Deckers Outdoor Beats Estimate - Analyst Blog

Deckers Outdoor Corporation (DECK), the maker of sheepskin boots and slippers, recently delivered better-than-expected fourth-quarter 2009 results on the heels of strong demand for the UGG brand product line, new product introductions, and effective inventory management.

The quarterly earnings of $5.22 per share surpassed the Zacks Consensus Estimate of $4.32, and soared 28.9% from $4.05 posted in the prior-year quarter. Management now expects first-quarter 2010 earnings to fall by 6%, and fiscal year 2010 earnings to rise by 5%. The current Zacks Consensus Estimates for the first quarter and fiscal year 2010 are 90 cents and $9.40 per share, respectively.

The quarterly earnings outperformed the Zacks Consensus Estimate by 20.8%. 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 117.8%.

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 14.7% to $348 million, whereas gross margin expanded 450 basis points to 49.8% in the quarter under review. Deckers now expects first quarter and fiscal year 2010 revenues to climb by 7% and 11%, respectively.

Domestic sales for the quarter rose 8.9% to $308.7 million, whereas international sales almost doubled to $39.3 million.

UGG brand net sales grew 15.7% to $333.3 million, Teva brand net sales dropped 14.8% to $10.5 million, and Simple brand net sales jumped 17.9% to $2.7 million. Combined net sales of Deckers’ other brands for the quarter were $1.5 million.

Sales for the company’s eCommerce business grew 27% to $45.9 million, and sales for the retail store business surged 88.7% to $46.6 million due to the opening of 5 new stores and rise in same-store sales by 29.7%.

Deckers ended the quarter with cash and cash equivalents of $315.9 million, and total shareholders’ equity of $491.9 million.