Deckers Brands (NYSE: DECK), a global leader in designing,
marketing and distributing innovative footwear, apparel and
accessories, today announced financial results for the first fiscal
quarter ended June 30, 2016.
Throughout this release, references to Non-GAAP financial
measures exclude certain restructuring charges. Additional
information regarding these Non-GAAP financial measures is set
forth under the heading "Non-GAAP Financial Measures" below.
“We are encouraged by our start to fiscal 2017, and we remain on
track to deliver the sales and profitability targets we established
for the year,” commented Dave Powers, President and Chief Executive
Officer. “Looking ahead, I am confident that our product lineup and
marketing plans for this fall and holiday will help drive sales
during our key selling season. I am excited about the progress we
are making in this transitional year, and believe we are
positioning the Company to capitalize on the opportunities in front
of us.”
First Quarter Fiscal 2017 Financial Review
- Net sales decreased 18.4% to
$174.4 million compared to $213.8 million for the same period last
year. The year over year decrease was due to the timing of order
shipments between quarters, a decrease in Direct-to-Consumer (DTC)
comparable sales, and fewer close-out sales. On a constant currency
basis, net sales decreased 18.8%.
- Gross margin was 43.7% compared
to 40.5% for the same period last year.
- SG&A expenses as a
percentage of sales were 88.6% compared to 70.3% for the same
period last year. Non-GAAP SG&A expenses as a percentage of
sales were 87.6%.
- Operating loss was $(78.3)
million compared to $(63.7) million for the same period last year.
Non-GAAP operating loss was $(76.6) million.
- Diluted loss per share was
$(1.84) compared to $(1.43) for the same period last year. Non-GAAP
diluted loss per share was $(1.80).
Brand Summary
- UGG® brand net sales for the first
quarter decreased (19.8)% to $91.9 million compared to $114.5
million for the same period last year. On a constant currency
basis, sales decreased (20)%. The decrease in sales was driven by a
shift in the timing of order shipments between quarters which
impacted global wholesale and distributor sales, a decrease in DTC
comparable sales and fewer close-out sales.
- Teva® brand net sales for the first
quarter decreased (17.3)% to $34.7 million compared to $41.9
million for the same period last year. On a constant currency
basis, sales decreased (18.3)%. The decrease in sales was driven by
a decrease in global wholesale sales.
- Sanuk® brand net sales for the first
quarter decreased (20.2)% to $26.7 million compared to $33.5
million for the same period last year on both a reported and
constant currency basis. The decrease in sales was driven by a
decrease in global wholesale sales.
- Combined net sales of the Company’s
other brands decreased (11.6)% to $21.1 million compared to $23.9
million for the same period last year. On a constant currency
basis, sales decreased (11.8)%. The decrease was primarily
attributable to discontinued brands. HOKA ONE ONE® reported sales,
which are included as part of the Company’s other brand sales,
increased 1.8% to $17.6 million compared to the same period last
year.
Channel Summary (included in the brand sales numbers
above)
- Wholesale and distributor net sales for
the first quarter decreased (24.3)% to $116.1 million compared to
$153.4 million for the same period last year. On a constant
currency basis, sales decreased (24.6)%. The decrease in sales was
driven by a shift in the timing of order shipments between quarters
and fewer close-out sales.
- DTC net sales for the first quarter
decreased (3.6)% to $58.3 million compared to $60.4 million for the
same period last year. On a constant currency basis, sales
decreased (3.8)%. DTC comparable sales for the first quarter
decreased (7.3)% over the same period last year.
Geographic Summary (included in the brand and channel sales
numbers above)
- Domestic net sales for the first
quarter decreased (18.6)% to $109.5 million compared to $134.5
million for the same period last year.
- International net sales for the first
quarter decreased (18.2)% to $64.9 million compared to $79.3
million for the same period last year. On a constant currency
basis, sales decreased (19.1)%.
Balance Sheet
At June 30, 2016, cash and cash equivalents were $202.3 million
compared to $168.7 million at June 30, 2015. The Company had $110.6
million in outstanding borrowings under its credit facility at June
30, 2016 compared to $43.4 million at June 30, 2015.
Company-wide inventories at June 30, 2016 increased 25.6% to
$469.2 million from $373.6 million at June 30, 2015. By brand, UGG
inventory increased 25.5% to $385.8 million at June 30, 2016, Teva
inventory increased 10.5% to $24.9 million at June 30, 2016, Sanuk
inventory increased 31.4% to $23.5 million at June 30, 2016, and
the other brands inventory increased 35.0% to $35.0 million at June
30, 2016. The elevated levels of inventory were in-line with
expectations given the unseasonably warm weather experienced in the
third quarter of fiscal 2016.
Full Year Fiscal 2017 Outlook for the Twelve Month Period
Ending March 31, 2017
- The Company continues to expect fiscal
year 2017 net sales to be in the range of down (3)% to flat.
- Gross margin for fiscal 2017 is
expected to be in the range of 47.0% to 47.5%.
- SG&A expenses as a percentage of
sales are projected to be approximately 37%.
- The Company expects fiscal 2017 diluted
earnings per share to be in the range of $4.05 to $4.40. This
excludes any pretax charges that may occur from any further
restructuring charges, which are expected to be in the range of
$10-$15 million in fiscal year 2017.
Second Quarter Fiscal 2017 Outlook for the Three Month Period
Ending September 30, 2016
- The Company expects second quarter
fiscal 2017 net sales to be up 1% to 3% versus same period last
year. The Company expects diluted earnings per share of
approximately $1.12 to $1.22 compared to $1.11 for the same period
last year.
- As a reminder, a significant amount of
our operating expenses are fixed and spread evenly on an absolute
dollar basis throughout each quarter. We expect the majority of our
earnings increase in fiscal 2017 to come in the third and fourth
quarters.
Non-GAAP Financial Measures
We present certain Non-GAAP financial measures in this press
release, including Non-GAAP gross margin, Non-GAAP SG&A
expenses, Non-GAAP operating income and Non-GAAP diluted earnings
per share, to provide information that may assist investors in
understanding our financial results and assessing our prospects for
future performance. We believe these Non-GAAP financial measures
are important indicators of our operating performance because they
exclude items that are unrelated to, and may not be indicative of,
our core operating results, such as restructuring charges relating
to retail store closures and office consolidations. In particular,
we believe that the exclusion of certain costs and charges allows
for a more meaningful comparison of our results from period to
period. These Non-GAAP measures, as we calculate them, may not
necessarily be comparable to similarly titled measures of other
companies and may not be appropriate measures for comparing the
performance of other companies relative to Deckers. These Non-GAAP
financial results are not intended to represent, and should not be
considered to be more meaningful measures than, or alternatives to,
measures of operating performance as determined in accordance with
GAAP. To the extent we utilize such Non-GAAP financial measures in
the future, we expect to calculate them using a consistent method
from period to period. A reconciliation of each of the financial
measures to the most directly comparable GAAP measures has been
provided under the heading “Reconciliation of GAAP Financial
Measures to Non-GAAP Financial Measures” in the financial statement
tables included below.
Conference Call Information
The Company’s conference call to review the results for the
first quarter 2017 will be broadcast live today, Thursday, July 28,
2016 at 4:30 pm Eastern Time and hosted at www.deckers.com. You can
access the broadcast by clicking on the “Investor Information” tab
and then clicking on the microphone icon at the top of the
page.
About Deckers Brands
Deckers Brands is a global leader in designing, marketing and
distributing innovative footwear, apparel and accessories developed
for both everyday casual lifestyle use and high performance
activities. The Company’s portfolio of brands includes UGG®,
Koolaburra®, HOKA ONE ONE®, Teva® and Sanuk®. Deckers Brands
products are sold in more than 50 countries and territories through
select department and specialty stores, Company-owned and operated
retail stores, and select online stores, including Company-owned
websites. Deckers Brands has a 40-year history of building niche
footwear brands into lifestyle market leaders attracting millions
of loyal consumers globally. For more information, please visit
www.deckers.com.
Forward Looking Statements
This press release contains "forward-looking statements" within
the meaning of the federal securities laws, which statements are
subject to considerable risks and uncertainties. These
forward-looking statements are intended to qualify for the safe
harbor from liability established by the Private Securities
Litigation Reform Act of 1995. Forward-looking statements include
all statements other than statements of historical fact contained
in this press release, including statements regarding our
anticipated financial performance, including our projected net
sales, margins, expenses and earnings per share, as well as
statements regarding our product and brand strategies, marketing
plans and market opportunities. We have attempted to identify
forward-looking statements by using words such as "anticipate,"
"believe," “could,” "estimate," "expect," "intend," "may," “plan,”
“predict,” "project," "should," "will," or “would,” and similar
expressions or the negative of these expressions.
Forward-looking statements represent our management’s current
expectations and predictions about trends affecting our business
and industry and are based on information available as of the time
such statements are made. Although we do not make forward-looking
statements unless we believe we have a reasonable basis for doing
so, we cannot guarantee their accuracy or completeness.
Forward-looking statements involve numerous known and unknown
risks, uncertainties and other factors that may cause our actual
results, performance or achievements to be materially different
from any future results, performance or achievements predicted,
assumed or implied by the forward-looking statements. Some of the
risks and uncertainties that may cause our actual results to
materially differ from those expressed or implied by these
forward-looking statements are described in the section entitled
“Risk Factors” in our Annual Report on Form 10-K for the fiscal
year ended March 31, 2016, as well as in our other filings with the
Securities and Exchange Commission.
Except as required by applicable law or the listing rules of the
New York Stock Exchange, we expressly disclaim any intent or
obligation to update any forward-looking statements, or to update
the reasons actual results could differ materially from those
expressed or implied by these forward-looking statements, whether
to conform such statements to actual results or changes in our
expectations, or as a result of the availability of new
information.
DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Loss
(Unaudited) (Amounts in thousands, except for per share
data) Three-month period ended
June 30, 2016 2015 Net
sales $ 174,393 213,805 Cost of sales 98,141 127,209
Gross profit 76,252 86,596 Selling, general and
administrative expenses 154,571 150,304 Loss from
operations (78,319 ) (63,708 ) Other expense, net 562
974 Loss before income taxes (78,881 ) (64,682 )
Income tax benefit (19,963 ) (17,355 ) Net loss (58,918 ) (47,327 )
Other comprehensive income (loss), net of tax Unrealized
gain (loss) on foreign currency hedging 2,909 (1,463 ) Foreign
currency translation adjustment 3,699 2,766 Total
other comprehensive income 6,608 1,303 Comprehensive
loss $ (52,310 ) (46,024 ) Net loss per share: Basic $ (1.84
) (1.43 ) Diluted $ (1.84 ) (1.43 ) Weighted-average common
shares outstanding: Basic 32,024 33,117 Diluted 32,024
33,117
Reconciliation of
GAAP Financial Measures to Non-GAAP Financial
Measures
DECKERS OUTDOOR
CORPORATION AND SUBSIDIARIES - GAAP to Non-GAAP Reconciliation
For the Three Months Ended June 30, 2016 (Rounded to the
thousands, except per share data) (Unaudited)
Q1 FY17
Non-GAAP GAAP Measures Restructuring
Measures (As Reported) Charges (1)
(Excluding Items) (2) Net sales $ 174,393 $ 174,393 Cost of
sales 98,141 98,141 Gross profit 76,252 76,252
Selling, general and administrative expenses 154,571
(1,732 ) 152,839 Loss from operations (78,319 ) 1,732
(76,587 ) Other expense, net 562 562
Loss before income taxes (78,881 )
(77,149 ) Income tax benefit (19,963 )
(19,525 ) Net loss $ (58,918 )
$ (57,624 ) Net loss per share: Basic $ (1.84 ) $ (1.80 )
Diluted $ (1.84 ) $ (1.80 ) Weighted-average common shares
outstanding: Basic 32,024 32,024 Diluted 32,024 32,024
(1) Amounts as of June 30, 2016 reflect charges related to
restructuring costs as a result of retail store closures and office
consolidations. (2) The tax rate applied to the Non-GAAP measures
is 25.3%, which is the same as the 1Q17 GAAP measure tax rate.
DECKERS OUTDOOR CORPORATION AND
SUBSIDIARIES Condensed Consolidated Balance Sheets
(Unaudited) (Amounts in thousands)
June 30, March 31,
Assets 2016 2016 Current assets: Cash
and cash equivalents $ 202,309 $ 245,956 Trade accounts receivable,
net 102,951 160,154 Inventories 469,163 299,911 Other current
assets 84,540 79,744 Total current assets 858,963 785,765
Property and equipment, net 245,111 237,246 Other noncurrent assets
253,671 255,057 Total assets $ 1,357,745 $ 1,278,068
Liabilities and Stockholders' Equity Current
liabilities: Short-term borrowings $ 110,558 $ 67,475 Trade
accounts payable 212,723 100,593 Other current liabilities 48,750
70,430 Total current liabilities 372,031 238,498 Long-term
liabilities: Mortgage payable 32,500 32,631 Other liabilities
35,970 39,468 Total long-term liabilities 68,470 72,099
Total stockholders' equity 917,244 967,471 Total
liabilities and stockholders' equity $ 1,357,745 $ 1,278,068
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version on businesswire.com: http://www.businesswire.com/news/home/20160728006547/en/
Investor Contact:Deckers BrandsSteve Fasching, VP,
Strategy & Investor Relations805.967.7611
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