Deckers Outdoor (DECK) 8-K Deckers Brands Reports Second Quarter Fiscal 2018 Financial Results and Raises Guidance for Full Year Fiscal 2018

Exhibit 99.1

Deckers Brands Reports Second Quarter Fiscal 2018 Financial Results and Raises Guidance for Full Year Fiscal 2018

• Second quarter fiscal 2018 sales of $482.5 million and diluted earnings per share of $1.54
• Gross margin expanded 220 basis points in the quarter
• Fiscal 2018 sales now anticipated to increase between 1% to 2% over fiscal 2017 and adjusted earnings per share expected to be in the range of $4.15 to $4.30
• Share repurchase authorization increased to $400 million

GOLETA, Calif.--(BUSINESS WIRE)--October 26, 2017--Deckers Brands (NYSE: DECK), a global leader in designing, marketing and distributing innovative footwear, apparel and accessories, today announced financial results for the second fiscal quarter ended September 30, 2017.

Throughout this release, references to Non-GAAP financial measures exclude the impact of certain restructuring and other charges. Additional information regarding these Non-GAAP financial measures is set forth under the heading "Non-GAAP Financial Measures" below.

“I am very pleased with the progress we have made, and continue to make, executing on our operating profit improvement plan. Our goal remains to achieve an incremental $100 million of operating profit by the end of our fiscal year 2020, and operating margins of at least 13% by focusing on full-priced selling, driving supply chain efficiencies, implementing process improvements, reducing indirect spend, and closing retail stores that do not meet our financial objectives,” said Dave Powers, President and Chief Executive Officer. “This quarter is yet another testament to the power of our transformation, as we generated a 220 basis point increase in gross margin and earnings per share that were ahead of expectations. As we head into the holiday selling season with a stronger product lineup and cleaner channel inventories compared to a year ago, we are confident that Deckers is well positioned to achieve our near- and medium-term financial targets and deliver increased shareholder value.”

“In light of our strong results and our confidence in the back half of the fiscal year, we are increasing our outlook for the year. In addition, I am pleased to announce that the board of directors has authorized a new $335 million share repurchase program. Combined with the $65 million remaining under our current authorization, we now have the ability to repurchase a total of $400 million worth of shares, or approximately 20% of our market capitalization. We intend to aggressively repurchase our shares to reward our long-term shareholders with accelerated EPS growth.”

Second Quarter Fiscal 2018 Financial Review

• Net sales declined 0.7% to $482.5 million compared to $485.9 million for the same period last year. On a constant currency basis, net sales decreased 0.3%.
• Gross margin was 46.7% compared to 44.5% for the same period last year.
• SG&A expenses were $157.8 million compared to $162.4 million for the same period last year. Non-GAAP SG&A expenses were $157.3 million.
• Operating income was $67.4 million compared to $54.0 million for the same period last year. Non-GAAP operating income was $67.8 million.
• Diluted earnings per share was $1.54 compared to $1.21 for the same period last year. Non-GAAP diluted earnings per share was $1.54.

Brand Summary

• UGG® brand net sales for the second quarter declined 2.9% to $400.4 million compared to $412.2 million for the same period last year.
• HOKA ONE ONE® brand net sales for the second quarter increased 34.4% to $40.6 million compared to $30.2 million for the same period last year.
• Teva® brand net sales for the second quarter increased 24.9% to $21.4 million compared to $17.1 million for the same period last year.
• Sanuk® brand net sales for the second quarter decreased 19.3% to $15.2 million compared to $18.9 million for the same period last year.

Channel Summary (included in the brand sales numbers above)

• Wholesale net sales for the second quarter declined 2.2% to $391.2 million compared to $399.9 million for the same period last year.
• DTC net sales for the second quarter increased 6.2% to $91.3 million compared to $86.0 million for the same period last year. DTC comparable sales for the second quarter increased 3.7% over the same period last year.

Geographic Summary (included in the brand and channel sales numbers above)

• Domestic net sales for the second quarter decreased 3.1% to $302.7 million compared to $312.2 million for the same period last year.
• International net sales for the second quarter increased 3.5% to $179.8 million compared to $173.7 million for the same period last year.

Balance Sheet (September 30, 2017 as compared to September 30, 2016)

• Cash and cash equivalents were $230.6 million compared to $110.0 million.
• Deckers had $165.3 million in outstanding borrowings compared to $310.4 million.
• Inventories decreased 3.9% to $555.6 million from $578.0 million.

Full Year Fiscal 2018 Outlook for the Twelve Month Period Ending March 31, 2018

Deckers now expects fiscal year 2018 results to be:

• Net sales are expected to be in the range of up approximately 1% to up 2% versus last year.
• Gross margin is expected to be approximately 47.5%.
• SG&A expenses as a percentage of sales are projected to be approximately 37%.
• Non-GAAP diluted earnings per share are expected to be in the range of $4.15 to $4.30. This excludes any charges that may occur from additional store closures, restructuring and other charges.
• The earnings per share guidance does not assume any future share repurchase.

Third Quarter Fiscal 2018 Outlook for the Three Month Period Ending December 31, 2017

• The Company expects third quarter fiscal 2018 net sales to be in the range of $735.0 million to $745.0 million.
• Non-GAAP diluted earnings per share are expected to be in the range of $3.65 to $3.75. This excludes any charges that may occur from additional store closures, restructuring and other charges.
• The earnings per share guidance does not assume any future share repurchase.

Non-GAAP Financial Measures

We present certain Non-GAAP financial measures in this press release, including constant currency, 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, and other charges relating to inventory write-downs, severance and asset impairments. 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. For example, in order to calculate our constant currency information, we calculate the current period financial information using the foreign currency exchange rates that were in effect during the previous comparable period, excluding the effects of foreign currency exchange rate hedges and re-measurements in the condensed consolidated balance sheets. 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 second quarter 2018 will be broadcast live today, Thursday, October 26, 2017 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 cost savings initiatives, product and brand strategies, and marketing and distribution plans. 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, 2017, 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 Income (Loss)
(Unaudited)
(Amounts in thousands, except for per share data)
				Three-month period ended						Six-month period ended
				September 30,						September 30,
				2017			2016			2017			2016
Net sales			$	482,460		$	485,944		$	692,177		$	660,337
Cost of sales				257,343			269,519			376,435			367,660
	Gross profit			225,117			216,425			315,742			292,677
Selling, general and administrative expenses				157,762			162,402			304,643			316,973
	Income (loss) from operations			67,355			54,023			11,099			(24,296	)
Other expense, net				1,034			1,551			1,365			2,113
	Income (loss) before income taxes			66,321			52,472			9,734			(26,409	)
Income tax expense (benefit)				16,762			13,167			2,296			(6,796	)
	Net income (loss)			49,559			39,305			7,438			(19,613	)
Other comprehensive income (loss), net of tax
	Unrealized (loss) gain on foreign currency hedging			(911	)		(890	)		(4,683	)		2,019
	Foreign currency translation adjustment			2,968			(856	)		4,518			2,843
		Total other comprehensive income (loss)		2,057			(1,746	)		(165	)		4,862
	Comprehensive income (loss)		$	51,616		$	37,559		$	7,273		$	(14,751	)
Net income (loss) per share:
	Basic		$	1.55		$	1.23		$	0.23		$	(0.61	)
	Diluted		$	1.54		$	1.21		$	0.23		$	(0.61	)
Weighted-average common shares outstanding:
	Basic			32,015			32,057			32,003			32,041
	Diluted			32,272			32,422			32,256			32,041

Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures
DECKERS BRANDS - GAAP to Non-GAAP Reconciliation
For the Three Months Ended September 30, 2017 and September 30, 2016
(Amounts in thousands, except for per share data)
(Unaudited)
			Three-month period ended September 30, 2017
							Non-GAAP
			GAAP Measures				Measures
			(As Reported)	Other Charges (1)			(Excluding Items) (2)
Net sales		$	482,460			$	482,460
Cost of sales			257,343				257,343
	Gross profit		225,117				225,117
Selling, general and administrative expenses			157,762	(464	)		157,298
	Income from operations		67,355	464			67,819
Other expense, net			1,034				1,034
	Income before income taxes		66,321				66,785
Income tax expense			16,762				17,084
	Net income	$	49,559			$	49,701
Net income per share:
	Basic	$	1.55			$	1.55
	Diluted	$	1.54			$	1.54
Weighted-average common shares outstanding:
	Basic		32,015				32,015
	Diluted		32,272				32,272
(1) Amounts as of September 30, 2017 reflect other charges related to organizational changes, the strategic review process and the contested annual meeting.
(2) The tax rate applied to the Non-GAAP measures is 25.6% for the fiscal quarter ended September 30, 2017.
			Three-month period ended September 30, 2016
							Non-GAAP
			GAAP Measures	Restructuring			Measures
			(As Reported)	Charges (1)			(Excluding Items) (2)
Net sales		$	485,944			$	485,944
Cost of sales			269,519				269,519
	Gross profit		216,425				216,425
Selling, general and administrative expenses			162,402	(900	)		161,502
	Income from operations		54,023	900			54,923
Other expense, net			1,551				1,551
	Income before income taxes		52,472				53,372
Income tax expense			13,167				13,394
	Net income	$	39,305			$	39,978
Net income per share:
	Basic	$	1.23			$	1.25
	Diluted	$	1.21			$	1.23
Weighted-average common shares outstanding:
	Basic		32,057				32,057
	Diluted		32,422				32,422
(1) Amounts as of September 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 25.1%, which is the same as the GAAP tax rate for the three-month period ended September 30, 2016.

Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures
DECKERS BRANDS - GAAP to Non-GAAP Reconciliation
For the Six Months Ended September 30, 2017 and September 30, 2016
(Amounts in thousands, except for per share data)
(Unaudited)
			Six-month period ended September 30, 2017
								Non-GAAP
			GAAP Measures		Restructuring and			Measures
			(As Reported)		Other Charges (1)			(Excluding Items) (2)
Net sales		$	692,177				$	692,177
Cost of sales			376,435					376,435
	Gross profit		315,742					315,742
Selling, general and administrative expenses			304,643		(2,408	)		302,235
	Income from operations		11,099		2,408			13,507
Other expense, net			1,365					1,365
	Income before income taxes		9,734					12,142
Income tax expense			2,296					3,357
	Net income	$	7,438				$	8,785
Net income per share:
	Basic	$	0.23				$	0.27
	Diluted	$	0.23				$	0.27
Weighted-average common shares outstanding:
	Basic		32,003					32,003
	Diluted		32,256					32,256
(1) Amounts as of September 30, 2017 reflect other charges related to organizational changes, the strategic review process and the contested annual meeting.
(2) The tax rate applied to the Non-GAAP measures is 27.6% for the six months ended September 30, 2017.
			Six-month period ended September 30, 2016
								Non-GAAP
			GAAP Measures		Restructuring			Measures
			(As Reported)		Charges (1)			(Excluding Items) (2)
Net sales		$	660,337				$	660,337
Cost of sales			367,660					367,660
	Gross profit		292,677					292,677
Selling, general and administrative expenses			316,973		(2,632	)		314,341
	Loss from operations		(24,296	)	2,632			(21,664	)
Other expense, net			2,113					2,113
	Loss before income taxes		(26,409	)				(23,777	)
Income tax benefit			(6,796	)				(6,118	)
	Net loss	$	(19,613	)			$	(17,659	)
Net loss per share:
	Basic	$	(0.61	)			$	(0.55	)
	Diluted	$	(0.61	)			$	(0.55	)
Weighted-average common shares outstanding:
	Basic		32,041					32,041
	Diluted		32,041					32,041
(1) Amounts as of September 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 25.7%, which is the same as the GAAP tax rate for the six-month period ended September 30, 2016.

DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)
					September 30,		March 31,
			Assets		2017		2017
Current assets:
	Cash and cash equivalents			$	230,586	$	291,764
	Trade accounts receivable, net				306,573		158,643
	Inventories, net				555,560		298,851
	Other current assets				60,192		71,563
		Total current assets			1,152,911		820,821
Property and equipment, net					216,980		225,531
Other noncurrent assets					150,397		145,428
		Total assets		$	1,520,288	$	1,191,780
			Liabilities and Stockholders' Equity
Current liabilities:
	Short-term borrowings			$	133,474	$	549
	Trade accounts payable				244,846		95,893
	Other current liabilities				95,727		62,609
		Total current liabilities			474,047		159,051
Long-term liabilities:
	Mortgage payable				31,803		32,082
	Other liabilities				45,612		46,392
		Total long-term liabilities			77,415		78,474
		Total stockholders' equity			968,826		954,255
		Total liabilities and stockholders' equity		$	1,520,288	$	1,191,780

CONTACT:
Deckers Brands
Investor Contact:
Steve Fasching | VP, Strategy & Investor Relations
805.967.7611