Retail Stores Sales for the retail store business, which are included in the brand sales numbers above, increased 66.1% to $23.1 million for the first quarter compared to $13.9 million for the same period last year, driven by five new stores and a same store sales increase of 28.2% for those stores that were open for the full three month periods ended March 31, 2009 and 2010.
Full-Year 2010 Outlook
• Based on better than expected first quarter results combined with higher projected sales for the UGG and Teva brands, the Company is raising its full-year outlook. • The Company now expects its full-year revenue to increase approximately 13% over 2009 levels, compared to previous guidance of approximately 11%. • The Company now expects its full-year diluted earnings per share to increase approximately 11% over the non-GAAP diluted EPS of $8.94 in 2009, compared to previous guidance of approximately 5%. This guidance assumes a gross profit margin of approximately 48% and SG&A as a percentage of sales of approximately 26%. The non-GAAP diluted EPS of $8.94 in 2009 excluded pre-tax non-cash impairment charges of $1.0 million, or $0.05 per diluted share, as discussed in the related earnings release. • Fiscal 2010 guidance includes estimates of incremental expenses of approximately $8.0 million, or approximately $0.38 per diluted share, associated with the transition to wholesale sales for the Teva brand in the Benelux region and France and incremental expenses and a shift in sales from 2010 to 2011 associated with the upcoming transitions in January 2011 to wholesale sales in the United Kingdom, the Benelux region and France. Fiscal 2010 guidance also assumes an effective tax rate of approximately 37% compared to 36.2% in 2009 due to the impact on international income from the aforementioned incremental expenses and shift in profit.
Second Quarter Outlook
• The Company currently expects second quarter 2010 revenue to increase approximately 25% over 2009 levels. • The Company currently expects second quarter 2010 diluted earnings per share to be flat compared to second quarter 2009 non-GAAP diluted EPS of $0.26, which excluded pre-tax non-cash impairment charges of $1.0 million, or $0.04 per diluted share, as discussed in the related earnings release. • Second quarter guidance includes improved gross margins compared to 2009 due to a higher retail mix and improved brand margins. In addition, second quarter guidance includes higher levels of fixed overhead for new retail stores, international infrastructure and other general and administrative costs. Second quarter guidance also includes estimates of approximately $1.0 million, or approximately $0.05 per diluted share, for incremental investments associated with the distribution transitions. A significant amount of the Company's operating expenses are fixed and spread evenly on an absolute dollar basis throughout each quarter, resulting in the greatest impact on earnings in the lowest volume sales quarter, which has historically been the second quarter.