Deckers Outdoor Corporation's total revenues jumped by 34 percent to $137.1 million in the second quarter ended June 30. Net income grew by 222 percent to $8.9 million. Gross margins rose by 4.5 percentage points to 44.3 percent with the gain attributed to improved Teva sales, fewer closeouts and a one-time $3.1 million duty refund.
Teva's sales were 38 percent higher at $31.2 million; UGG sales were 35 percent higher at $100.2 million, marking the second consecutive quarter that the brand has surpassed $100 million in sales. Other brands were essentially flat at $5.6 million.
E-commerce sales dipped slightly to $5.2 million and retail store sales ballooned by 63 percent to $10 million on a 19.2 percent increase in comparable store sales. There will be an additional 140 UGG shop-in-shops added this fiscal year to bring the year-end total to 290 globally. On the retail side, eight additional doors will be added in the second half: six in the U.S. and two in Shanghai.
Deckers' management points out that the company continues to become more far-reaching in terms of product range, seasonality, distribution channels and geography. Its business outside the U.S. was up by 55 percent in the second quarter and by 41 percent for the first six months of the year, and the company has a goal of generating 30 percent of its top line from markets outside the U.S. in the 2012 fiscal year. It’s already benefiting from last year’s shift to a wholesale business from a distributorship in Japan and will do the same in the U.K. and Benelux region in 2011.
Domestic sales were up by 15 percent in the first half on higher demand for both Teva and UGGs.
With the strong quarterly results, Deckers raised its full-year outlook. Revenues are now projected to increase by 14 percent, up from a 13 percent estimate earlier. Annual Teva sales are now forecast to rise by the high 20s instead of the mid-20s; UGG sales should grow by 13 percent vs. 11 percent prior; and other brands are now expected to grow by 15 percent instead of an earlier forecast of 20 percent. The third-quarter outlook calls for 15 percent revenue growth; fourth-quarter sales are predicted to grow by 8 percent at this time.