Deckers struggles over last quarter, but raises targets for 2014/2015

By

Olivier Guyot

Published
Apr 30, 2014

For its quarter ending at the end of March, the boots and slippers brand Ugg saw solid growth compared to the same period last year. It grew by nearly 16% to 143 million euros, buoying Deckers business activity.

The American group has recorded sales growth of nearly 12% to 213 million euros (295 million US dollars). But Ugg’s strong results mask poor results by Sanuk (-1% to 22 million euros) and by the outdoor brand Teva, which saw a sharp decline (-9 % to 34 million euros). There was a positive note, however. Thanks to the acquisition of the running brand Hoka One One, the "other brands" saw sales jump by 84% to 14 million euros.

Deckers said its direct-to-consumer sales improved by almost 17% on a comparable basis. Total sales in its stores reached 58 million euros, an increase of 26% and 4% on a comparable basis. E-commerce sales reached 28 million euros, up 45%.

Besides growth in sales, the group took a great step forward in terms of its gross margin, which rose from 46.8% to 48.9%. But group also increased investment, including in its store network. It operating result thus collapsed into the red at -294,000 euros compared with a positive result of 1.91 million one year ago. Its saw a net loss of 1.94 million euros.

Last quarter was a transitional period for company, which had decided to shift the end of its fiscal year to March. Because of the change, it has just started 2014/2015. For the coming year, the company, with strong pre-orders, has raised its sights. Deckers expects a 13% increase in sales with growth of 11% for Ugg, 11% for Teva and 15% for Sanuk. It expects its other brands portfolio to reach 59 million as compared to 35 million last year. To drive the growth, the group is seeking a new CEO to take over from Zohar Ziv, who has served there for eight years, now preparing for retirement.

The group expects 30 to 35 store openings (excluding China) during the next fiscal year. For Europe, it announced the creation of new structuring to directly manage the German market.