Deckers Outdoor trounces recession to deliver dazzling growth
Deckers Outdoor Corporation announced financial results for the fourth quarter and fiscal year ended December 31, 2008.
Fourth Quarter Highlights:
• Net sales increased 56.3% to $303.5 million versus $194.2 million last year.
• Diluted EPS of $3.07 on a GAAP basis, or $4.05 excluding the pre-tax non-cash write down of $20.9 million described below.
• The non-GAAP diluted EPS of $4.05 represents an increase of 50.6% over diluted EPS of $2.69 a year ago.
• Domestic sales increased 59.5% to $283.4 million compared to $177.7 million last year.
• International sales increased 21.3% to $20.1 million versus $16.5 million a year ago.
• UGG brand sales increased 62.0% to $288.0 million compared to $177.7 million last year.
Fiscal 2008 Highlights:
• Net sales increased 53.6% to $689.4 million versus $448.9 million last year.
• Diluted EPS of $5.60 on a GAAP basis, or $7.27 excluding the pre-tax non-cash write down of $14.9 million incurred in the second quarter of fiscal 2008 and the $20.9 million incurred in the fourth quarter of fiscal 2008. The non-GAAP diluted EPS of $7.27 represents an increase of 43.7% over diluted EPS of $5.06 a year ago.
• Domestic sales increased 50.4% to $581.5 million compared to $386.6 million last year.
• International sales increased 73.1% to $107.9 million versus $62.3 million a year ago.
• UGG brand sales increased 67.5% to $582.0 million compared to $347.6 million last year.
• Simple sales increased 27.4% to $17.2 million versus $13.5 million in the prior year.
• Cash, cash equivalents and short-term investments increased to $194.8 million compared to $168.1 million a year ago, or on a non-GAAP basis $14.76 per diluted share compared to $12.80 per diluted share a year ago.
As part of the Company's annual goodwill and indefinite lived asset impairment testing, the Company recognized an impairment charge for the entire balance of $11.9 million of the Teva brand's goodwill as well as the entire balance of $3.5 million of the TSUBO brand's goodwill in the fourth quarter of fiscal 2008. These impairment charges resulted primarily from a significant decrease in the Company's market capitalization as the stock market as a whole has declined, as well as reduced forecasts for the Teva brand. In addition, the Company recognized an impairment loss of $5.5 million on the Teva brand's trademarks, leaving a balance of $15.3 million as of December 31, 2008. This impairment charge resulted primarily from the reduced forecasts for the Teva brand.
Angel Martinez, President, Chief Executive Officer and Chairman of the Board of Directors, stated: “Our UGG business, both in the U.S. and internationally, performed very well during the fourth quarter. We experienced robust consumer demand for our expanded product assortment across all geographic regions and throughout our wholesale accounts, company-owned stores, and on our eCommerce website.
This allowed us to exceed expectations and represented a strong finish to another record year. While the macroeconomic conditions did impact Teva and Simple's fourth quarter performance, we are pleased with the progress both brands made during the past twelve months. For Teva, this included targeting a younger audience, improving retail placement, and introducing a fall line of closed-toe footwear. And for Simple, it was expanding the product assortment, increasing distribution, and broadening consumer awareness of the brand and its collections.
We begin 2009 fully cognizant of the challenges confronting our industry and this is reflected in our modest growth assumptions for the full year. That said, we remain confident about our long-term prospects and believe that the current retail environment is creating new opportunities for market share gains. Therefore, we plan to take advantage of our positive momentum and strong balance sheet by making strategic investments in our brands and infrastructure to ensure we are best positioned for the future.”