Exhibit 99.1
Deckers Outdoor Corporation Reports Record First Quarter Financial Results
Company Reports First Quarter Sales Increased 37.6% to a Record of $134.2 Million
First Quarter Diluted EPS Increased 8.1% to a Record of $0.93
GOLETA, Calif.--(BUSINESS WIRE)--April 23, 2009--Deckers Outdoor Corporation (NASDAQGS: DECK) today announced financial results for the first quarter ended March 31, 2009.
First Quarter Highlights
- Net sales increased 37.6% to $134.2 million versus $97.5 million last year.
- Diluted EPS increased 8.1% to $0.93 compared to $0.86 a year ago.
- Domestic sales increased 29.6% to $102.0 million versus $78.7 million last year.
- International sales increased 71.0% to $32.2 million compared $18.8 million a year ago.
- UGG® brand sales increased 66.9% to $91.4 million versus $54.8 million last year.
Angel Martinez, President, Chief Executive Officer and Chairman of the Board of Directors, stated: “We are pleased by our recent performance and proud of our ability to deliver excellent operating results in this challenging economic environment. Our first quarter sales and earnings exceeded plan, driven by higher than expected domestic and international demand for UGG® products as the brand’s spring collection of boots, sandals, and casual footwear sold through very well at retail. Sales of Teva® products experienced a slight shortfall versus a year ago as a result of the general retail environment combined with the bankruptcy of some accounts. Importantly, we effectively controlled our inventories and expenses and we continue to monitor the financial health of our customers. We believe that the Teva brand is well positioned as we head into the summer selling season. Similarly, a higher level of cancellations and lower reorders during the first quarter negatively impacted our Simple® brand’s business.”
“Again, we are pleased with our start to 2009,” continued Mr. Martinez. “Our UGG brand’s momentum continues to grow and we are now more optimistic about the brand’s prospects evidenced by our improved outlook for the full year. Furthermore, our entire organization has done an excellent job managing the business during these difficult recessionary conditions, which allowed us to grow inventories to meet our sales while improving our cash, cash equivalents and short-term investments position by nearly $47 million to $230 million compared to a year ago.”
Division Summary
UGG®
UGG brand net sales for the first quarter increased 66.9% to $91.4 million compared to $54.8 million for the same period last year. The significant sales increase was attributable to strong domestic demand for the expanded spring line coupled with increased shipments of spring product to international distributors.
Teva®
Teva brand net sales decreased 5.7% to $35.6 million for the first quarter compared to $37.7 million for the same period last year. The decline in sales was the result of lower pre-booked orders scheduled for delivery in the first quarter compared with the year ago period and to a lesser extent the bankruptcies of three wholesale accounts.
Simple®
Simple brand net sales for the first quarter decreased 13.0% to $4.4 million compared to $5.1 million for the same period last year. Simple sales were negatively impacted by a higher than normal rate of order cancellations due to the general retail environment combined with lower reorders and the loss of international sales, partly as a result of the termination of the brand’s distributor in Japan.
Other Brands
Combined net sales of the Company’s other brands, TSUBO® and Ahnu®, were $2.9 million for the first quarter of 2009. The Company acquired TSUBO in the second quarter of 2008 and Ahnu in the first quarter of 2009.
eCommerce
Sales for the eCommerce business, which are included in the brand sales numbers above, increased 3.5% to $16.2 million for the first quarter compared to $15.6 million for the same period a year ago.
Retail Stores
Sales for the retail store business, which are included in the brand sales numbers above, increased 161.9% to $13.9 million for the first quarter compared to $5.3 million for the same period a year ago. For those stores that were open during the full three months ended March 31, 2008 and 2009, same store sales grew by 29.3%.
Gross Profit Margin
The Company’s gross profit margin for the first quarter was 43.9% compared to 47.3% for the first quarter of last year. Gross profit margin decreased primarily due to the wholesale business growing at a higher rate than the eCommerce business for the first quarter of 2009 as well as higher levels of closeout sales than in the first quarter of 2008. First quarter 2008 margins were also positively impacted by a reduction in the estimate for sales returns.
Full-Year 2009 Outlook
- Based upon the UGG brand’s better than expected first quarter results partially offset by lower projected sales forecasts for Teva, Simple, and TSUBO, the Company is adjusting its full year revenue outlook. The Company now expects its full year revenue to increase approximately 7% to 9% over 2008, compared to previous guidance of approximately 6% to 9%.
- The Company now expects its full year diluted earnings per share to be flat to up slightly over the $7.27 non-GAAP diluted EPS in 2008, which excluded pre-tax impairment charges of $35.8 million as discussed in our related earnings release, compared to previous guidance of flat to down slightly. This guidance assumes a gross profit margin of approximately 45% and SG&A as a percentage of sales of approximately 25%.
Second Quarter Outlook
- The Company currently expects second quarter 2009 revenue to increase approximately 10% over 2008 levels.
- The Company currently expects to report a diluted loss per share of approximately ($0.15) to ($0.10) for the second quarter 2009. This guidance assumes a gross profit margin of approximately 39% and SG&A as a percentage of sales of approximately 43% due to the shift of approximately $2 million in expenses, consisting primarily of marketing costs, into the second quarter from the first quarter. A significant amount of the Company’s operating expenses are fixed and spread evenly on an absolute dollar basis throughout each quarter, resulting in the greatest impact on earnings in the lowest volume sales quarter, which has historically been the second quarter.
The Company’s conference call to review first quarter fiscal 2009 results will be broadcast live over the internet today, Thursday, April 23, 2009 at 4:30 pm Eastern Time. The broadcast will be hosted at www.deckers.com and www.earnings.com.
Deckers Outdoor Corporation strives to be a premier lifestyle marketer that builds niche brands into global market leaders by designing and marketing innovative, functional and fashion-oriented footwear developed for both high performance outdoor activities and everyday casual lifestyle use. UGG® Australia, Teva®, Simple® Shoes, TSUBO®, Ahnu® and Deckers® Brand are registered trademarks of Deckers Outdoor Corporation.
This news release contains statements regarding our expectations, beliefs and views about our future financial performance which are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can be identified by the use of words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "project," or future or conditional verbs such as "will," "would," "should," "could," or "may" or by the fact that such statements relate to future, and not just historical, events or circumstances, including statements related to anticipated revenues, expenses, earnings, operating cash flows, the outlook for the Company's markets and the demand for its products. The forward-looking statements in this news release regarding our future financial performance are based on currently available information as of the date of this release, and because our business is subject to a number of risks and uncertainties, some of which may be beyond our control, actual operating results in the future may differ materially from the future financial performance expected at the current time. Those risks and uncertainties include, among others: the continued decline of the global economy; our ability to anticipate fashion trends; consumer demand or inventory needs; whether the UGG brand will continue to grow at the same rate it has experienced in the past; impairment charges related to our brand’s intangible assets if our product sales or operating performance decline to a point that the fair value of our brands’ intangible assets do not exceed their carrying values; shortages or price fluctuations of raw materials that could interrupt product manufacturing and increase product costs; increased costs of manufacturing in China and actions by the Chinese government; currency fluctuations; our ability to implement our growth strategy; the success of our customers, their ability to perform in an adverse economic environment and the risk of losing one or more of our key customers; our ability to develop and protect our brands and intellectual property; the risk that counterfeiting can harm our sales or our brand image; our dependence on independent manufacturers to supply our products; the risk that retailers could postpone or cancel existing orders; unpredictable events and circumstances and currency risks related to our international operations; a downturn in key market economies; volatile credit markets; liquidity and market risks for our cash equivalents and short-term investments; the risk of losing key personnel; a delay or interruption in the delivery of merchandise to our customers; and the sensitivity of our sales to seasonal and weather conditions. Certain of these risks and uncertainties, as well as others, are more fully described under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, which we filed with the Securities and Exchange Commission on March 2, 2009. Readers are cautioned not to place undue reliance on forward-looking statements contained in this news release, which speak only as of the date of this release. The Company undertakes no obligation to publicly release or update the results of any revisions to forward-looking statements, which may be made to reflect new information, events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. The risks and uncertainties highlighted herein should not be assumed to be the only items that could affect the future performance or valuation of the Company.
(Tables to follow)
| |
| DECKERS OUTDOOR CORPORATION |
| AND SUBSIDIARIES |
| Condensed Consolidated Balance Sheets |
| (Unaudited) |
| (Amounts in thousands) |
| | | | |
| | | | |
| | March 31, | | December 31, |
| Assets | | 2009 | | 2008 |
| | | | |
| Current assets: | | | | |
| Cash and cash equivalents | $ | 179,073 | | 176,804 |
| Restricted cash | | 300 | | 300 |
| Short-term investments | | 50,947 | | 17,976 |
| Trade accounts receivable, net | | 56,298 | | 108,129 |
| Inventories | | 66,399 | | 92,740 |
| Prepaid expenses and other current assets | | 5,045 | | 3,691 |
| Deferred tax assets | | 13,317 | | 13,324 |
| Total current assets | | 371,379 | | 412,964 |
| | | | |
| Restricted cash | | 400 | | 700 |
| Property and equipment, at cost, net | | 30,123 | | 28,318 |
| Intangible assets, less applicable amortization | | 26,152 | | 24,034 |
| Deferred tax assets | | 17,455 | | 17,447 |
| Other assets | | 444 | | 258 |
| | | | |
| $ | 445,953 | | 483,721 |
| | | | |
| Liabilities and Stockholders' Equity | | | | |
| | | | |
| Current liabilities: | | | | |
| Trade accounts payable | $ | 19,492 | | 42,960 |
| Accrued expenses | | 15,442 | | 27,672 |
| Income taxes payable | | 7,852 | | 24,577 |
| Total current liabilities | | 42,786 | | 95,209 |
| | | | |
| Long-term liabilities | | 3,696 | | 3,847 |
| | | | |
| Stockholders' equity: | | | | |
| Deckers Outdoor Corporation stockholders' equity: | | | | |
| Deckers Outdoor Corporation stockholders' equity:Common stock | | 131 | | 131 |
| Additional paid-in capital | | 117,714 | | 115,214 |
| Retained earnings | | 280,855 | | 268,515 |
| Accumulated other comprehensive income | | 345 | | 392 |
| Total Deckers Outdoor Corporation stockholders' equity | | 399,045 | | 384,252 |
| Noncontrolling interest | | 426 | | 413 |
| Total stockholders' equity | | 399,471 | | 384,665 |
| | | | |
| $ | 445,953 | | 483,721 |
| DECKERS OUTDOOR CORPORATION |
| AND SUBSIDIARIES |
| Condensed Consolidated Statements of Income |
| (Unaudited) |
| (Amounts in thousands, except for per share data) |
| |
| |
| | Three-month period ended |
| | March 31, |
| | | 2009 | | 2008 |
| | | | | |
| Net sales | | $ | 134,226 | | 97,535 |
| Cost of sales | | | 75,313 | | 51,387 |
| Gross profit | | | 58,913 | | 46,148 |
| | | | | |
| Selling, general and administrative expenses | | | 39,587 | | 29,088 |
| Income from operations | | | 19,326 | | 17,060 |
| | | | | |
| Other (income) expense, net: | | | | | |
| Interest income | | | (596) | | (1,389) |
| Interest expense | | | 17 | | 32 |
| Other, net | | | (19) | | (251) |
| Income before income taxes | | | 19,924 | | 18,668 |
| | | | | |
| Income tax expense | | | 7,571 | | 7,374 |
| Net income | | | 12,353 | | 11,294 |
| | | | | |
Less: Net income attributable to the noncontrolling interest | | | 13 | | ---- |
| | | | | |
| Net income attributable to Deckers Outdoor Corporation | | $ | 12,340 | | 11,294 |
| | | | | |
| Net income attributable to Deckers Outdoor Corporation | | | | | |
| common stockholders per share: | | | | | |
| Basic | | $ | 0.94 | | 0.87 |
| Diluted | | | 0.93 | | 0.86 |
| | | | | |
| Weighted-average shares: | | | | | |
| Basic | | | 13,090 | | 13,008 |
| Diluted | | | 13,201 | | 13,175 |
| DECKERS OUTDOOR CORPORATION |
| AND SUBSIDIARIES |
| Reconciliation of Non-GAAP Measures |
| (Unaudited) |
| (Amounts in thousands, except for per share data) |
| |
| |
| | | Twelve-month |
| | | period ended |
| | | December 31, 2008 |
| | | |
| Income before income taxes | | $ | 120,502 |
| Add back impairment charges | | | 35,825 |
| | | |
| Income before income taxes excluding impairment charges | | | 156,327 |
| | | |
| Income tax expense (1) | | | 60,494 |
| Net income excluding impairment charges | | | 95,833 |
| | | |
| Less: Net loss attributable to the noncontrolling interest | | | (77) |
| | | |
| Net income excluding impairment charges attributable to | | | |
| Deckers Outdoor Corporation | | | 95,910 |
| | | |
| Net income excluding impairment charges attributable to | | | |
| Deckers Outdoor Corporation common stockholders per share: | | | |
| Basic | | $ | 7.35 |
| Diluted | | | 7.27 |
| | | |
| Weighted-average shares: | | | |
| Basic | | | 13,042 |
| Diluted | | | 13,195 |
(1) The non-GAAP income tax expense for the period presented above assumes the same effective tax rate as the GAAP income tax expense for that period. |
| |
| Use of Non-GAAP Financial Measures |
| |
To supplement the actual and forecast results in accordance with U.S. generally accepted accounting principles (GAAP), for the applicable period, the Company also used non-GAAP measures of net income and earnings per share, which are adjusted from the GAAP-based results to exclude non-cash impairment charges. This adjustment is not in accordance with or an alternative for GAAP. This adjustment is provided to enhance an overall understanding of the Company's financial performance for the applicable period and is an indicator management uses for planning and forecasting future periods. |
|
The excluded items represent non-cash impairment charges associated with the write-down of the Company's Teva goodwill and trademarks and TSUBO goodwill because management does not believe these expenses are indicative of the Company's core business. Even though such items have occurred in the past and may recur in future periods, it is driven by events that are not directly related to the Company's ongoing core business operations. These financial measures are not to be considered in isolation from, or as a substitute for, financial results prepared in accordance with GAAP. |
CONTACT:
Deckers Outdoor Corporation
Zohar Ziv, 805-967-7611
Chief Operating Officer
or
Investor Relations:
ICR
Chad Jacobs/Brendon Frey, 203-682-8200
