Company Reports Fourth Quarter Sales Increased 56.3% to a Record of $303.5 Million and Diluted EPS Increased 50.6% to a Record of $4.05, Excluding Non-Cash Write-Down of Intangible Assets
GOLETA, Calif.--(BUSINESS WIRE)--Feb. 26, 2009--
Deckers Outdoor Corporation (NASDAQGS: DECK) today announced financial
results for the fourth quarter and fiscal year ended December 31, 2008.
Fourth Quarter Highlights
-
Net sales increased 56.3% to $303.5 million versus $194.2 million last
year.
-
Diluted EPS of $3.07 on a GAAP basis, or $4.05 excluding the pre-tax
non-cash write down of $20.9 million described below. The non-GAAP *
diluted EPS of $4.05 represents an increase of 50.6% over diluted EPS
of $2.69 a year ago.
-
Domestic sales increased 59.5% to $283.4 million compared to $177.7
million last year.
-
International sales increased 21.3% to $20.1 million versus $16.5
million a year ago.
-
UGG® brand sales increased 62.0% to $288.0 million compared to $177.7
million last year.
Fiscal 2008 Highlights
-
Net sales increased 53.6% to $689.4 million versus $448.9 million last
year.
-
Diluted EPS of $5.60 on a GAAP basis, or $7.27 excluding the pre-tax
non-cash write down of $14.9 million incurred in the second quarter of
fiscal 2008 and the $20.9 million incurred in the fourth quarter of
fiscal 2008. The non-GAAP * diluted EPS of $7.27 represents an
increase of 43.7% over diluted EPS of $5.06 a year ago.
-
Domestic sales increased 50.4% to $581.5 million compared to $386.6
million last year.
-
International sales increased 73.1% to $107.9 million versus $62.3
million a year ago.
-
UGG brand sales increased 67.5% to $582.0 million compared to $347.6
million last year.
-
Simple sales increased 27.4% to $17.2 million versus $13.5 million in
the prior year.
-
Cash, cash equivalents and short-term investments increased to $194.8
million compared to $168.1 million a year ago, or on a non-GAAP *
basis $14.76 per diluted share compared to $12.80 per diluted share a
year ago.
* See the Reconciliation of Non-GAAP Measures in the tables below.
As part of the Company’s annual goodwill and indefinite lived asset
impairment testing, the Company recognized an impairment charge for the
entire balance of $11.9 million of the Teva® brand’s goodwill as well as
the entire balance of $3.5 million of the TSUBO® brand’s goodwill in the
fourth quarter of fiscal 2008. These impairment charges resulted
primarily from a significant decrease in the Company’s market
capitalization as the stock market as a whole has declined, as well as
reduced forecasts for the Teva brand. In addition, the Company
recognized an impairment loss of $5.5 million on the Teva brand’s
trademarks, leaving a balance of $15.3 million as of December 31, 2008.
This impairment charge resulted primarily from the reduced forecasts for
the Teva brand.
Angel Martinez, President, Chief Executive Officer and Chairman of the
Board of Directors, stated: “Our UGG business, both in the U.S. and
internationally, performed very well during the fourth quarter. We
experienced robust consumer demand for our expanded product assortment
across all geographic regions and throughout our wholesale accounts,
company-owned stores, and on our eCommerce website. This allowed us to
exceed expectations and represented a strong finish to another record
year. While the macroeconomic conditions did impact Teva and Simple’s
fourth quarter performance, we are pleased with the progress both brands
made during the past twelve months. For Teva, this included targeting a
younger audience, improving retail placement, and introducing a fall
line of closed-toe footwear. And for Simple, it was expanding the
product assortment, increasing distribution, and broadening consumer
awareness of the brand and its collections. We begin 2009 fully
cognizant of the challenges confronting our industry and this is
reflected in our modest growth assumptions for the full year. That said,
we remain confident about our long-term prospects and believe that the
current retail environment is creating new opportunities for market
share gains. Therefore, we plan to take advantage of our positive
momentum and strong balance sheet by making strategic investments in our
brands and infrastructure to ensure we are best positioned for the
future.”
Division Summary
UGG®
UGG brand net sales for the fourth quarter increased 62.0% to $288.0
million compared to $177.7 million for the same period last year. The
significant sales gain was driven by increased orders for fall and
holiday product from domestic retailers, international distributors, and
higher sell-through rates at company-owned retail locations and on its
eCommerce website versus a year ago. For the full year, UGG brand sales
increased 67.5% to a record $582.0 million versus $347.6 million in 2007.
Teva®
Teva brand net sales were $12.4 million for the fourth quarter compared
to $13.9 million for the same period last year, a decrease of 11.1%. The
sales decline was primarily attributable to a lower level of
pull-forwards on spring product compared with last year, partially
offset by demand for new fall closed-toe product. For the full year,
Teva brand sales decreased 1.6% to $86.5 million compared to $87.9
million in 2007.
Simple®
Simple brand net sales for the fourth quarter were $2.3 million compared
to $2.6 million for the same period last year, a decrease of 12.3%,
primarily due to lower reorders from retailers. For the full year,
Simple brand sales increased 27.4% to $17.2 million versus $13.5 million
in the prior year.
TSUBO®
TSUBO brand net sales were $0.9 million for the fourth quarter and $3.8
million for the full year. TSUBO was acquired by the Company in the
second quarter of 2008.
eCommerce
Sales for the eCommerce business, which are included in the brand sales
numbers above, increased 51.2% to $36.1 million for the fourth quarter
compared to $23.9 million for the same period a year ago. For the full
year, sales for the eCommerce business increased 51.2% to a record $68.8
million versus $45.5 million in 2007.
Retail Stores
Sales for the retail store business, which are included in the brand
sales numbers above, increased 103.1% to $24.7 million for the fourth
quarter compared to $12.1 million for the same period a year ago. For
the full year, sales for the retail store business increased 109.2% to
$38.5 million versus $18.4 million a year ago. For those stores that
were open during the full year of 2007 and 2008, same store sales grew
by 32.7%.
Full-Year 2009 Outlook
-
The Company introduced a full year revenue growth target of
approximately 6% to 9% over 2008.
-
The Company also introduced its full year diluted earnings per share
target of approximately the same as to slightly down from the $7.27
non-GAAP diluted EPS in 2008, based on a gross margin being the same
as to slightly up from 2008, SG&A expenses as a percentage of sales of
approximately 25% to 26% and an effective tax rate of approximately
38%.
-
Fiscal 2009 guidance includes additional marketing investments in the
Simple and TSUBO divisions of approximately $10.0 million in an effort
to increase consumer brand awareness and market share, and
approximately $10.5 million of stock compensation expense.
First Quarter Outlook
-
The Company currently expects first quarter 2009 revenue to increase
approximately 22% over 2008, and expects first quarter 2009 diluted
earnings per share to be approximately 28% down from 2008.
-
First quarter guidance includes additional marketing investments in
the Simple and TSUBO divisions of $2 million, lower gross margins
compared to 2008 due to higher levels of wholesale and international
distributor sales as a percentage of total sales expected this year
and higher levels of fixed overhead for new retail stores, warehouse
operations, international infrastructure and general administrative
costs.
The Company’s conference call to review fourth quarter and fiscal 2008
financial results will be broadcast live over the internet today,
Thursday, February 26, 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®, 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 recent 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, 2007, which we filed with the Securities and Exchange Commission on
February 29, 2008, and the Company’s Quarterly Reports on Form 10-Q for
the first, second and third quarters of 2008. 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)
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
Assets
|
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
176,804
|
|
54,525
|
|
Restricted cash
|
|
|
300
|
|
250
|
|
Short-term investments
|
|
|
17,976
|
|
113,567
|
|
Trade accounts receivable, net
|
|
|
108,129
|
|
72,209
|
|
Inventories
|
|
|
92,740
|
|
51,776
|
|
Prepaid expenses and other current assets
|
|
|
3,691
|
|
3,276
|
|
Deferred tax assets
|
|
|
13,324
|
|
5,964
|
|
Total current assets
|
|
|
412,964
|
|
301,567
|
|
|
|
|
|
|
|
|
Restricted cash
|
|
|
700
|
|
1,000
|
|
Property and equipment, at cost, net
|
|
|
28,318
|
|
10,579
|
|
Intangible assets, less applicable amortization
|
|
|
24,034
|
|
54,131
|
|
Deferred tax assets
|
|
|
17,447
|
|
2,682
|
|
Other assets
|
|
|
258
|
|
73
|
|
|
|
|
|
|
|
|
|
|
$
|
483,721
|
|
370,032
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Trade accounts payable
|
|
$
|
42,960
|
|
36,221
|
|
Accrued expenses
|
|
|
27,672
|
|
17,629
|
|
Income taxes payable
|
|
|
24,577
|
|
17,544
|
|
Total current liabilities
|
|
|
95,209
|
|
71,394
|
|
|
|
|
|
|
|
|
Long-term liabilities
|
|
|
3,847
|
|
----
|
|
|
|
|
|
|
|
|
Minority interest
|
|
|
413
|
|
----
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
Common stock
|
|
|
131
|
|
130
|
|
Additional paid-in capital
|
|
|
115,214
|
|
103,659
|
|
Retained earnings
|
|
|
268,515
|
|
194,567
|
|
Accumulated other comprehensive income
|
|
|
392
|
|
282
|
|
Total stockholders' equity
|
|
|
384,252
|
|
298,638
|
|
|
|
|
|
|
|
|
|
|
$
|
483,721
|
|
370,032
|
|
|
|
DECKERS OUTDOOR CORPORATION
|
|
AND SUBSIDIARIES
|
|
Condensed Consolidated Statements of Income
|
|
(Unaudited)
|
|
(Amounts in thousands, except for per share data)
|
|
|
|
|
|
|
|
Three-month period ended
|
|
|
Twelve-month period ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2008
|
|
2007
|
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
303,506
|
|
|
194,243
|
|
|
$
|
689,445
|
|
|
448,929
|
|
|
Cost of sales
|
|
166,016
|
|
|
100,593
|
|
|
|
384,127
|
|
|
241,458
|
|
|
Gross profit
|
|
137,490
|
|
|
93,650
|
|
|
|
305,318
|
|
|
207,471
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
52,843
|
|
|
36,693
|
|
|
|
152,574
|
|
|
101,918
|
|
|
Impairment loss
|
|
20,925
|
|
|
----
|
|
|
|
35,825
|
|
|
---
|
|
|
Income from operations
|
|
63,722
|
|
|
56,957
|
|
|
|
116,919
|
|
|
105,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (income) expense, net:
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
(683
|
)
|
|
(1,351
|
)
|
|
|
(3,190
|
)
|
|
(4,855
|
)
|
|
Interest expense
|
|
(227
|
)
|
|
101
|
|
|
|
(142
|
)
|
|
768
|
|
|
Other, net
|
|
(14
|
)
|
|
(513
|
)
|
|
|
(251
|
)
|
|
(399
|
)
|
|
Income before income taxes and minority interest
|
|
64,646
|
|
|
58,720
|
|
|
|
120,502
|
|
|
110,039
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
24,306
|
|
|
23,331
|
|
|
|
46,631
|
|
|
43,602
|
|
|
Minority interest
|
|
(120
|
)
|
|
----
|
|
|
|
(77
|
)
|
|
----
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
40,460
|
|
|
35,389
|
|
|
$
|
73,948
|
|
|
66,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
3.10
|
|
|
2.72
|
|
|
$
|
5.67
|
|
|
5.18
|
|
|
Diluted
|
|
3.07
|
|
|
2.69
|
|
|
|
5.60
|
|
|
5.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
13,072
|
|
|
12,989
|
|
|
|
13,042
|
|
|
12,835
|
|
|
Diluted
|
|
13,198
|
|
|
13,158
|
|
|
|
13,195
|
|
|
13,129
|
|
|
|
|
DECKERS OUTDOOR CORPORATION
|
|
AND SUBSIDIARIES
|
|
Reconciliation of Non-GAAP Measures
|
|
(Unaudited)
|
|
(Amounts in thousands, except for per share data)
|
|
|
|
|
|
|
|
|
Three-month period ended
|
|
|
Twelve-month period ended
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2008
|
|
2007
|
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes and minority interest
|
|
$
|
64,646
|
|
|
58,720
|
|
$
|
120,502
|
|
|
110,039
|
|
Add back impairment charges
|
|
|
20,925
|
|
|
----
|
|
|
35,825
|
|
|
----
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes and minority interest,
|
|
|
|
|
|
|
|
|
|
|
|
excluding impairment charges
|
|
|
85,571
|
|
|
58,720
|
|
|
156,327
|
|
|
110,039
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (1)
|
|
|
32,214
|
|
|
23,331
|
|
|
60,494
|
|
|
43,602
|
|
Minority interest
|
|
|
(120
|
)
|
|
----
|
|
|
(77
|
)
|
|
----
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income excluding impairment charges
|
|
|
53,477
|
|
|
35,389
|
|
|
95,910
|
|
|
66,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income excluding impairment charges per share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
4.09
|
|
|
2.72
|
|
$
|
7.35
|
|
|
5.18
|
|
Diluted
|
|
|
4.05
|
|
|
2.69
|
|
|
7.27
|
|
|
5.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
13,072
|
|
|
12,989
|
|
|
13,042
|
|
|
12,835
|
|
Diluted
|
|
|
13,198
|
|
|
13,158
|
|
|
13,195
|
|
|
13,129
|
|
|
|
|
|
(1) The non-GAAP income tax expense for the three and twelve
months ended December 31, 2008
assumes the same effective tax
rate as the GAAP income tax expense for those periods.
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
As of
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
|
|
|
|
|
|
2008
|
|
2007
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
$
|
176,804
|
|
|
54,525
|
|
Short-term investments
|
|
|
|
|
|
|
|
17,976
|
|
|
113,567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and short-term investments
|
|
|
|
|
|
|
|
194,780
|
|
|
168,092
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and short-term investments
|
|
|
|
|
|
|
|
|
|
|
|
per diluted share:
|
|
|
|
|
|
|
$
|
14.76
|
|
|
12.80
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Use of Non-GAAP Financial Measures
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To supplement the actual and forecast results in accordance with
U.S. generally accepted accounting principles (GAAP), for the
applicable periods, 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 periods and
are indicators management uses for planning and forecasting future
periods.
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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.
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Source: Deckers Outdoor Corporation
Deckers Outdoor Corporation
Tom Hillebrandt,
805-967-7611
Chief Financial Officer
or
Investor
Relations:
Integrated Corporate Relations, Inc.
Chad A.
Jacobs/Brendon Frey, 203-682-8200