DECKERS BRANDS REPORTS SECOND QUARTER FISCAL 2023 FINANCIAL RESULTS

Rhea-AI Summary

Deckers Brands (NYSE: DECK) reported second-quarter fiscal 2023 revenue of $876 million, marking a 21% increase year-over-year and 25% in constant currency. The company reiterated its full-year revenue growth guidance of 10-11% and diluted EPS guidance of $17.50-$18.35. Direct-to-Consumer sales surged 35.3% to $239.1 million, while wholesale sales rose by 16.7%. However, gross margin decreased to 48.2% from 50.9%. Notably, HOKA brand sales soared by 58.3%, while Sanuk brand sales fell 25.2%. Cash reserves declined to $419.3 million.

Positive

• Second-quarter revenue rose 21% to $876 million.
• Direct-to-Consumer sales increased 35.3%.
• HOKA brand sales surged 58.3%.
• Reiterated fiscal year 2023 diluted EPS guidance of $17.50-$18.35.

Negative

• Gross margin decreased to 48.2% from 50.9%.
• Cash and cash equivalents dropped to $419.3 million from $746.2 million.
• Sanuk brand net sales declined 25.2%.

• Second Quarter Fiscal 2023 Reported Revenue was $876 million, Increasing 21% Compared to the Same Period Last Year and 25% in Constant Currency
• Fiscal Year 2023 Revenue Growth Guide of 10-11% Reiterated on a Reported Basis
• Fiscal Year 2023 Diluted EPS Guide of $17.50-$18.35 Reiterated on a Reported Basis

GOLETA, Calif., Oct. 27, 2022 /PRNewswire/ -- Deckers Brands (NYSE: DECK), a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories, today announced financial results for the second quarter ended September 30, 2022. The Company also provided an update to its financial outlook for the full fiscal year ending March 31, 2023, which included a reiterated revenue and diluted earnings per share outlook.

"Deckers' strong performance in the first half of fiscal year 2023 is a testament to our team's execution, despite a challenging macroeconomic backdrop," said Dave Powers, President and Chief Executive Officer. "As we head into the UGG brand's peak selling season and continue to fuel expanding demand for HOKA performance footwear, we are confident in our ability to deliver our maintained full year guidance."

Second Quarter Fiscal 2023 Financial Review (Compared to the Same Period Last Year)

• Net sales increased 21.3% to $875.6 million compared to $721.9 million. On a constant currency basis, net sales increased 24.8%.
• Channel
• Wholesale net sales increased 16.7% to $636.5 million compared to $545.2 million.
• Direct-to-Consumer (DTC) net sales increased 35.3% to $239.1 million compared to $176.7 million. Comparable DTC net sales increased 38.2%.
• Geography
• Domestic net sales increased 20.0% to $617.7 million compared to $514.6 million.
• International net sales increased 24.4% to $257.9 million compared to $207.3 million.
• Gross margin was 48.2% compared to 50.9%.
• Selling, general, and administrative (SG&A) expenses were $294.1 million compared to $238.9 million.
• Operating income was $127.8 million compared to $128.2 million.
• Diluted earnings per share was $3.80 compared to $3.66.

Second Quarter Fiscal 2023 Brand Summary (Compared to the Same Period Last Year)

• UGG® brand net sales increased 6.3% to $476.5 million compared to $448.4 million.
• HOKA® brand net sales increased 58.3% to $333.0 million compared to $210.4 million.
• Teva® brand net sales increased 4.3% to $30.1 million compared to $28.8 million.
• Sanuk® brand net sales decreased 25.2% to $7.5 million compared to $10.1 million.
• Other brands, primarily composed of Koolaburra®, net sales increased 17.9% to $28.5 million compared to $24.2 million.

Balance Sheet (September 30, 2022 as compared to September 30, 2021)

• Cash and cash equivalents is $419.3 million compared to $746.2 million.
• Inventories, which include amounts in-transit, is $925.0 million compared to $636.3 million.
• The Company has no outstanding borrowings.

Stock Repurchase Program

During the second quarter, the Company repurchased approximately 173 thousand shares of its common stock for a total of $50.2 million at a weighted average price paid per share of $290.01. As of September 30, 2022, the Company had approximately $1.5 billion remaining under its stock repurchase authorization.

Full Fiscal Year 2023 Outlook for the Twelve Month Period Ending March 31, 2023

The Company's full fiscal year 2023 outlook is forward-looking in nature, reflecting our expectations as of October 27, 2022, and is subject to significant risks and uncertainties that limit our ability to accurately forecast results. This outlook assumes no meaningful changes to the Company's business prospects or risks and uncertainties identified by management that could impact future results, which include but are not limited to: the impact of the COVID-19 pandemic on our business and operations, including supply chain disruptions, constraints and related expenses; labor shortages; changes in economic conditions including foreign currency fluctuation, inflationary pressures, consumer confidence and discretionary spending; and geopolitical tensions.

• Net sales are still expected to be in the range of $3.45 billion to $3.50 billion.
• Gross margin is now expected to be approximately 50.5%.
• SG&A expenses as a percentage of sales are now projected to be approximately 33%.
• Operating margin is still expected to be in the range of 17.5% to 18.0%.
• Effective tax rate is now expected to be approximately 22%.
• Diluted earnings per share is still expected to be in the range of $17.50 to $18.35.
• The earnings per share guidance does not assume any impact from additional share repurchases.

Non-GAAP Financial Measures

In certain instances the Company may present financial measures that were not prepared in accordance with generally accepted accounting principles in the United States (non-GAAP financial measures), including constant currency, to provide information that may assist investors in understanding its financial results and assessing its prospects for future performance. The Company believes these non-GAAP financial measures are important indicators of its operating performance because they exclude items that are unrelated to, and may not be indicative of, its core operating results.

The non-GAAP financial measures presented by the Company may not necessarily be comparable to similarly titled measures of other companies and may not be appropriate measures for comparing the performance of other companies relative to Deckers. For example, in order to calculate constant currency information, the Company calculates the current period financial information using the foreign currency exchange rates that were in effect during the previous comparable period, excluding the effects of foreign currency exchange rate hedges and remeasurements in the condensed consolidated financial statements. Further, the Company reports comparable DTC sales on a constant currency basis for DTC operations that were open throughout the current and prior reporting periods, and may adjust prior reporting periods to conform to current year accounting policies. These non-GAAP financial measures are not intended to represent, and should not be considered to be more meaningful measures than, or alternatives to, measures of operating performance as determined in accordance with GAAP. To the extent the Company utilizes such non-GAAP financial measures in the future, it expects to calculate them using a consistent method from period to period.

Conference Call Information

The Company's conference call to review the results for the second quarter fiscal year 2023 will be broadcast live today, Thursday, October 27, 2022, at 4:30 pm Eastern Time and hosted at ir.deckers.com. You can access the broadcast by clicking on the link within the "Webcast" box at the top of the page. A replay of the broadcast will be available for at least 30 days following the conference call and can be accessed under the "Quarterly Earnings" section of the "Financials" tab at the aforementioned website.

About Deckers Brands

Deckers Brands is a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories developed for both everyday casual lifestyle use and high-performance activities. The Company's portfolio of brands includes UGG®, HOKA®, Teva®, Sanuk®, and Koolaburra®. Deckers Brands products are sold in more than 50 countries and territories through select department and specialty stores, Company-owned and operated retail stores, and select online stores, including Company-owned websites. Deckers Brands has over 40 years of history building niche footwear brands into lifestyle market leaders attracting millions of loyal consumers globally. For more information, please visit www.deckers.com.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, which statements are subject to considerable risks and uncertainties. Forward-looking statements include all statements other than statements of historical fact contained in this press release, including statements regarding our projected financial results, including net sales, gross margin, SG&A expenses, operating margin, inventories, effective tax rate, and diluted earnings per share; the disruptions and impacts caused by the COVID-19 pandemic on our business and operations; the strength of our brands and demand for our products; our ability to drive future growth and profitability; and our potential repurchase of shares. We have attempted to identify forward-looking statements by using words such as "anticipate," "believe," "could," "estimate," "expected," "intend," "may," "plan," "predict," "project," "should," "will," or "would," and similar expressions or the negative of these expressions. 

Forward-looking statements represent our management's current expectations and predictions about trends affecting our business and industry and are based on information available as of the time such statements are made. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy or completeness. Forward-looking statements involve numerous known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements predicted, assumed or implied by the forward-looking statements. Some of the risks and uncertainties that may cause our actual results to materially differ from those expressed or implied by these forward-looking statements are described in the section entitled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022, as well as in our Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission. 

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. Except as required by applicable law or the listing rules of the New York Stock Exchange, we expressly disclaim any intent or obligation to update any forward-looking statements, or to update the reasons actual results could differ materially from those expressed or implied by these forward-looking statements, whether to conform such statements to actual results or changes in our expectations, or as a result of the availability of new information. In addition, readers are cautioned that we may make future changes to our business and operations in response to the challenges and impacts of the COVID-19 pandemic, or in response to other business developments, which changes may be inconsistent with our prior forward-looking statements, and which may not be disclosed in future public announcements.

 

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (dollar and share data amounts in thousands, except per share data)
	Three Months Ended September 30,				Six Months Ended September 30,
	2022		2021		2022		2021
Net sales	$       875,614		$       721,902		$     1,490,075		$     1,226,580
Cost of sales	453,693		354,814		773,402		598,989
Gross profit	421,921		367,088		716,673		627,591
Selling, general, and administrative expenses	294,090		238,907		532,501		437,578
Income from operations	127,831		128,181		184,172		190,013
Other (income) expense, net	(1,087)		501		(1,748)		682
Income before income taxes	128,918		127,680		185,920		189,331
Income tax expense	27,394		25,617		39,547		39,144
Net income	101,524		102,063		146,373		150,187
Other comprehensive (loss) income
Unrealized gain on cash flow hedges, net of tax	1,088		1,033		1,846		2,491
Foreign currency translation loss	(13,529)		(2,537)		(29,253)		(644)
Total other comprehensive (loss) income	(12,441)		(1,504)		(27,407)		1,847
Comprehensive income	$         89,083		$       100,559		$       118,966		$       152,034
Net income per share
Basic	$             3.83		$             3.69		$             5.49		$             5.42
Diluted	$             3.80		$             3.66		$             5.46		$             5.37
Weighted-average common shares outstanding
Basic	26,517		27,651		26,646		27,731
Diluted	26,682		27,896		26,815		27,978

 

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (dollar amounts in thousands)
	September 30, 2022		March 31, 2022
ASSETS			(AUDITED)
Current assets
Cash and cash equivalents	$              419,259		$              843,527
Trade accounts receivable, net	434,674		302,688
Inventories	925,043		506,796
Other current assets	134,309		99,117
Total current assets	1,913,285		1,752,128
Property and equipment, net	221,308		222,449
Operating lease assets	164,794		182,459
Other noncurrent assets	166,962		175,214
Total assets	$           2,466,349		$           2,332,250
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Trade accounts payable	$              482,928		$              327,487
Operating lease liabilities	46,886		50,098
Other current liabilities	198,810		164,099
Total current liabilities	728,624		541,684
Long-term operating lease liabilities	150,259		171,972
Other long-term liabilities	71,627		79,769
Total long-term liabilities	221,886		251,741
Total stockholders' equity	1,515,839		1,538,825
Total liabilities and stockholders' equity	$           2,466,349		$           2,332,250

 

 

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SOURCE Deckers Brands

FAQ

What were Deckers Brands' second-quarter fiscal 2023 earnings results?

Deckers Brands reported second-quarter fiscal 2023 revenue of $876 million, a 21% increase year-over-year, and diluted EPS of $3.80.

What is the revenue growth guidance for Deckers Brands for fiscal year 2023?

Deckers Brands reiterated a revenue growth guidance of 10-11% for fiscal year 2023.

How did HOKA brand perform in the second quarter of fiscal 2023?

HOKA brand net sales increased by 58.3% to $333 million compared to the same period last year.

What is the diluted EPS guidance for Deckers Brands for fiscal year 2023?

The diluted EPS guidance for fiscal year 2023 is maintained at $17.50-$18.35.

What were the financial impacts on Deckers Brands' gross margin in Q2 2023?

Deckers Brands' gross margin decreased to 48.2% in Q2 2023, down from 50.9% in the same period last year.