Deckers falls short of expectations after soft holiday season
The popularity of Deckers Brands’ flagship brand Ugg, wasn’t enough to keep the company from missing its fiscal third-quarter expectations.
The Goleta-based footwear maker and distributor reported a softer-than-expected holiday shopping season and poor performance in its roll out to asian markets, prompting the company to dial back its fiscal fourth quarter guidance.
Third quarter profit came to $156.7 million, or $4.50 per share. Analysts surveyed by Zacks Investment Research predicted $4.52 per share.
However, net sales increased 6.6 percent to a record $784.7 million, compared to $736 million for the same period last year. The company still expects fourth quarter revenue to increase about 10 percent.
In an earnings call, CEO Angel Martinez said the company lost about $7 million to $10 million in sales of weather-related products due to an unexpected spike in demand and depleted inventories.
Deckers also experienced a 25 percent jump in e-commerce sales as more customers purchased the company’s classics collection, which includes the staple Ugg boot, online. E-commerce sales climbed to $146.9 million, compared to $117.3 million for the same period last year.
The company also announced the board of directors’ approval for the repurchase of up to an additional $200 million of the company’s common stock.
Going forward, Deckers is closely monitoring the launch of new retail stores in North America, China and Japan as tourism traffic at stores flagged for the quarter and the products offered in Asian markets failed to resonate with consumers.
Martinez said the company’s product lines didn’t have enough “sparkles and color” and that the Asian market is going to be a major focus over the next six months, noting that he and a team from the North American division will be meeting with Asia Pacific team in the coming weeks.
Deckers stock slid 14 percent to $71 in after-hours trading. The shares have gained 10 percent in the past 12 months, closing at $82.27 today.