Deckers Brands reported a 20.3 percent increase in total sales to $209.7 million for the first quarter of its financial year through the end of June, due in part to a higher-than-expected jump of 74.2 percent to $30.7 million in the revenues of Hoka One One, thanks to good reorders from the run specialty channel. On a currency-neutral basis, sales rose at even higher rates of 21.5 percent for the group and 75.3 percent for Hoka.
Other factors behind the overall increases were 12.7 percent higher comparable sales at company-owned stores and early shipments of merchandise that was originally planned to go out during the second quarter. Both factors concerned mainly Ugg, which posted an impressive sales increase of 24.9 percent to $144.6 million during the period. Good spring orders for Teva allowed that brand to score a 8.6 percent sales increase to $37.7 million, but Sanuk's sales went down by 2.0 percent to $26.2 million.
Across the group, sales improved by 10.2 percent in the U.S. and by 37.2 percent elsewhere, with a rise of 40.8 percent in local currencies. They went up by more than 80 percent in Europe, the Middle East and Africa, and by over 45 percent in Asia-Pacific.
The gross margin contracted by 0.5 percentage points to 43.2 percent, in spite of higher average selling prices, but savings in operating costs helped the company to narrow its comprehensive net loss for the not so significant period down to $44.3 million from the $52.3 million loss of the year-ago period.
In discussing the results, the management refused to field analysts' questions about the proxy fight threatened by activist investors led by Marcato Capital Management. A few weeks before the release of the latest results, Marcato issued an ultimatum to Deckers to sell itself at an attractive valuation or face a battle to oust the entire board of directors, citing a series of missteps by the company's management and a lack of transparency about its strategic review. Marcato is the fifth largest investor in Deckers. It has been joined by Red Mountain Capital Partners and, reportedly, at least five other large investors, in urging the company to sell itself. Research conducted by Marcato has indicated an opportunity to save more than $200 million a year at Deckers after a transfer of ownership.