Deckers earnings dropped 36% in 2012
Shares of Deckers Outdoor Corp. shot up 7.4 percent in after-hours trading as the Goleta firm predicted 2013 revenue will increase 7 percent over last year’s levels.
Deckers earned $98 million in the fourth quarter, a 22.9 percent decline over a year earlier. Diluted earnings per share were $2.77 compared to $3.18 a year earlier, taking into account a $36 million stock repurchase.
Deckers’ full-year net income was down 36.1 percent last year, to $129 million. Revenue stayed roughly the same at $1.4 billion.
Deckers, best known as the parent company of the Ugg brand, has been struggling over the last year to maintain sales momentum for its classic sheepskin boots. It reported that fourth-quarter sales across all of its brands were up 2.2 percent to $617.3 million.
The Ugg brand contributed $584 million to fourth-quarter sales, a 2.9 percent increase. In a statement, Deckers CEO and President Angel Martinez said that the company looked at several signs in the fourth quarter that “we believe underscore the health and relevancy of the Ugg brand.” Fourth-quarter retail store sales increased, he said, and Ugg was one of the most searched for terms on the Internet during the holiday season.
Analysts last year said Ugg may be losing its momentum, pointing to the availability of the once-exclusive brand at off-price retailers such as Marshalls and on flash-sale websites. Deckers has said warmer temperatures and rising sheepskin costs are partly to blame for lower sales and margins.
“We’ve made modifications to the Ugg brand footwear collections to broaden accessibility, reduce exposure to sheepskin price fluctuations, and better bridge the summer and holiday selling seasons,” Martinez said in the earnings release. “We’ve adjusted receipts and reduced future purchase commitments as we continue to work diligently to better align inventory and sales growth.”
Deckers’ smaller brands showed signs of gaining steam. Sales of the Sanuk brand rose 39.2 percent to $15.3 million in the fourth quarter. Deckers paid $120 million to acquire the Orange County brand in 2011. It expects Sanuk sales to increase 15 percent this year, it said.
Sales of the Teva brand jumped 29.5 percent to $13.7 million in the fourth quarter.
Deckers told the Business Times last month that it was rolling out an aggressive retail store expansion in which it plans to build more than 100 company-owned stores across the world over the next three years.
While domestic sales across its brands languished at $446.7 million, a 2.1 percent increase over the previous year, international sales jumped 15.6 percent to $170.5 million.
Deckers is building a new 152,000-square-foot headquarters at the Cabrillo Business Park in Goleta. The campus will house about 400 employees when it opens later this year. Deckers noted in its earnings report that it spent $61.6 million last year on its new campus facility and the retail store expansion.