Deckers Brands posts decline in Q3 sales and earnings

Deckers Brands’ third quarter net sales decreased 4.5 percent to 760.3 million dollars compared to 795.9 million dollars for the same period last year. On a constant currency basis, net sales decreased 3.7 percent. Diluted earnings per share were 1.27 dollars compared to 4.78 dollars for the same period last year. Non-GAAP diluted earnings per share were 4.11 dollars.

“While the slow start to the holiday season limited our reorder opportunities and led to a shortfall in third quarter sales and earnings, sell-through of the UGG brand accelerated sharply late in the quarter. Our December performance helped drive a positive 4.7 percent direct-to-consumer (DTC) comparable sales increase. While we are disappointed that our overall results fell short of projections, we are confident that our product, pricing and distribution strategies will benefit the long-term health of the UGG brand,” said Dave Powers, President and CEO in a press release.

Review of the Q3 performance

Gross margin was 50.5 percent compared to 49.1 percent for the same period last year. Operating income was 53.3 million dollars compared to 202.5 million dollars for the same period last year. Non-GAAP operating income was 182.2 million dollars.

UGG brand net sales decreased 5.3 percent to 704 million dollars. On a constant currency basis, sales decreased 4.4 percent. The company said, year over year decrease was driven by lower domestic wholesale sales, primarily due to a slower than expected start to the quarter, partially offset by stronger than expected DTC comparable sales.

Teva brand net sales increased 3.9 percent to 14.6 million dollars compared to 14.1 million dollars for the same period last year. On a constant currency basis, sales increased 2 percent driven by an increase in global DTC sales.

Sanuk brand net sales were down 18.4 percent to 13.9 million dollars on both a reported and constant currency basis due to a decrease in global wholesale and distributor sales. Combined net sales of the company’s other brands increased 28.6 percent to 27.8 million dollars compared to 21.6 million dollars for the same period last year. On a constant currency basis, sales increased 27.9 percent. The company attributed this increase in sales to increased Hoka One One sales and Koolaburra by UGG sales. Hoka One One sales increased 18.3 percent compared to the same period last year.

Sales performance by distribution channel

Wholesale and distributor net sales for the third quarter decreased 12.6 percent to 388.6 million dollars compared to 444.6 million dollars for the same period last year. On a constant currency basis, sales decreased 12.5 percent.

DTC net sales increased 5.8 percent to 371.7 million dollars compared to 351.3 million dollars for the same period last year. On a constant currency basis, sales increased 7.4 percent. DTC comparable sales for the period increased 4.7 percent over the same period last year.

Domestic net sales decreased 9.9 percent to 489.5 million dollars compared to 543.3 million dollars for the same period last year. International net sales increased 7.2 percent to 270.8 million dollars compared to 252.6 million dollars for the same period last year. On a constant currency basis, sales increased 11.7 percent.

Picture:Hoka One One