Ugg boosts Deckers Q3 net sales by 6.6 percent

Deckers Brands in its financial results for the third fiscal quarter ended December 31, 2014 said that its net sales increased 6.6 percent to 784.7 million dollars compared to 736 million dollars for the same period last year. Gross margin increased 180 basis points to 52.9 percent compared to 51.1 percent for the same period last year. Diluted earnings per share increased 11.4 percent to 4.50 dollars compared to 4.04 dollars for the same period last year.

“Our third quarter performance represents an important inflection point in the evolution of the Ugg brand product line,” commented Angel Martinez, President, Chief Executive Officer and Chair of the Board of Directors, adding, “Full price selling of casual boots, weather boots, and specialty classics exceeded expectations and in some cases outpaced our inventory investments.”

Ugg brand net sales for the third quarter increased 6.5 percent to 736 million dollars compared to 690.9 million dollars for the same period last year. The increase in sales was driven by higher global e-commerce sales, sales contributions from new worldwide retail store openings, increased international wholesale and distributor sales, partially offset by a decrease in domestic wholesale and same store sales. Teva brand net sales for the third quarter decreased 12.1 percent to 13.6 million dollars compared to 15.5 million dollars for the same period last year. Sanuk brand net sales for the third quarter decreased 7.9 percent to 20.5 million dollars compared to 22.2 million dollars for the same period last year.

Combined net sales of the company's other brands increased 96.5 percent to 14.6 million dollars for the third quarter compared to 7.4 million dollars for the same period last year. The increase was primarily attributable to a 7.2 million dollars increase in sales for the Hoka One One brand.

Sales for the global retail store business, which is included in the brand sales numbers above, increased 8.3 percent. The increase was driven by 29 new stores opened after December 31, 2013, partially offset by a same store sales decrease of 7.2 percent for the thirteen weeks ended December 28, 2014. Sales for the global e-commerce business increased 25.2 percent driven primarily by an increase in global Ugg brand sales.

For the fiscal year 2015, the company now expects, revenues to be approximately 1.8 billion dollars or 13.5 percent over the twelve month period ended March 31, 2014, down from the previous guidance of approximately 1.825 billion dollars or 15 percent. The company diluted earnings per share to be approximately 4.58 dollars or an increase of 12.6 percent over the twelve month period ended March 31, 2014, compared to the previous guidance for growth of approximately 15.8 percent. This guidance assumes a gross profit margin of approximately 49 percent and an operating margin of approximately 12.5 percent compared to previous guidance of approximately 13 percent.

The company expects the Ugg brand revenues to increase approximately 11 percent over the twelve month period ended March 31, 2014, down from the previous guidance of approximately 14 percent, for Teva brand, revenues are anticipated to increase low double digits and for Sanuk brand, revenues could increase low double digits. Combined fiscal year 2015 net sales of the company's other brands are now expected to be approximately 83 million dollars compared to 48.6 million dollars for the twelve month period ended March 31, 2014, up from previous guidance of approximately 82 million dollars.

The company expects to break even in the fourth quarter fiscal year 2015 with revenue increase of approximately 10 percent over the three month period ended March 31, 2014.