Deckers Brands posts fall in Q4 earnings, net sales up 11.2 percent

Deckers Brands net sales increased 11.2 percent to a record 378.6 million dollars compared to 340.6 million dollars for the same period last year. On a constant currency basis, net sales increased 12.4 percent. Net sales increased 3.2 percent to 1.875 billion dollars for fiscal 2016 compared to 1.817 billion dollars last year. On a constant currency basis, net sales increased 5.9 percent.

“Our stronger than expected fourth quarter Non-GAAP operating results are very encouraging given the current market environment,” commented Angel Martinez, Chief Executive Officer and Chair of the Board of Directors, adding, “Looking back on the year, our performance was challenged by record warm weather across the globe and store traffic declines across retail. While these issues have created lingering headwinds for the industry, I am confident that Deckers is well positioned to increase long-term shareholder value with the new leadership team in place, our robust Omni-channel capabilities and strong brand portfolio.”

Fourth quarter and fiscal 2016 financial review

Gross margin in the fourth quarter was 40.9 percent compared to 44.7 percent for the same period last year. Non-GAAP gross margin was 42.3 percent. The year over year decline, the company said, was due to a higher proportion of closeouts, promotions and foreign exchange headwinds from the strengthening US dollar.

Gross margin for the full year was 45.2 percent compared to 48.3 percent last year and non-GAAP gross margin was 45.4 percent. Diluted earnings per share were 3.70 dollars compared to 4.66 dollars last year and non-GAAP diluted earnings per share were 4.50 dollars.

Brand performance review

UGG brand net sales for the fourth quarter increased 13.3 percent to 245.6 million dollars. On a constant currency basis, sales increased approximately 15.2 percent. The increase in sales was driven by an increase in global wholesale sales and DTC sales. For fiscal 2016, UGG brand sales increased 2.1 percent to 1.524 billion dollars. On a constant currency basis, sales increased 5 percent.

Teva brand net sales for the fourth quarter increased 11.3 percent to 59.1 million dollars on both a reported and constant currency basis. The increase in sales was driven by an increase in global wholesale sales. For fiscal 2016, Teva brand sales increased 5 percent to 133 million dollars. On a constant currency basis, sales increased 7 percent.

Sanuk brand net sales for the fourth quarter decreased 1.9 percent to 38.5 million dollars on both a reported and constant currency basis. The decrease in sales was driven by a decrease in domestic wholesale sales. For fiscal 2016, Sanuk brand sales decreased 7.4 percent to 106.2 million dollars on both a reported and constant currency basis.

Combined net sales of the company’s other brands for the fourth quarter increased 12.4 percent to 35.4 million dollars. On a constant currency basis, sales increased approximately 13 percent. The increase was primarily attributable to an 8.6 million dollars or 43.3 percent, increase in sales for the Hoka One One brand compared to the same period last year. For fiscal 2016, combined sales of the company’s other brands increased 35.4 percent to 111.6 million dollars. On a constant currency basis, sales increased 36.9 percent.

Performance by retail channel and geographies

Wholesale and distributor net sales for the fourth quarter increased 13.4 percent to 232.7 million dollars and on a constant currency basis, sales increased 14.2 percent driven by an increase in global wholesale sales. For fiscal 2016, wholesale and distributor sales increased 2.6 percent to 1.231 billion dollars. On a constant currency basis, sales increased 5.2 percent.

Direct-to-Consumer (DTC) net sales for the fourth quarter increased 7.7 percent to 145.9 million dollars and on a constant currency basis, sales increased 9.7 percent. DTC comparable sales for the fourth quarter increased 2.6 percent over the same period last year. For fiscal 2016, DTC sales increased 4.4 percent to 644.3 million dollars and DTC comparable sales decreased 1 percent. On a constant currency basis, DTC sales increased 7.4 percent.

Domestic net sales for the fourth quarter increased 10.4 percent to 240.4 million dollars compared to 217.7 million dollars for the same period last year. For fiscal 2016, domestic sales increased 4.7 percent to 1.220 billion dollars. International net sales increased 12.4 percent to 138.2 million dollars for the quarter and on a constant currency basis, sales increased 15.8 percent. For fiscal 2016, international sales increased 0.6 percent to 655.5 million dollars. On a constant currency basis, sales increased 8.2 percent.

Full year fiscal 2017 and first quarter outlook

The company expects fiscal 2017 net sales to be in the range of down 3 percent to flat. Diluted earnings per share are expected to be in the range of 4.05 dollars to 4.40 dollars.

The Company expects first quarter fiscal 2017 net sales to be down 20 percent to 25 percent and diluted loss per share of approximately 2.10 dollars to 2.20 dollars compared to a diluted loss per share of 1.43 dollars for the same period last year.

picture:sanuk.com