Warm weather continues to weigh on Deckers Brands
- Swings to fourth quarter loss of $23.7m from a profit of $1.4m
- Net sales up 11.2% to $378.6m from $340.6m
- Dave Powers to succeed Angel Martinez as CEO
Lingering headwinds including unseasonably warm weather have promped Ugg boot owner Deckers Brands to book a softer-than expected full-year and first-quarter outlook – as the apparel and footwear group also announced the retirement of its CEO.
The forecast came as the firm, which also owns the Teva, Hoka One One and Sanuk brands, said that it swung to a fourth quarter loss of $23.7m from a profit of $1.4m a year earlier.
This was despite net sales in the three months to 31 March increasing 11.2% to $378.6m from $340.6m. Ugg brand sales increased 13.3% to $245.6m, Teva rose 11.3% to $59.1m, Sanuk fell 1.9% to $38.5m, and other brands were up 12.4% to $35.4m.
Gross margin in the quarter declined to 40.9% compared to 44.7% for the same period last year, with the company blaming a higher proportion of closeouts, promotions and foreign exchange headwinds from the strengthening US dollar.
"Looking back on the year, our performance was challenged by record warm weather across the globe and store traffic declines across retail," said CEO Angel Martinez, adding that " these issues have created lingering headwinds for the industry."
For the full-year, net income tumbled 25% to $122m, from $162m the year before, with gross margin slipping 45.2% from 48.3% last year as lower input costs were offset by promotions, higher closeout sales and foreign exchange headwinds from the strengthening of the US dollar.
Net sales increased 3.2% to a record $1.875bn, up from $1.817bn last year.
Unseasonably warm weather also left Deckers with elevated inventory levels, led by 31% increase at the Ugg brand and a 21.4% rise at Teva.
Looking ahead to fiscal 2017, the company said it expects sales to range from flat to a 3% decline, with earnings per share in the range of $4.05 to $4.40.
It also expects first quarter net sales to be down 20-25%, with loss per share of $2.10 to $2.20 compared to a loss of $1.43 per share a year earlier. The decline in sales is primarily due to the timing of order shipments between quarters, the company said.
Separately, Deckers Brands said Dave Powers will succeed Angel Martinez as chief executive officer following Martinez's retirement at the end of this month. Martinez will continue to serve as chairman of the company's board of directors.
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US apparel and footwear group Deckers Brands, the maker of Ugg footwear, has lowered its guidance for the full year amid disappointing third-quarter results that saw profit drop by nearly three-quarte...
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