Deckers Brands posts profit gain despite fall in Q2 sales

Second quarter net sales at Deckers Brands decreased 0.2 percent to 485.9 million dollars compared to 486.9 million dollars for the same period last year. On a constant currency basis, net sales increased 0.3 percent. Diluted earnings per share were, however, 1.21 dollars compared to 1.11 dollars for the same period last year. Non-GAAP diluted earnings per share were 1.23 dollars.

“We are pleased with the results of our second quarter and the progress on our plans for the year,” said Dave Powers, President and CEO, adding, “Despite a challenging consumer environment, we delivered earnings per share results that were higher than last year and at the top end of our expectations.”

Second quarter financial review

Gross margin was 44.5 percent compared to 44 percent for the same period last year. Operating income was 54 million dollars compared to 51.2 million dollars for the same period last year. Non-GAAP operating income was 54.9 million dollars.

UGG brand net sales decreased 2.1 percent to 412.2 million dollars compared to 421.1 million dollars for the same period last year. On a constant currency basis, sales decreased 1.6 percent. The year over year decrease, the company said, was driven by lower European combined wholesale and distributor sales, primarily due to a delay in the European shipments now deferred to the third quarter, and a decrease in direct-to-consumer (DTC) comparable sales.

Teva brand net sales decreased 4.2 percent to 17.1 million dollars compared to 17.9 million dollars for the same period last year. On a constant currency basis, sales decreased 4.8 percent. The decrease in sales at Teva was driven by lower domestic wholesale sales, while Sanuk brand net sales increased 9.2 percent to 18.9 million dollars compared to 17.3 million dollars for the same period last year. On a constant currency basis, sales increased 9 percent, on the back of an increase in global wholesale and distributor sales.

Combined net sales of the company’s other brands increased 23.3 percent to 37.7 million dollars compared to 30.6 million dollars for the same period last year. On a constant currency basis, sales increased 23.9 percent. The increase was primarily attributable to increased Hoka One One sales. Hoka One One brand net sales, which are included as part of the company’s other brand sales, increased 39 percent compared to the same period last year.

Sales performance of the retail channels

Wholesale and distributor net sales decreased 0.1 percent to 399.9 million dollars compared to 400.3 million dollars for the same period last year. On a constant currency basis, sales increased 0.6 percent.

DTC net sales decreased 0.7 percent to 86 million dollars compared to 86.6 million dollars for the same period last year. On a constant currency basis, sales decreased 1 percent. DTC comparable sales for the second quarter decreased 3.2 percent over the same period last year.

Domestic net sales increased 3.6 percent to 312.2 million dollars compared to 301.6 million dollars for the same period last year. International net sales decreased 6.3 percent to 173.7 million dollars compared to 185.3 million dollars for the same period last year. On a constant currency basis, sales decreased 5.1 percent.

Forecasts decline in FY17 net sales

The company now expects fiscal year 2017 net sales to be in the range of down 3 percent to down 1.5 percent. Gross margin is expected to be in the range of 47 percent to 47.5 percent. Diluted earnings per share are anticipated to be in the range of 4.05 dollars to 4.25 dollars.

Third quarter net sales are forecasted to be in the range of down approximately 2 percent to flat versus same period last year. The company expects diluted earnings per share in the range of 4.16 dollars to 4.28 dollars compared to 4.78 dollars for the same period last year.

Picture:UGG