Deckers Brands Crushes Income, Revenue Estimates

24 May Deckers Brands Crushes Income, Revenue Estimates

Posted at 21:54h in FDRA by

Footwear, apparel and accessories company Deckers Brands reported fourth-quarter net income of $29.7 million, or diluted earnings per share of 66 cents, up from last year’s Q4 loss of $12 million, or (49) cents per share, and beating analysts’ estimates by 31 cents per share.

The company reported net sales increased 8.4 percent to $400.7, beating analysts’ estimates by $25.3 million, compared to $369.5 million for the same period last year. On a constant currency basis, net sales increased 6.6 percent.

“We closed fiscal 2018 on a high note as we exceeded expectations for the fifth consecutive quarter,” said Dave Powers, president and chief executive officer. “The entire Deckers team stepped up to the plate and performed exceptionally well despite the numerous challenges the organization faced over the last twelve months. For the full year, we achieved record revenue of $1.9 billion, drove a 320 basis point improvement in non-GAAP operating margin to 12.4 percent and increased non-GAAP diluted earnings per share by 50 percent to a record $5.74. I am confident that the company is well-positioned to build on its recent financial accomplishments and enhance its industry competitiveness through the continued execution of our operating profit improvement plan and strategic focus.”

Fourth Quarter Fiscal 2018 Financial Review

  • Net sales increased 8.4 percent to $400.7 million compared to $369.5 million for the same period last year. On a constant currency basis, net sales increased 6.6 percent.
  • Gross margin was 48 percent compared to 43 percent for the same period last year.
  • SG&A expenses were $174.1 million compared to $189.8 million for the same period last year. Non-GAAP SG&A expenses were $172.5 million this year compared to $153.9 million last year.
  • Operating income was $18.3 million compared to an operating loss of $30.9 million for the same period last year. Non-GAAP operating income was $19.9 million this year compared to $5.1 million last year.
  • Diluted earnings per share were $0.66 compared to a loss of $0.49 for the same period last year. Non-GAAP diluted earnings per share were $0.50 this year compared to $0.11 last year.

Full Year Fiscal 2018 Financial Review

  • Net sales increased 6.3 percent to $1.9 billion compared to $1.8 billion for the same period last year. On a constant currency basis, net sales increased 6.1 percent.
  • Gross margin was 48.9 percent compared to 46.7 percent for the same period last year.
  • SG&A expenses were $709.1 million compared to $837.2 million for the same period last year. Non-GAAP SG&A expenses were $695.2 million this year compared to $669.6 million last year.
  • Operating income was $222.6 million compared to an operating loss of $1.9 million for the same period last year. Non-GAAP operating income was $236.5 million this year compared to $165.6 million last year.
  • Diluted earnings per share was $3.58 compared to $0.18 for the same period last year. Non-GAAP diluted earnings per share was $5.74 this year compared to $3.82 last year.

Brand Summary

  • UGG brand net sales for the fourth quarter increased 6 percent to $257.5 million compared to $243 million for the same period last year. For fiscal 2018, sales increased 3.9 percent to $1.5 billion.
  • HOKA ONE ONE brand net sales for the fourth quarter increased 34.1 percent to $50.4 million compared to $37.6 million for the same period last year. For fiscal 2018, sales increased 46.7 percent to $153.5 million.
  • Teva brand net sales for the fourth quarter increased 7.3 percent to $55 million compared to $51.3 million for the same period last year. For fiscal 2018, sales increased 13.5 percent to $133.6 million.
  • Sanuk brand net sales for the fourth quarter increased 10.3 percent to $35.6 million compared to $32.3 million for the same period last year. For fiscal 2018, sales declined 0.9 percent to $90.9 million.

Channel Summary (included in the brand sales numbers above)

  • Wholesale net sales for the fourth quarter increased 1.8 percent to $223.1 million compared to $219.1 million for the same period last year. For fiscal 2018, sales increased 5.7 percent to $1.2 billion.
  • DTC net sales for the fourth quarter increased 18.1 percent to $177.6 million compared to $150.4 million for the same period last year. DTC comparable sales for the fourth quarter increased 15 percent over the same period last year. For fiscal 2018, sales increased 7.4 percent to $715.7 million and DTC comparable sales increased 7 percent.

Geographic Summary (included in the brand and channel sales numbers above)

  • Domestic net sales for the fourth quarter increased 8.3 percent to $249 million compared to $230 million for the same period last year. For fiscal 2018, sales increased 2.9 percent to $1.2 billion.
  • International net sales for the fourth quarter increased 8.7 percent to $151.7 million compared to $139.5 million for the same period last year. For fiscal 2018, sales increased 12.4 percent to $729.3 million.

Balance Sheet (March 31, 2018 as compared to March 31, 2017)

  • Cash and cash equivalents were $430 million compared to $291.8 million.
  • Inventories were $299.6 million compared to $298.9 million.
  • Outstanding borrowings were $32.1 million compared to $32.6 million.

Stock Repurchase Program

During the fourth quarter, the company repurchased approximately 1.34 million shares of common stock for a total of $125 million. As of March 31, 2018, the company had $251 million remaining under the $400 million in stock repurchase authorizations.

Full Year Fiscal 2019 Outlook for the 12-Month Period Ending March 31, 2019

  • Net sales are expected to be in the range of $1.925 billion to $1.950 billion.
  • Gross margin is expected to be slightly better than 49 percent.
  • SG&A expenses as a percentage of sales are projected to be slightly better than 36.5 percent.
  • Operating margin is expected to be in the range of 12.6 percent to 12.8 percent.
  • Effective tax rate of approximately 22 percent.
  • Non-GAAP diluted earnings per share are expected to be in the range of $6.20 to $6.40.
  • The earnings per share guidance excludes any charges that may occur from additional store closures, restructuring activities, tax reform and other one-time charges. It also does not assume any impact from additional share repurchases.

First Quarter Fiscal 2019 Outlook for the Three-Month Period Ending June 30, 2018

  • Net sales are expected to be in the range of $225 million to $235 million.
  • Effective tax rate of approximately 22 percent.
  • Non-GAAP net loss per share is expected to be in the range of ($1.50) to ($1.41).
  • The earnings per share guidance excludes any charges that may occur from additional store closures, restructuring activities, tax reform and other one-time charges. It also does not assume any impact from additional share repurchases.