Deckers Brands reports 4.5 percent decrease in FY17 net sales

Fourth quarter net sales at Deckers Brands decreased 2.4 percent to 369.5 million dollars compared to 378.6 million dollars for the same period last year. On a constant currency basis, net sales decreased 1.5 percent. Full year net sales decreased 4.5 percent to 1.790 billion dollars compared to 1.875 billion dollars last year. On a constant currency basis, net sales decreased 4.1 percent.

Commenting on the company’s performance, Dave Powers, President and CEO, said in a statement, "Over the course of the last year, the organization has been hard at work identifying margin enhancing initiatives and detailing plans that significantly improve the profitability of the company. We now anticipate that the 150 million dollars cumulative savings plan announced in February 2017 will drive a 100 million dollars operating profit improvement by fiscal year 2020."

Fourth quarter and full year financial highlights

Gross margin was 43 percent compared to 40.9 percent for the same period last year, while non-GAAP gross margin was 43 percent compared to 42.3 percent for the same period last year due to less domestic promotional activity and supply chain improvements, partially offset by foreign exchange headwinds from the strengthening of the US dollar.

Gross margin for the full year was 46.7 percent compared to 45.2 percent last year. Non-GAAP gross margin was 46.7 percent compared to 45.4 percent last year. Operating loss was 1.9 million dollars compared to 162.1 million dollars last year. Non-GAAP operating income was 165.6 million dollars compared to 195.7 million dollars last year.

Fourth quarter operating loss was 30.9 million dollars compared to 27.9 million dollars for the same period last year. Non-GAAP operating income was 5.1 million dollars compared to 5.7 million dollars for the same period last year. Diluted loss per share was 0.49 dollar compared to 0.73 dollar for the same period last year. Non-GAAP diluted earnings per share were 0.11 dollar compared to 0.11 dollar for the same period last year.

Diluted earnings per share for the year were 0.18 dollar compared to 3.70 dollars last year, while non-GAAP diluted earnings per share were 3.82 dollars compared to 4.50 dollars last year.

Brand Summary

UGG brand net sales for the fourth quarter decreased 1.1 percent to 243 million dollars compared to 245.6 million dollars for the same period last year. On a constant currency basis, sales increased 0.2 percent. The company said, decrease in sales was driven by a decrease in domestic wholesale sales, partially offset by an increase in international wholesale and DTC sales. For fiscal 2017, UGG brand sales decreased 4.8 percent to 1.451 billion dollars and on a constant currency basis, sales decreased 4.2 percent.

Teva brand net sales for the quarter decreased 13.3 percent to 51.3 million dollars compared to 59.1 million dollars for the same period last year. On a constant currency basis, sales decreased 13.2 percent. The decrease in sales was driven by a decrease in global wholesale sales, partially offset by an increase in DTC sales. For fiscal 2017, Teva brand sales decreased 11.5 percent to 117.7 million dollars. On a constant currency basis, sales decreased 12.2 percent.

Sanuk brand net sales for the fourth quarter decreased 16.1 percent to 32.3 million dollars compared to 38.5 million dollars for the same period last year on both a reported and constant currency basis. The decrease in sales was driven by a decrease in global wholesale and DTC sales. For fiscal 2017, Sanuk brand sales decreased 13.6 percent to 91.8 million dollars. On a constant currency basis, sales decreased 13.7 percent.

Combined net sales of the company’s other brands for the quarter increased 21.2 percent to 42.9 million dollars compared to 35.4 million dollars for the same period last year. On a constant currency basis, sales increased 22 percent. The increase, the company said, was primarily attributable to a 9.3 million dollars or 32.7 percent, increase in sales for the Hoka One One brand compared to the same period last year. For fiscal 2017, combined sales of the company’s other brands increased 16.2 percent to 129.6 million dollars. On a constant currency basis, sales increased 16.3 percent.

Wholesale net sales for the quarter decreased 5.8 percent to 219.1 million dollars compared to 232.7 million dollars for the same period last year. On a constant currency basis, sales decreased 5.2 percent. For fiscal 2017, wholesale sales decreased 8.7 percent to 1.124 billion dollars, while on a constant currency basis, sales decreased 8.6 percent.

Direct-to-Consumer (DTC) net sales for the quarter increased 3 percent to 150.4 million dollars compared to 145.9 million dollars for the same period last year. On a constant currency basis, sales increased 4.3 percent. DTC comparable sales for the fourth quarter were flat compared to the same period last year. For fiscal 2017, DTC sales increased 3.4 percent to 666.3 million dollars and DTC comparable sales increased 2.6 percent. On a constant currency basis, DTC sales increased 4.5 percent.

Domestic net sales for the quarter decreased 4.3 percent to 230 million dollars compared to 240.4 million dollars for the same period last year. For fiscal 2017, domestic sales decreased 6.4 percent to 1.141 billion dollars. International net sales for the quarter increased 0.9 percent to 139.5 million dollars compared to 138.2 million dollars for the same period last year. On a constant currency basis, sales increased 4.1 percent. For fiscal 2017, international sales decreased 1 percent to 648.8 million dollars. On a constant currency basis, sales increased 1.6 percent.

The company forecasts total sales to reach 2 bn dollars by 2020

In its long-term outlook, the Deckers Brands expects total sales of approximately 2 billion dollars, operating margin of 13 percent and ROIC over 20 percent.

The Company’s fiscal year 2018 outlook includes targeted savings which are expected to result in over 17 million dollars of operating profit improvement. Net sales are expected to be in the range of down 2 percent to flat for FY18, gross margin to be approximately 47.5 percent, non-GAAP diluted earnings per share to be in the range of 3.95 dollars to 4.15 dollars.

Net sales for the first quarter are expected to be up low single digits over the same period last year, and a non-GAAP diluted loss per share of approximately 1.70 dollar to 1.65 dollar compared to a non-GAAP diluted loss per share of 1.80 dollars for the same period last year.

Picture:Deckers Brands website