Exhibit 99.1
Deckers Outdoor Corporation Reports Second Quarter Financial Results;
Company Reports 2Q Diluted EPS of $0.21;
Ahead of Previous Guidance of $0.03 to $0.05;
Company Raises Fiscal 2006 Outlook
GOLETA, Calif.--(BUSINESS WIRE)--July 27, 2006--Deckers Outdoor
Corporation (NASDAQ: DECK) today announced financial results for the
second quarter ended June 30, 2006.
Second Quarter Highlights
-- Net sales increased 3.4% to $41.7 million versus $40.3 million
last year; ahead of our previous guidance range of $38 million
to $40 million.
-- Gross margin increased 600 basis points to 45.6% compared to
39.6% a year ago.
-- Diluted EPS was the same as last year at $0.21; ahead of our
previous guidance range of $0.03 to $0.05.
-- Cash and short-term investments improved to $64.9 million
compared to $11.1 million a year ago.
-- Inventories decreased to $45.2 million versus $66.7 million
last year.
Angel Martinez, President and Chief Executive Officer, stated, "We
are very pleased that the positive momentum in our business has
continued, allowing us to once again exceed expectations. During the
quarter we experienced strong full price selling across all three of
our brands evidenced by the 600 basis point improvement in our gross
margin. We are particularly encouraged by the performance of Teva, as
consumer reaction to a limited introduction of new styles as well as
improved retail presence, helped drive results. At the same time, our
strategic investments in marketing and advertising, research &
development, and our retail and international infrastructures have us
well positioned to capitalize on the many opportunities that still lie
ahead, both domestically and overseas. We are focused on successfully
executing our business plan and are dedicated to driving increased
profitability and greater shareholder value."
Second Quarter Segment Summary
Teva
As anticipated, Teva net sales for the second quarter were $22.8
million compared to $24.8 million for the same period last year. The
decrease in the volume of sales was the result of fewer closeout
sales, which was partially offset by an increase in full margin sales
that were driven by solid sell-through of men's, women's and kids'
products including the introduction of new styles of the Dozer, Elixir
and Mush.
UGG
UGG net sales for the second quarter increased 19.2% to $15.9
million versus $13.3 million for the same period a year ago. Sales
were positively impacted by a strong reorder business for the UGG
spring line, as well as continued demand for core products.
Simple
Simple net sales increased 39.9% to $3.0 million for the second
quarter compared to $2.2 million for the same period last year. Simple
experienced strong consumer demand for our recently introduced Green
Toe Collection across all channels of distribution. In addition,
Simple's men's and women's sandal business also performed well.
Consumer Direct
Sales for the Consumer Direct business, which are included in the
brand sales numbers above, increased 13.5% to $4.0 million compared to
$3.5 million for the same period a year ago. Results for the second
quarter of 2006 include sales from the Company's two retail outlet
stores, which were not in operation in the second quarter of 2005.
Full-Year Outlook
-- Company raises full year sales guidance to range of $272
million to $278 million versus previous expectation of $268
million to $276 million.
-- Company raises full year diluted EPS range to $2.39 to $2.45
compared to previous expectation of $2.21 to $2.29.
-- Company reiterates previously announced second-half outlook of
sales between $174 million to $180 million and diluted EPS of
$1.74 to $1.80.
-- Fiscal 2006 guidance includes approximately $2.1 million of
stock compensation expense which includes $0.7 million of
additional stock compensation expense related to the adoption
of Statement of Financial Accounting Standards No. 123R,
effective January 1, 2006. In addition, the guidance includes
approximately $9 million related to the aforementioned
increase in selling, general and administrative expenses as
part of the strategic initiatives to support future growth.
Third Quarter Outlook
-- Company introduces third quarter guidance of sales between $71
million to $74 million and diluted EPS of $0.51 to $0.54.
-- Third quarter guidance includes approximately $2.5 million of
expenses associated with the $9 million increase in selling,
general and administrative expenses for fiscal 2006.
Fourth Quarter Outlook
-- Company introduces fourth quarter guidance of sales between
$103 million to $106 million and diluted EPS of $1.23 to
$1.26.
-- Fourth quarter guidance includes approximately $2.5 million of
expenses associated with the $9 million increase in selling,
general and administrative expenses for fiscal 2006.
The Company's conference call to review second quarter fiscal 2006
results will be broadcast live over the Internet today, Thursday, July
27, 2006 at 4:30 pm Eastern Time. The broadcast will be hosted at
www.deckers.com and www.earnings.com.
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 as of today, July 27,
2006, and are subject to future events and uncertainties. No one
should assume that any forward-looking statement made by the Company
will remain consistent with the Company's expectations after the date
the forward-looking statement is made. 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 same rate it has experienced in the recent
past; shortages of top grade sheepskin could interrupt product
manufacturing and increase product costs; the risk that we are unable
to accurately forecast consumer demand and inventory needs; whether we
are successful in continuing to implement our growth strategy; the
success of our customers; the risk of losing one or more key
customers; our ability to protect our intellectual property; the risk
that counterfeiting can harm our sales or our brand image; our ability
to develop and patent new technologies; our dependence on independent
manufacturers to supply our products; the risk that retailers could
postpone or cancel existing orders; future changes in the price of raw
materials; the effect of future increases in the cost of petroleum and
other energy prices on the costs of production; unpredictable events
and circumstances related to our international operations; the adverse
affect on our business if our independent manufacturers, designated
suppliers or our licensees might violate labor laws or fail to conform
to our ethical standards; risks associated with licensing partners'
ability to meet our expectations; the challenge of managing our brands
for growth; our ability to successfully build new brands;
unpredictable fluctuations in our quarterly sales and operating
results; the risk of losing key personnel; currency risk; the
sensitivity of our sales to seasonal and weather conditions; risks
associated with international markets which are subject to a variety
of laws and political and economic risks that may adversely impact our
business; delays and unexpected costs that can result from customs
regulations; our dependence on computer and communication systems;
fluctuating economic conditions; increased levels of competition in
the footwear industry; concentration of ownership in the retail
industry; the risk that world events, such as terrorism, could disrupt
international commerce; members of management owning sufficient shares
to substantially control our company; volatility of our stock price;
the risk that future sales of our common stock could adversely affect
our stock price; and the prevention or delay of changes in control due
to anti-takeover provisions.
DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
June 30, December 31,
Assets 2006 2005
------------ ------------
Current assets:
Cash and cash equivalents $ 9,499,000 50,749,000
Short-term investments 55,434,000 2,500,000
Trade accounts receivable, net 24,617,000 40,918,000
Inventories 45,246,000 33,374,000
Prepaid expenses and other current assets 2,067,000 1,364,000
Deferred tax assets 5,949,000 5,949,000
------------ ------------
Total current assets 142,812,000 134,854,000
Property and equipment, at cost, net 4,939,000 4,711,000
Intangible assets, less applicable
amortization 69,854,000 70,009,000
Other assets 54,000 52,000
------------ ------------
$217,659,000 209,626,000
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable $ 14,718,000 14,506,000
Accrued expenses 4,781,000 6,095,000
Income taxes payable 5,284,000 7,133,000
------------ ------------
Total current liabilities 24,783,000 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 79,324,000 76,788,000
Retained earnings 108,816,000 100,436,000
Accumulated other comprehensive income 274,000 207,000
------------ ------------
Total stockholders' equity 188,539,000 177,555,000
------------ ------------
$217,659,000 209,626,000
============ ============
DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)
Three-month period ended Six-month period ended
June 30, June 30,
------------------------ ------------------------
2006 2005 2006 2005
------------------------- -----------------------
Net sales $ 41,721,000 40,341,000 97,725,000 104,604,000
Cost of sales 22,680,000 24,372,000 53,984,000 59,068,000
------------ ----------- ----------- -----------
Gross profit 19,041,000 15,969,000 43,741,000 45,536,000
Selling, general and
administrative
expenses 15,033,000 11,292,000 30,819,000 26,460,000
------------ ----------- ----------- -----------
Income from
operations 4,008,000 4,677,000 12,922,000 19,076,000
Other (income)
expense :
Interest, net (687,000) 6,000 (1,267,000) (63,000)
Other (17,000) (4,000) (17,000) (3,000)
------------ ----------- ----------- -----------
Income before income
taxes 4,712,000 4,675,000 14,206,000 19,142,000
Income taxes 1,981,000 1,943,000 5,826,000 7,523,000
------------ ----------- ----------- -----------
Net income $ 2,731,000 2,732,000 8,380,000 11,619,000
============ =========== =========== ===========
Net income per share:
Basic $ 0.22 0.22 0.67 0.94
Diluted 0.21 0.21 0.65 0.90
============ =========== =========== ===========
Weighted-average
shares:
Basic 12,510,000 12,351,000 12,516,000 12,320,000
Diluted 12,806,000 12,886,000 12,815,000 12,909,000
============ =========== =========== ===========
CONTACT: Deckers Outdoor Corporation
Zohar Ziv, 805-967-7611
or
Integrated Corporate Relations, Inc.
Investor Relations:
Chad A. Jacobs/Brendon Frey, 203-682-8200