Deckers Outdoor Corporation, which recently changed its fiscal year-end to March, has raised its outlook for sales and earnings in the current financial year after reporting a 24.3 percent boost in total revenues to $211.5 million for its first quarter ended on June 30. All its main brands contributed to the growth, fueled by the introduction of new products and the roll-out of an omni-channel retail strategy.
The group's own retail sales increased by 29.2 percent to $42.0 million through the opening of new single-brand stores and new websites in the U.S. and abroad. A Retail Inventory Online system, launched in the U.S. and Europe this spring, allows customers to check the inventory in a store before visiting it. In both territories, customers will be able to order products online and pick them up at the stores.
Ugg, a brand that we are handling more in detail in Shoe Intelligence, posted a 22.8 percent sales increase to $123.3 million. Teva's sales rose by 25.7 percent to $39.3 million, and those of Sanuk grew by 19.6 percent to $36.0 million.
Both Teva and Sanuk are being transformed into lifestyle brands with a broader appeal instead of being strictly associated with the outdoor or action sports. Higher revenues from foreign distributors and wholesale customers contributed to the good performance of both brands in the latest quarter.
Deckers' Other Brands segment saw its sales jump by 54.5 percent to $12.9 million, due primarily to a $4.5 million increase for the Hoka One One brand of trail running shoes. The management continues to limit its distribution to the specialty running channel but is considering widening it to athletic specialty stores and the generalist sporting goods chains next year.
The group's total sales outside the U.S. rose by 32.0 percent to $79.2 million and they are likely to keep growing strongly for the full year, especially in Europe, where Deckers is assigning pan-European responsibilities for its major brands to individual executives, instead of running the whole show from its European office in the UK.
As reported in our July 11 issue, Deckers has appointed a Dutch executive, Rob van der Vis, as managing director for Teva's operations throughout the Europe, Middle East and Africa (EMEA)region. He was previously in charge of Teva, Ugg and Sanuk in the Benelux countries alone.
Similarly, Chris Cavanagh, who took care of Sanuk and Teva in the U.K. and Ireland, is now EMEA brand director for Hoka One One. He is working with a Uli Kick, a former executive of Reebok and Adidas, for sales in the German-speaking markets, and with a French industry veteran, Serge Darcy, for Southern Europe.
The group's gross margin remained essentially flat at 41.1 percent, due to a higher proportion of sales to international distributors. The company moved to an operating loss of $50.5 million from a $42.8 million loss in the year-ago period, and its net loss increased by 26.6 percent to $37.1 million for this seasonally weak quarter.
For the full financial year through March 2015, sales are predicted to go up by about 14 percent with increases of 12 percent for Ugg, 11 percent for Teva and 15 percent for Sanuk. Earnings per share should inflate by 14.5 percent, up from a previous forecast of 13.5 percent growth.