US: Deckers cuts outlook on plunge in Q3 profit
- Q3 profit drops 30.1% to $43.1m
- Net sales fell 9.2% to $376.4m
- Sees FY earnings per share down 33%
Deckers Outdoor Corporation, the maker of Ugg boots and Teva sandals, has slashed its full-year forecasts after the introduction of higher ticket prices for its products led to a drop in third-quarter sales and earnings.
The company says it now expects full-year sales to rise by about 5% - down from earlier guidance of 14%. And earnings per share are seen falling 33%, compared to previous forecasts for a drop of 9% to 10%.
The revision follows a 30.1% drop in profit during the three months to 30 September to $43.1m or $1.18 per share, down from $62.3m or $1.59 per share last year.
Net sales fell 9.2% to $376.4m from $414.4m, with its largest brand, Ugg, seeing sales drop 11.6% to $332.8m. Domestic sales fell 6.1% to $242.2m, and international sales were down 14.2% to $134.2m.
Retail sales increased 12.8% to $39.1m, but same-store sales slipped 13.1%, the company said. Gross margin fell to 42.3% from 49.0% in last year's third quarter.
Deckers has been raising its prices to try to offset an 80% hike in sheepskin and raw material costs over the past two years. The move has, however, coincided unprecedented warm weather, contributing to slowing sales and a later-than-usual start to the key selling season for the Ugg brand.
"We believe that these selective price increases...pushed us above the consumer's price-value expectations for the Ugg brand," said president and CEO Angel Martinez.
He added that the company has cut domestic prices on certain styles and negotiated lower product costs for autumn 2013.
It has also taken steps to reduce its exposure to sheepskin prices, and diversified its products to lessen its dependency on Classics and cold weather. The acquisition of the Sanuk brand should also help balance the seasonality of its business and improve margins.
Deckers Outdoor Corporation, the maker of Ugg boots and Teva sandals, says it expects to post a loss during its first-quarter after reporting a decline in fourth-quarter profit....
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