US: Deckers 94% EPS hike boosted by record sales
High performance footwear producer Deckers Outdoor Corporation has revealed strong growth in both its full year and fourth quarter results, on the back of full year sales that surpassed the US$300m mark for the first time.
The company exceeded previous guidance both in sales and earnings per share.
However, Deckers announced that that it recently conducted its annual impairment evaluation of the intangible assets on its balance sheet. Based on preliminary results, the company expects to record a non-cash, pre-tax charge in the fourth quarter in the range of $14m to $16m, reflecting the write-down of the intangible asset related to Teva's trademarks
Excluding the charge, preliminary diluted earnings per share increased 93.6% to $1.82 versus $0.94 last year, ahead of the previous guidance range of $1.27 to $1.30. Full year preliminary diluted EPS increased 33.1% to $3.30 versus $2.48 in 2005, ahead of the previous guidance range of $2.75 to $2.78.
Net sales in the fourth quarter increased 36.7% to $124.4m versus $91.0m last year. Net sales for the full year increased 15.0% to $304.4m versus $264.8m in 2005.
Angel Martinez, president and CEO said: "Our fourth quarter was highlighted by strong full price selling of our entire Ugg Brand autumn collection throughout the holiday season and across the country which, combined with a meaningful reorder business, allowed us to once again exceed expectations. We are very pleased with our recent performance, particularly our top and bottom line growth.
"We achieved some key milestones in 2006 including surpassing the $300m mark in sales, generating more than $3.00 in diluted earnings per share on an operational basis, and finishing the year with nearly $100m in cash and short term investments on our balance sheet.
"Throughout the past 12 months we took a number of important steps to better position our company for the future. And as we enter the new year, we are committed to further investing in all three of our brands, evolving our growth strategy, and fully maximizing the many opportunities that still exist going forward."
The company said its Teva Brand net sales for the fourth quarter increased 15.5% to $13.0m compared to $11.3m for the same period last year.
Sales of Teva products were driven by solid sell-through of autumn product and pull-forwards on several spring 2007 models, the company said. For the full year, Teva product sales decreased 5.6% to $80.5m compared to $85.2m in the prior year.
Ugg Brand net sales for the fourth quarter increased 40.1% to $109.9m versus $78.5m for the same period a year ago. For the full year, UGG Brand sales increased 23.2% to a record $211.5m versus $171.6m in 2005.
Simple Brand net sales increased 18.8% to $1.5m for the fourth quarter compared to $1.2m for the same period last year. For the full year, the Simple Brand's sales increased 58.01% to $12.5m compared to $7.9m a year ago.
Meanwhile, sales for the Consumer Direct business, which are included in the brand sales numbers above, increased 28.4% to $19.5m.
Looking forward, the company reiterated its full year revenue growth target of approximately 15%. The company also introduced its full year diluted earnings per share target of approximately 5% growth over 2006 before the impairment charge.
The company did warn however: "It is important to note, that the fiscal 2006 gross margin of 46.4% was above normal due primarily to labour and material cost containment. The company expects gross margin to return to a more normalised level of approximately 44% in fiscal 2007."
The company currently expects first quarter 2007 revenue to increase approximately 15% and diluted earnings per share to increase approximately 15% over 2006.
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