Deckers Outdoor Corporation (DECK), the maker of sheepskin boots and slippers, recently delivered better-than-expected first-quarter 2010 results on the back of strong demand for the UGG and Teva brands product lines.
The quarterly earnings of $1.37 per share have outpaced the Zacks Consensus Estimate of 91 cents, and soared 47.3% from 93 cents posted in the prior-year quarter. Management now expects second-quarter 2010 earnings to be flat compared to the prior-year quarter, and fiscal year 2010 earnings to rise by 11%.
Deckers had earlier forecasted fiscal year 2010 earnings growth of 5%. The current Zacks Consensus Estimates for the second quarter and fiscal year 2010 are 26 cents and $9.92 per share, respectively.
The quarterly earnings have outperformed the Zacks Consensus Estimate by 50.6%. Deckers’ earnings surprise history compared to the Zacks Consensus Estimate for the preceding four quarters (including the reported quarter), varies between 16.1% and 388.9% with the average being 119.1%.
Goleta, California based company Deckers said that effective January 2011, following the expiration of existing distribution agreements, it will manage the distribution of UGG, Teva and Simple brands in the U.K. and the UGG and Simple brands in the Benelux region and France. This will help increase sales and margins by selling directly to wholesale customers.
Deckers, which competes with Skechers USA Inc. (SKX), said that total net sales jumped 16.2% year-over-year to $155.9 million. Deckers now expects the second quarter and fiscal year 2010 revenue to climb by 25% and 13%, respectively. Management had previously predicted fiscal year 2010 total revenue growth of 11%.
Gross margin expanded 610 basis points to 50% in the quarter under review, reflecting increased sales from higher margin global retail and eCommerce businesses. Domestic sales for the quarter rose 14.7% to $117 million, whereas international sales soared 20.8% to $38.9 million.
UGG brand net sales grew 14.2% to $104.4 million and Teva brand net sales surged 21.4% to $43.2 million. Combined net sales of Deckers’ other brands for the quarter were $8.4 million, up 15.1%.
Sales for the company’s eCommerce business grew 13.8% to $18.4 million, and sales for the retail store business surged 66.1% to $23.1 million, reflecting the opening of 5 new stores and rise in same-store sales by 28.2%.
Deckers also portrays a healthy balance sheet with a significant cash and cash equivalents balance of $357.3 million and no debt at the end of first-quarter 2010, which provides it with ample liquidity to capitalize on future growth opportunities. Management expects capital expenditure between $25 million and $30 million for fiscal 2010. The company did not buy back shares during the quarter, and has $30 million at its disposal under the share repurchase authorization.
Read the full analyst report on “DECK”
Read the full analyst report on “SKX”
Zacks Investment Research
