Exhibit 99.1
Deckers Outdoor Corporation Reports First Quarter Financial Results;
Company Raises Fiscal 2006 Outlook
GOLETA, Calif.--(BUSINESS WIRE)--April 27, 2006--Deckers Outdoor
Corporation (NASDAQ: DECK) today announced financial results for the
first quarter ended March 31, 2006.
For the first quarter, net sales were $56.0 million compared to
$64.3 million in the same period last year. Net earnings for the
quarter were $5.6 million compared to earnings of $8.9 million last
year and earnings per diluted share was $0.44 versus earnings per
diluted share of $0.69 in the first quarter of 2005.
Angel Martinez, President and Chief Executive Officer, stated, "We
are pleased with our strong start to the new fiscal year and our
ability to exceed expectations for the first quarter. Importantly,
Teva is performing on plan, highlighted by the introduction of several
key new products. At the same time, we benefited from the very
successful debut of our UGG spring line, coupled with double digit
gains in our Simple business. While it is obviously early in the year,
we are excited with the positive momentum we are experiencing across
the board."
Including sales from both the wholesale divisions and the consumer
direct (our Internet, catalog and retail outlet division) business,
Teva net sales for the first quarter were $34.7 million compared to
$39.4 million in the same period last year. UGG net sales for the
quarter were $17.8 million versus $22.5 million a year ago, and Simple
net sales increased 49.6% to $3.5 million for the first quarter
compared to $2.4 million for the same period last year. Sales for the
consumer direct business, which are included in the brand sales
numbers above, increased 31.6% to $6.5 million for the first quarter
of 2006 compared to $5.0 million for the first quarter of 2005.
Mr. Martinez further stated, "Fiscal 2006 is an important year as
we begin the process of enhancing the long-term growth opportunities
for Teva by updating the product line, expanding our closed-toe
footwear selection, and further evolving the outdoor lifestyle nature
of the brand. Although we are still in the beginning stages of our
strategic plan, we feel confident that the initial steps we have
taken, primarily related to increases in both research and development
and advertising and marketing, are driving improved results and
setting the stage for a brighter future."
"UGG posted another strong quarter, driven by the success of the
brand's inaugural spring line and ongoing demand for our traditional
fall and holiday footwear offerings. The feedback from retailers to
our spring and fall collections has been very positive, which bodes
well as we look to further expand UGG's selling season year round,
giving us a heightened degree of confidence about our UGG business in
the second half of the year."
"Sales of Simple increased significantly compared to a year ago,
as consumer reaction to our new Green Toe collection has been
extremely positive. This category of environmentally friendly footwear
is off to a great start at retail, and importantly, it has allowed us
to open several new accounts. Looking ahead, we believe Simple's
product assortment for fall is our best in some time and we remain
convinced the brand is poised for a breakout year in 2006."
Gross margin for the first quarter of 2006 was 44.1%, compared to
46.0% for the first quarter of 2005, primarily due to higher closeouts
and inventory write-downs. Selling, general and administrative
expenses ("SG&A") were $15.8 million or 28.2% of net sales for the
first quarter of 2006 compared to $15.2 million or 23.6% of net sales
in the first quarter of 2005. The increase in SG&A was primarily due
to increased marketing, payroll and warehouse costs, partially offset
by lower bad debt and commission expense on the lower sales levels,
which caused SG&A as a percentage of sales to increase in the first
quarter of 2006 compared to the first quarter of 2005. The resulting
operating margins were 15.9% in the first quarter of 2006 versus 22.4%
for the same period last year.
Overall, inventories decreased to $31.3 million at March 31, 2006
compared to $45.4 million at March 31, 2005. UGG inventories were
$15.6 million at March 31, 2006 compared to $26.1 million at March 31,
2005; Teva inventories decreased to $11.9 million at March 31, 2006
compared to $16.9 million at March 31, 2005; and Simple inventories
increased to $3.7 million at March 31, 2006 compared to $2.4 million
at March 31, 2005. In addition, the Company ended the first quarter of
fiscal 2006 with approximately $65.3 million in cash and short-term
investments compared to $17.6 million at the end of the first quarter
of fiscal 2005.
Deckers also increased its guidance for fiscal 2006. The Company
now expects net sales to range from $268 million to $276 million, and
earnings per diluted share to be $2.21 to $2.29, compared to its
previous guidance of sales between $260 million to $270 million, and
earnings per diluted share of $2.05 to $2.15. The Company also
reiterated its comfort with its previous sales guidance for the second
quarter of 2006 of $38 million to $40 million. However, due to a
change in sales mix which is expected to result in lower gross profit
margin sales and a shift of certain expenses from the first quarter
into the second quarter, the Company now expects earnings per diluted
share of $0.03 to $0.05 compared to its previous guidance of earnings
per diluted share of $0.09 to $0.11.
The fiscal 2006 guidance includes approximately $2.1 million of
equity compensation expense which includes $700,000 of additional
stock compensation expense related to the adoption of Statement of
Financial Accounting Standards No. 123R, effective January 1, 2006.
Mr. Martinez concluded, "Our recent performance reflects the
vibrancy of our brands, the strength of our operating teams, and the
focus of our mission. While we are pleased with the current pace of
our business, we remain fully committed to further developing a global
platform in order to support our long-term growth strategy and better
position Deckers to capitalize on the many future prospects we believe
exist for our Company."
Deckers Outdoor Corporation builds niche products into global
lifestyle brands by designing and marketing innovative, functional and
fashion-oriented footwear developed for both high performance outdoor
activities and everyday casual lifestyle use. The Company's products
are offered under the Teva(R), Simple(R) and UGG(R) brand names, which
are also its registered trademarks.
Certain expectations and projections regarding the future
performance of Deckers Outdoor Corporation discussed in this news
release are forward-looking and are made under the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995,
including statements related to anticipated revenues, expenses,
earnings, operating cash flows, the outlook for the Company's markets
and the demand for its products. These expectations and projections
are based on currently available competitive, financial and economic
data along with the Company's operating plans and are subject to
future events and uncertainties. Management cautions the reader that
the following factors, among others, could cause the Company's actual
consolidated results of operations and financial position to differ
materially from those expressed in forward-looking statements: our
ability to anticipate fashion trends; whether the UGG brand will
continue to grow at the rate it has experienced in the recent past;
unpredictable events and circumstances relating to the supply of raw
materials; the risk that we are unable to accurately forecast consumer
demand and inventory needs; the risk that retailers could postpone or
cancel existing orders; whether we are successful in continuing to
implement our growth strategy; the success of our customers; our
ability to protect our intellectual property; our ability to develop
and patent new technologies; the risk that counterfeiting can harm our
sales or our brand image; our dependence on independent manufacturers
to supply our products; unpredictable events and circumstances related
to our international operations; our reliance on licensing partners to
expand our business; the challenge of managing our brands for growth;
currency risk; delays and unexpected costs that can result from
customs regulations; the sensitivity of our sales to seasonal and
weather factors; competition; and general economic conditions. Please
refer to the Company's reports and filings with the Securities and
Exchange Commission for a further discussion of these risks and
uncertainties. Readers are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date they are
made. 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 highlighted herein should not be assumed to be the
only items that could affect the future performance of the Company.
DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
March 31, December 31,
Assets 2006 2005
------------- -------------
Current assets:
Cash and cash equivalents $ 10,552,000 50,749,000
Short-term investments 54,788,000 2,500,000
Trade accounts receivable, net 28,193,000 40,918,000
Inventories 31,281,000 33,374,000
Prepaid expenses and other current
assets 1,748,000 1,364,000
Deferred tax assets 5,949,000 5,949,000
------------- -------------
Total current assets 132,511,000 134,854,000
Property and equipment, at cost, net 4,344,000 4,711,000
Intangible assets, less applicable
amortization 69,932,000 70,009,000
Other assets 52,000 52,000
------------- -------------
$ 206,839,000 209,626,000
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable $ 8,922,000 14,506,000
Accrued expenses 4,918,000 6,095,000
Income taxes payable 4,179,000 7,133,000
------------- -------------
Total current liabilities 18,019,000 27,734,000
------------- -------------
Deferred tax liabilities-noncurrent 4,337,000 4,337,000
Stockholders' equity:
Common stock 125,000 124,000
Additional paid-in capital 78,037,000 76,788,000
Retained earnings 106,085,000 100,436,000
Accumulated other comprehensive income 236,000 207,000
------------- -------------
Total stockholders' equity 184,483,000 177,555,000
------------- -------------
$ 206,839,000 209,626,000
============= =============
DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)
Three-month period ended
March 31,
---------------------------
2006 2005
------------ ------------
Net sales $ 56,004,000 64,263,000
Cost of sales 31,304,000 34,696,000
------------ ------------
Gross profit 24,700,000 29,567,000
Selling, general and administrative
expenses 15,786,000 15,168,000
------------ ------------
Income from operations 8,914,000 14,399,000
Other expense (income):
Interest, net (580,000) (69,000)
Other ----- 1,000
------------ ------------
Income before income taxes 9,494,000 14,467,000
Income taxes 3,845,000 5,580,000
------------ ------------
Net income $ 5,649,000 8,887,000
============ ============
Net income per share:
Basic $ 0.45 0.72
Diluted 0.44 0.69
============ ============
Weighted-average shares:
Basic 12,468,000 12,285,000
Diluted 12,763,000 12,922,000
============ ============
CONTACT: Deckers Outdoor Corporation
Zohar Ziv, 805-967-7611
or
Investor Relations:
Integrated Corporate Relations, Inc.
Chad A. Jacobs/Brendon Frey, 203-682-8200