Deckers Brands Reports Third Quarter Fiscal 2019 Financial Results And Raises Guidance For Full Year Fiscal 2019

GOLETA, Calif., Jan. 31, 2019 /PRNewswire/ -- Deckers Brands (NYSE: DECK), a global leader in designing, marketing and distributing innovative footwear, apparel and accessories, today announced financial results for the third fiscal quarter ended December 31, 2018. The Company also provided its financial outlook for the fourth fiscal quarter ending March 31, 2019 and updated its outlook for the full fiscal year ending March 31, 2019.

Throughout this release, references to Non-GAAP financial measures exclude the impact of certain charges relating to retail store closures, tax reform, organizational changes and other one-time or non-recurring amounts.  Additional information regarding these Non-GAAP financial measures is set forth under the heading "Non-GAAP Financial Measures" below.

"With third quarter results delivered and an updated outlook for the full fiscal year 2019, I am pleased to say that we are now well ahead of schedule to deliver on the long term strategic goals we laid out two years ago," said Dave Powers, President and Chief Executive Officer. "Our third quarter results were propelled by the UGG brand as it successfully delivered a compelling product offering, with thoughtful and controlled distribution. In addition, we achieved impressive growth with our HOKA ONE ONE and Koolaburra brands. These brands significantly contributed to the growth of our business and further highlight the momentum built throughout the entire Deckers organization."

"In light of our strong results and the confidence in our strategies to produce strong cash flow over time, the Board of Directors has authorized an additional $261 million to our share repurchase program. Combined with the $89 million remaining under our current authorization, we now have the ability to repurchase a total of $350 million worth of shares in the future, as one avenue to effectively return value to shareholders."

Third Quarter Fiscal 2019 Financial Review

• Net sales increased 7.8% to $873.8 million compared to $810.5 million for the same period last year. On a constant currency basis, net sales increased 7.7%.
• Gross margin was 53.8% compared to 52.2% for the same period last year.
• SG&A expenses were $225.4 million compared to $230.3 million for the same period last year.
  Non-GAAP SG&A expenses were $227.8 million this year compared to $220.4 million last year.
• Operating income was $244.7 million compared to $193.2 million for the same period last year.
  Non-GAAP operating income was $242.3 million this year compared to $203.1 million last year.
• Diluted earnings per share was $6.68 compared to $2.69 for the same period last year.
  Non-GAAP diluted earnings per share was $6.59 this year compared to $4.97 last year.

Brand Summary

• UGG® brand net sales for the third quarter increased 3.6% to $761.0 million compared to $734.7 million for the same period last year.
• HOKA ONE ONE® brand net sales for the third quarter increased 79.2% to $56.9 million compared to $31.8 million for the same period last year.
• Teva® brand net sales for the third quarter increased 17.5% to $22.9 million compared to $19.5 million for the same period last year.
• Sanuk® brand net sales for the third quarter decreased 7.0% to $12.9 million compared to $13.9 million for the same period last year.

Channel Summary (included in the brand sales numbers above)

• Wholesale net sales for the third quarter increased 12.5% to $482.2 million compared to $428.8 million for the same period last year.
• DTC net sales for the third quarter increased 2.6% to $391.6 million compared to $381.7 million for the same period last year. DTC comparable sales for the third quarter increased 1.4% over the same period last year.

Geographic Summary (included in the brand and channel sales numbers above)

• Domestic net sales for the third quarter increased 14.2% to $573.0 million compared to $501.7 million for the same period last year.
• International net sales for the third quarter decreased 2.6% to $300.8 million compared to $308.8 million for the same period last year.

Balance Sheet (December 31, 2018 as compared to December 31, 2017)

• Cash and cash equivalents were $515.9 million compared to $493.0 million.
• Inventories were $342.0 million compared to $396.3 million.
• Outstanding borrowings were $31.7 million compared to $32.2 million.

Stock Repurchase Program

During the third quarter, the Company repurchased approximately 249 thousand shares of its common stock for a total of $27 million.  As of December 31, 2018, the Company had $89 million remaining under its $400 million in stock repurchase authorizations.

As of January 29, 2019, the Board of Directors approved an increase of $261 million to the Company's stock repurchase authorization. Combined with the previous outstanding amount of $89 million, this brings the Company's total stock repurchase authorization up to $350 million.

Full Year Fiscal 2019 Outlook for the Twelve Month Period Ending March 31, 2019

• Net sales are now expected to be in the range of $1.986 billion to $2.0 billion.
• Gross margin is now expected to be above 50.5%.
• SG&A expenses as a percentage of sales are now projected to be below 36.5%.
• Operating margin is now expected to be in the range of 14.5% to 14.7%.
• Effective tax rate is now expected to be approximately 20%.
• Non-GAAP diluted earnings per share are now expected to be in the range of $7.85 to $7.95.
• The earnings per share guidance excludes any charges that may occur from additional store closures, tax reform, organizational changes and other one-time or non-recurring amounts. It also does not assume any impact from additional share repurchases.

Fourth Quarter Fiscal 2019 Outlook for the Three Month Period Ending March 31, 2019

• Net sales are expected to be in the range of $360.0 million to $374.0 million.
• Non-GAAP diluted earnings per share are expected to be in the range of break-even to $0.10.
• The earnings per share guidance excludes any charges that may occur from additional store closures, tax reform, organizational changes and other one-time or non-recurring amounts. It also does not assume any impact from additional share repurchases.

Non-GAAP Financial Measures

We present certain Non-GAAP financial measures in this press release, including constant currency, Non-GAAP SG&A expenses, Non-GAAP operating income and Non-GAAP diluted earnings (loss) per share, to provide information that may assist investors in understanding our financial results and assessing our prospects for future performance.  We believe these Non-GAAP financial measures are important indicators of our operating performance because they exclude items that are unrelated to, and may not be indicative of, our core operating results, such as charges relating to retail store closures, tax reform, organizational changes and other one-time or non-recurring amounts.  In particular, we believe the exclusion of certain costs and one-time amounts allows for a more meaningful comparison of our results from period to period. Further, we report comparable DTC sales on a constant currency basis for DTC operations that were open throughout the current and prior reporting periods, and we adjust prior reporting periods to conform to current year accounting policies.

These Non-GAAP measures, as we calculate them, may not necessarily be comparable to similarly titled measures of other companies and may not be appropriate measures for comparing the performance of other companies relative to Deckers.  For example, in order to calculate our constant currency information, we calculate the current period financial information using the foreign currency exchange rates that were in effect during the previous comparable period, excluding the effects of foreign currency exchange rate hedges and re-measurements in the condensed consolidated balance sheets.  These Non-GAAP financial results are not intended to represent, and should not be considered to be more meaningful measures than, or alternatives to, measures of operating performance as determined in accordance with GAAP.  To the extent we utilize such Non-GAAP financial measures in the future, we expect to calculate them using a consistent method from period to period.  A reconciliation of each of the Non-GAAP financial measures to the most directly comparable GAAP measures has been provided under the heading "Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures" in the financial statement tables attached to this press release.

Conference Call Information

The Company's conference call to review the results for the third quarter fiscal 2019 will be broadcast live today, Thursday, January 31, 2019 at 4:30 pm Eastern Time and hosted at www.deckers.com.  You can access the broadcast by clicking on the "Investor" tab and then clicking on the microphone icon at the top of the page.

About Deckers Brands

Deckers Brands is a global leader in designing, marketing and distributing innovative footwear, apparel and accessories developed for both everyday casual lifestyle use and high performance activities. The Company's portfolio of brands includes UGG®, Koolaburra®, HOKA ONE ONE®, Teva® and Sanuk®.  Deckers Brands products are sold in more than 50 countries and territories through select department and specialty stores, Company-owned and operated retail stores, and select online stores, including Company-owned websites. Deckers Brands has over 40 years of history building niche footwear brands into lifestyle market leaders attracting millions of loyal consumers globally.  For more information, please visit www.deckers.com.        

Forward Looking Statements

This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, which statements are subject to considerable risks and uncertainties.  Forward-looking statements include all statements other than statements of historical fact contained in this press release, including statements regarding our anticipated financial performance, including our projected net sales, margins, expenses, effective tax rate and earnings (loss) per share, as well as statements regarding our progress towards the achievement of our long term strategic objectives, our ability to compete in our industry, our product and brand positioning and strategies, and our potential repurchase of shares. We have attempted to identify forward-looking statements by using words such as "anticipate," "believe," "could," "estimate," "expected," "intend," "may," "plan," "predict," "project," "should," "will," or "would," and similar expressions or the negative of these expressions.

Forward-looking statements represent our management's current expectations and predictions about trends affecting our business and industry and are based on information available as of the time such statements are made. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy or completeness. Forward-looking statements involve numerous known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements predicted, assumed or implied by the forward-looking statements.  Some of the risks and uncertainties that may cause our actual results to materially differ from those expressed or implied by these forward-looking statements are described in the section entitled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended March 31, 2018, as well as in our Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. Except as required by applicable law or the listing rules of the New York Stock Exchange, we expressly disclaim any intent or obligation to update any forward-looking statements, or to update the reasons actual results could differ materially from those expressed or implied by these forward-looking statements, whether to conform such statements to actual results or changes in our expectations, or as a result of the availability of new information.

SOURCE Deckers Brands

Related Links

http://www.deckers.com