
loss of $1.10 due to lower operational expenses.
However, the quarterly loss widened substantially from a loss
of 53 cents a share delivered in the year-ago quarter due to soft
sales across the UGG brand and sluggish sales of sandals for the
Teva and Sanuk brands.
Deckers' total net sales dropped 2.5% year over year to $170.1
million and fell short of the Zacks Consensus Estimate of $180
million. Management had earlier anticipated revenue to remain
flat for the quarter under review.
During the quarter, the company's domestic sales declined 3%
year over year to $110.1 million, whereas international sales
fell 1.6% to $60 million.
Deckers has been grappling with higher input costs, primarily
due to rise in sheepskin costs. In order to safeguard against
rising sheepskin costs and other raw materials, Deckers has
undertaken certain long-term programs, which include increasing
the mix of non-sheepskin merchandises, new casual footwear
materials less prone to weather, and innovative production
technologies. Also, Deckers has developed a new material namely
UGG Pure to safeguard against cost fluctuations.
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
China, and to enhance presence in South Korea, Taiwan, Mongolia,
Singapore, and Australia.
brand net sales fell 6.9% to $100.4 million, primarily due to a
fall in domestic and international wholesale sales, decline in
international distributor sales and a decrease in
comparable-store sales, partially offset by a rise in worldwide
retail sales on account of new store openings and a rise in
global eCommerce sales.
brand net sales plunged 8.4% to $31.2 million, reflecting a fall
in domestic wholesale sales, partly offset by higher
international distributor sales.
Sales for the
brand, known for its exclusive sandals and shoes, were $30.1
million, up 7.5% from the year-ago quarter, reflecting higher
domestic wholesale and eCommerce sales, rise in international
distributor sales, and favorable launch of the brand in the
wholesale markets of Europe.
Combined net sales of Deckers'
brands for the quarter were $8.3 million that surged 87% year
over year on the back of HOKA ONE ONE brand, acquired in Sep
sales ascended 29.1% to $32.5 million, propelled by the opening
of 36 new stores, partly offset by a 5.3% decline in
sales soared 34.2% to $10.7 million, reflecting robust demand of
the UGG brand in both domestic and international markets.
Moreover, inclusion of new international eCommerce websites and
higher domestic demand of Sanuk brand bolstered sales.
Gross profit decreased 5.1% to $69.8 million from the
comparable prior-year quarter, whereas gross margin contracted
110 basis points to 41.1%. Deckers reported operating loss of
$42.8 million compared with the loss of $28.7 million in the
Other Financial Aspects
Deckers ended the quarter with cash and cash equivalents of
$49.1 million, down significantly from $114.4 million in the
prior-year quarter, while short-term borrowings were $26 million.
Shareholders' equity was $718.2 million at the end of the
quarter. Inventories grew 4.6% year over year to $362.1 million.
The company had borrowings of $26 million under its credit
Management now anticipates capital expenditures between $85
million and $90 million for 2013.
During the quarter, Deckers did not buy back any shares. As of
Jun 30, the company has $79 million remaining at its disposal
under its $200 million share repurchase authorization declared in
On the back of robust eCommerce sales trends and more than
expected opening of new outlets (36 opened versus 30 planned)
Deckers provided an improved outlook for 2013.
This Zacks Rank #3 (Hold) stock now projects total revenue
growth of 8% for 2013, anticipating an increase of 7% to 8% in
UGG brand sales, flat to marginally down sales at Teva brand, 5%
increase in Sanuk brand sales and sales worth $39 million from
Earlier, the company had forecasted total revenue growth of 7%
for 2013 on the back of a 4% jump in UGG brand sales, 6% rise in
Teva brand sales, 10% to 13% growth in Sanuk brand sales and
sales worth $41 million from other brands.
Management now envisions an 8% rise in 2013 earnings per
share, up from 5% predicted earlier.
Deckers now projects third-quarter 2013 revenue to climb 2.5%,
while earnings per share are projected to decline 41% year over
year. For the fourth quarter, revenue is anticipated to take a
leap of 14.5%, whereas earnings per share are forecasted to surge
38% from the year-ago quarter.
Other Stocks to Consider
Until any further upward revision in the Zacks Rank of
Deckers, investors may consider other stocks in the same industry
that look far more promising. These include
Skechers USA Inc.
Wolverine World Wide Inc.
Brown Shoe Co. Inc.
) all portraying a Zacks Rank #1 (Strong Buy).
BROWN SHOE CO (BWS): Free Stock Analysis
DECKERS OUTDOOR (DECK): Free Stock Analysis
SKECHERS USA-A (SKX): Free Stock Analysis
WOLVERINE WORLD (WWW): Free Stock Analysis
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