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GOLETA, Calif., Jul 22, 2010 (BUSINESS WIRE) -- Deckers Outdoor Corporation (NASDAQGS: DECK) today announced financial results for the second quarter ended June 30, 2010.
Second Quarter Highlights
Angel Martinez, President, Chief Executive Officer and Chairman of the Board of Directors, stated: "Our business continued to perform very well during the second quarter with sales, margins and earnings all coming in above plan. We were particularly pleased with the pace of sales for the UGG brand overseas. After a solid spring season, we began shipping the fall line to distributors and we are confident that our diversified product offering is gaining important traction in international markets. At the same time, the strong momentum Teva experienced to start the year carried forward into the second quarter, especially in our domestic wholesale channel as the brand continues to benefit from a more complete collection of open and closed toe footwear and improved shelf space. The performance of our retail stores was also very encouraging with the growing year round demand for the UGG brand driving higher sell-through rates. We are excited with exceeding our financial objectives for the first six months of the year, and as we pass the half-way mark of 2010, we are confident we can continue to drive earnings growth as our sales base increases."
UGG brand net sales for the second quarter increased 34.6% to $100.2 million compared to $74.4 million for the same period last year. The sales gain was primarily attributable to an increase in global shipments of fall product versus the same period a year ago, combined with solid sales of the spring line at company owned retail stores.
Teva brand net sales increased 38.4% to $31.2 million for the second quarter compared to $22.6 million for the same period last year. The increase in sales was driven by higher reorders of the expanded spring line of open and closed toe footwear in the second quarter compared with the year ago period, as well as from the Company assuming control of direct distribution in the Benelux region.
Combined net sales of the Company's other brands were $5.6 million for both the second quarter of 2010 and 2009.
Sales for the eCommerce business, which are included in the brand sales numbers above, were $5.2 million for the second quarter of 2010 compared to $5.3 million for the same period last year.
Sales for the retail store business, which are included in the brand sales numbers above, increased 63.1% to $10.0 million for the second quarter compared to $6.1 million for the same period last year, driven by five new stores and a same store sales increase of 19.2% for those stores that were open for the full three month periods ended June 30, 2009 and 2010.
Full-Year 2010 Outlook
Third and Fourth Quarter Outlook
The Company's conference call to review second quarter fiscal 2010 results will be broadcast live over the internet today, Thursday, July 22, 2010 at 4:30 pm Eastern Time. The broadcast will be hosted at http://www.deckers.com and http://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. Teva(R), Simple(R) Shoes, UGG(R) Australia, TSUBO(R), and Ahnu(R) 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. In addition, the results reported in this release may differ from actual results filed with the Securities and Exchange Commission (SEC) for the quarter ended June 30, 2010 if material events or circumstances occur between now and our SEC filing. Those risks and uncertainties include, among others: the continued decline of the global economy; the ability to realize returns on our new and existing retail stores; our ability to anticipate fashion trends; a decline in wholesaler, distributer, or direct consumer demand or inventory needs; impairment charges related to a decline in the value of our brands' intangible assets below 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 and obtain credit 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; volatile credit and equity markets; liquidity and market risks for our cash equivalents and short-term investments; the risk of losing key personnel or the interruption of key information technology systems; a delay, increase in cost, or interruption in the delivery of merchandise to our customers; the sensitivity of our sales to seasonal and weather conditions; and we could be subject to additional income tax liabilities. 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, 2009, which the Company filed with the SEC on March 1, 2010, and under "Risk Factors" in any subsequent filings with the SEC. 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|
|Condensed Consolidated Balance Sheets|
|(Amounts in thousands)|
|June 30,||December 31,|
|Cash and cash equivalents||$||333,745||315,862|
|Trade accounts receivable, net||81,647||76,427|
|Prepaid expenses and other current assets||6,725||7,210|
|Deferred tax assets||9,712||9,712|
|Total current assets||552,489||520,987|
|Property and equipment, at cost, net||37,367||35,442|
|Intangible assets, net||25,448||23,940|
|Deferred tax assets||16,704||16,704|
|Liabilities and Stockholders' Equity|
|Trade accounts payable||$||79,953||47,331|
|Other accrued expenses||6,023||12,985|
|Income taxes payable||5,844||19,685|
|Total current liabilities||104,670||100,870|
|Deckers Outdoor Corporation stockholders' equity:|
|Additional paid-in capital||132,892||125,431|
|Accumulated other comprehensive (loss) income||(563)||494|
|Total Deckers Outdoor Corporation stockholders' equity||522,246||491,358|
|Total liabilities and equity||$||634,542||599,043|
|DECKERS OUTDOOR CORPORATION|
|Condensed Consolidated Statements of Income|
|(Amounts in thousands, except for per share data)|
|Three-month period ended||Six-month period ended|
|June 30,||June 30,|
|Cost of sales||76,316||61,763||154,336||137,076|
|Selling, general and administrative expenses||47,527||36,560||96,613||76,147|
|Income from operations||13,216||3,225||42,037||22,551|
|Other income, net||497||1,239||562||1,837|
|Income before income taxes||13,713||4,464||42,599||24,388|
|Income tax expense||4,803||1,697||15,549||9,268|
|Net loss (income) attributable to the|
|Net income attributable to Deckers Outdoor|
|Net income per share attributable to Deckers|
|Outdoor Corporation common stockholders:|
|Weighted-average common shares:|
|DECKERS OUTDOOR CORPORATION|
|Reconciliation of Non-GAAP Measures|
|(Amounts in thousands, except for per share data)|
|period ended||period ended|
|June 30, 2009||December 31, 2009|
|Net income attributable to Deckers Outdoor Corporation||$||2,879||116,786|
|Net income per share attributable to Deckers Outdoor|
|Corporation common stockholders:|
|Reconciliation to Non-GAAP Measures|
|Income before income taxes||$||4,464||183,223|
|Add back impairment charges||1,000||1,000|
|Income before income taxes, excluding impairment charges||5,464||184,223|
|Income tax expense (1)||2,076||66,666|
|Net income excluding impairment charges||3,388||117,557|
|Net loss (income) attributable to the noncontrolling interest||112||(133)|
|Net income excluding impairment charges attributable to|
|Deckers Outdoor Corporation||$||3,500||117,424|
|Net income per share excluding impairment charges attributable|
|to Deckers Outdoor Corporation common stockholders:|
(1) The non-GAAP income tax expense assumes the same effective tax rate as the GAAP income tax expense for the periods presented.
|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 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.
The excluded items represent non-cash impairment charges associated with the write-down of the Company's TSUBO trademarks 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.
SOURCE: Deckers Outdoor Corporation
Deckers Outdoor Corporation
Tom George, 805-967-7611
Chief Financial Officer
Brendon Frey, 203-682-8200