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ecoSNEAKS drives Simple brand sales of Deckers
24 Jul '09
7 min read
Other Brands
Combined net sales of the Company's other brands, TSUBO and Ahnu, were $2.1 million for the second quarter of 2009 compared to $0.7 million in TSUBO brand sales for the same period last year. The Company acquired the TSUBO brand in the second quarter of 2008 and the Ahnu brand in the first quarter of 2009. Accordingly, 2008 only reflects a partial quarter of TSUBO brand sales activity. As of June 30, 2009, the Company conducted an impairment evaluation of the TSUBO brand trademarks included in intangible assets on its condensed consolidated balance sheet. Based on the results of the evaluation, the Company wrote down the value of the trademarks and recorded a non-cash, pre-tax charge of $1.0 million for the second quarter ended June 30, 2009.
eCommerce
Sales for the eCommerce business, which are included in the brand sales numbers above, decreased 18.1% to $5.3 million for the second quarter compared to $6.4 million for the same period a year ago. The decrease in sales resulted from more first quarter backorders carried into and shipped in the second quarter of 2008 than 2009 for the UGG brand, a decline in our conversion rates for all brands and lower average selling prices for Teva and Simple brand products.
Retail Stores
Sales for the retail store business, which are included in the brand sales numbers above, increased 100.0% to $6.1 million for the second quarter compared to $3.1 million for the same period a year ago, primarily as a result of more store locations in 2009. For those stores that were open during the full three months ended June 30, 2008 and 2009, same store sales grew by 8.4%.
Inventories
At June 30, 2009, inventories increased 29.1% to $145.6 million versus $112.8 million for the same period a year ago. By brand, the UGG brand increased by $39.7 million to $130.3 million compared to $90.6 million for the same period last year, the Teva brand decreased by $6.3 million to $7.9 million compared to $14.1 million for the same period last year and the Simple brand decreased by $3.1 million to $3.8 million compared to $6.9 million for the same period last year. TSUBO and Ahnu brand inventory totaled $3.7 million at June 30, 2009.
It is important to note that the majority of the UGG brand's business is pre-booked and the increase in the UGG brand's inventory is necessary to fulfill the volume of orders currently on the books. In addition, $6.8 million of the increase in UGG brand inventory was from the Company's retail store inventory, due in part to the Company's additional retail stores at June 30, 2009 compared to a year ago.
Full-Year 2009 Outlook
• Based upon the UGG brand's second quarter performance coupled with increased visibility into the second half of the year, the Company is raising its full year revenue outlook. The Company now expects its full year revenue to increase approximately 9% to 10% over 2008, compared to previous guidance of approximately 7% to 9%.
• The Company reiterated its previous outlook for full year non-GAAP diluted earnings per share to be flat to up slightly over the $7.27 non-GAAP diluted EPS in 2008, which excludes pre-tax impairment charges of $1.0 million for 2009 and $35.8 million for 2008 as described in our earnings release for the fourth quarter ended December 31, 2008. This guidance assumes a gross profit margin of approximately 44.5% compared to its previous expectation of approximately 45.0% and SG&A as a percentage of sales of approximately 24.5% compared to its previous expectation of approximately 25.0%.
Third and Fourth Quarter Outlook
• The Company currently expects third quarter 2009 revenue and diluted earnings per share to increase approximately 14.0% and 10.0%, respectively, over 2008 levels. This guidance assumes a gross profit margin of approximately 43.0% and SG&A as a percentage of sales of approximately 22.5%.
• The Company currently expects fourth quarter 2009 revenue to decrease slightly and non-GAAP diluted earnings per share to decrease approximately 4% from 2008 levels, which excludes pre-tax impairment charges of $20.9 million for the fourth quarter ended December 31, 2008 as described in our earnings release for that period. The projected sales and earnings decline for the fourth quarter is being driven by a shift of sales to the third quarter to accommodate customer requests for early deliveries of the UGG brand. This guidance assumes a gross profit margin of approximately 47.5% and SG&A as a pe
Combined net sales of the Company's other brands, TSUBO and Ahnu, were $2.1 million for the second quarter of 2009 compared to $0.7 million in TSUBO brand sales for the same period last year. The Company acquired the TSUBO brand in the second quarter of 2008 and the Ahnu brand in the first quarter of 2009. Accordingly, 2008 only reflects a partial quarter of TSUBO brand sales activity. As of June 30, 2009, the Company conducted an impairment evaluation of the TSUBO brand trademarks included in intangible assets on its condensed consolidated balance sheet. Based on the results of the evaluation, the Company wrote down the value of the trademarks and recorded a non-cash, pre-tax charge of $1.0 million for the second quarter ended June 30, 2009.
eCommerce
Sales for the eCommerce business, which are included in the brand sales numbers above, decreased 18.1% to $5.3 million for the second quarter compared to $6.4 million for the same period a year ago. The decrease in sales resulted from more first quarter backorders carried into and shipped in the second quarter of 2008 than 2009 for the UGG brand, a decline in our conversion rates for all brands and lower average selling prices for Teva and Simple brand products.
Retail Stores
Sales for the retail store business, which are included in the brand sales numbers above, increased 100.0% to $6.1 million for the second quarter compared to $3.1 million for the same period a year ago, primarily as a result of more store locations in 2009. For those stores that were open during the full three months ended June 30, 2008 and 2009, same store sales grew by 8.4%.
Inventories
At June 30, 2009, inventories increased 29.1% to $145.6 million versus $112.8 million for the same period a year ago. By brand, the UGG brand increased by $39.7 million to $130.3 million compared to $90.6 million for the same period last year, the Teva brand decreased by $6.3 million to $7.9 million compared to $14.1 million for the same period last year and the Simple brand decreased by $3.1 million to $3.8 million compared to $6.9 million for the same period last year. TSUBO and Ahnu brand inventory totaled $3.7 million at June 30, 2009.
It is important to note that the majority of the UGG brand's business is pre-booked and the increase in the UGG brand's inventory is necessary to fulfill the volume of orders currently on the books. In addition, $6.8 million of the increase in UGG brand inventory was from the Company's retail store inventory, due in part to the Company's additional retail stores at June 30, 2009 compared to a year ago.
Full-Year 2009 Outlook
• Based upon the UGG brand's second quarter performance coupled with increased visibility into the second half of the year, the Company is raising its full year revenue outlook. The Company now expects its full year revenue to increase approximately 9% to 10% over 2008, compared to previous guidance of approximately 7% to 9%.
• The Company reiterated its previous outlook for full year non-GAAP diluted earnings per share to be flat to up slightly over the $7.27 non-GAAP diluted EPS in 2008, which excludes pre-tax impairment charges of $1.0 million for 2009 and $35.8 million for 2008 as described in our earnings release for the fourth quarter ended December 31, 2008. This guidance assumes a gross profit margin of approximately 44.5% compared to its previous expectation of approximately 45.0% and SG&A as a percentage of sales of approximately 24.5% compared to its previous expectation of approximately 25.0%.
Third and Fourth Quarter Outlook
• The Company currently expects third quarter 2009 revenue and diluted earnings per share to increase approximately 14.0% and 10.0%, respectively, over 2008 levels. This guidance assumes a gross profit margin of approximately 43.0% and SG&A as a percentage of sales of approximately 22.5%.
• The Company currently expects fourth quarter 2009 revenue to decrease slightly and non-GAAP diluted earnings per share to decrease approximately 4% from 2008 levels, which excludes pre-tax impairment charges of $20.9 million for the fourth quarter ended December 31, 2008 as described in our earnings release for that period. The projected sales and earnings decline for the fourth quarter is being driven by a shift of sales to the third quarter to accommodate customer requests for early deliveries of the UGG brand. This guidance assumes a gross profit margin of approximately 47.5% and SG&A as a pe
Deckers Outdoor Corporation
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