DECKERS BRANDS REPORTS THIRD QUARTER FISCAL 2024 FINANCIAL RESULTS
- Record third quarter FY 2024 revenue of $1.56 billion, a 16% increase from the previous year
- Diluted EPS increased by 44% to a record $15.11
- FY 2024 revenue guidance raised to approximately $4.15 billion, 14% above the prior year
- FY 2024 diluted EPS guidance raised to a range of $26.25-$26.50, approximately 36% above the prior year
- Significant increase in net sales for UGG and HOKA brands
- Cash and cash equivalents at $1.651 billion with no outstanding borrowings
- None.
Insights
The significant revenue and earnings per share (EPS) growth reported by Deckers Brands indicates a robust financial performance, particularly noteworthy in a retail environment that has faced numerous challenges such as inflationary pressures and supply chain disruptions. The double-digit increase in net sales, alongside the substantial 44% rise in diluted EPS, suggests that Deckers has not only managed to sustain demand for its products but has also effectively controlled costs and possibly benefited from economies of scale. The raised guidance for FY 2024 revenue and EPS further reflects management's confidence in the company's operational efficiency and market position.
Gross margin expansion from 53.0% to 58.7% is a key highlight, underscoring the company's ability to maintain pricing power and cost management. The strategic focus on the Direct-to-Consumer (DTC) channel, which saw a 22.7% increase in net sales, aligns with broader retail trends favoring direct engagement and sales to consumers, which typically offer higher margins than wholesale channels. This performance, coupled with a strong balance sheet characterized by a significant cash reserve and no outstanding borrowings, presents Deckers as financially sound and well-positioned for future investments or shareholder return programs, such as the ongoing stock repurchase initiative.
Deckers' brand portfolio dynamics, with UGG and HOKA driving growth while Teva and Sanuk experience declines, highlight the shifting consumer preferences and the importance of brand vitality in the apparel and footwear industry. The exceptional growth of HOKA, at 21.9%, reflects successful brand positioning within the athletic footwear segment, which continues to see high consumer engagement. Conversely, the declines in Teva and Sanuk suggest a need for brand reinvigoration or strategic repositioning to align with current market trends.
International sales growth matching domestic performance indicates that Deckers' brand appeal is transcending geographic boundaries, a crucial factor for long-term growth in the global marketplace. The company's focus on global brand awareness and consumer connections, as mentioned by the CEO, appears to be yielding tangible results. The emphasis on full-price selling, as opposed to discounting, also suggests strong brand equity and consumer willingness to pay a premium for Deckers' products, which can be a significant competitive advantage in the industry.
The raised full-year guidance amidst ongoing macroeconomic uncertainties, including inflation and potential supply chain issues, signals Deckers' resilience and adaptability. The company's performance and optimistic outlook may serve as a bellwether for the broader retail sector, indicating that well-managed companies with strong brands can still thrive despite headwinds. Deckers' ability to navigate foreign currency fluctuations and geopolitical tensions, as referenced in the outlook, will be critical in maintaining its international growth trajectory.
The company's effective tax rate projection of approximately 22% and its operating margin expectation of around 20% reflect a favorable operational environment, but they also highlight the need for vigilance in a period where shifts in tax policy and trade agreements could impact profitability. Investors would benefit from monitoring these factors as they could affect Deckers' financials and the stock market's perception of the retail sector's stability and growth potential.
- THIRD QUARTER FY 2024 REVENUE INCREASED
16% TO A RECORD$1.56 BILLION - THIRD QUARTER FY 2024 DILUTED EPS INCREASED
44% TO A RECORD$15.11 - FY 2024 REVENUE GUIDANCE RAISED TO APPROXIMATELY
$4.15 BILLION 14% ABOVE PRIOR YEAR - FY 2024 DILUTED EPS GUIDANCE RAISED TO RANGE OF
$26.25 -$26.50 36% ABOVE PRIOR YEAR
"Our brands delivered Deckers' largest quarter in history, with record revenue and earnings as both HOKA and UGG drove exceptional performance in the quarter, led by our DTC channel and high levels of full price selling," said Dave Powers, President and Chief Executive Officer. "Global gains in awareness, combined with elevated consumer connections and innovative product offerings, continued to drive unparalleled demand for our brands. This, coupled with our disciplined operating approach, dedicated focus on marketplace management and fortified balance sheet, puts Deckers in a position of strength as we enter our last fiscal quarter of 2024. We believe HOKA and UGG are two of the healthiest brands in the industry and we remain focused on executing against our strategic initiatives to drive long-term future success."
Third Quarter Fiscal 2024 Financial Review (Compared to the Same Period Last Year)
- Net sales increased
16.0% to$1.56 0 billion$1.34 6 billion15.1% .- Channel
- Direct-to-Consumer (DTC) net sales increased
22.7% to$858.1 million $699.3 million 21.8% . - Wholesale net sales increased
8.6% to$702.2 million $646.3 million
- Direct-to-Consumer (DTC) net sales increased
- Geography
- Domestic net sales increased
15.6% to$1.04 8 billion$906.8 million - International net sales increased
16.7% to$511.9 million $438.8 million
- Domestic net sales increased
- Channel
- Gross margin was
58.7% compared to53.0% . - Selling, general, and administrative (SG&A) expenses were
$428.7 million $349.9 million - Operating income was
$487.9 million $362.7 million - Diluted earnings per share was
$15.11 $10.48
Third Quarter Fiscal 2024 Brand Summary (Compared to the Same Period Last Year)
- UGG® brand net sales increased
15.2% to$1.07 2 billion$930.4 million - HOKA® brand net sales increased
21.9% to$429.3 million $352.1 million - Teva® brand net sales decreased
16.2% to$25.6 million $30.5 million - Sanuk® brand net sales decreased
28.9% to$4.0 million $5.6 million - Other brands, primarily composed of Koolaburra®, net sales increased
10.0% to$29.6 million $26.9 million
Balance Sheet (December 31, 2023 as compared to December 31, 2022)
- Cash and cash equivalents were
$1.65 1 billion$1.05 8 billion - Inventories were
$539.0 million $723.4 million - The Company had no outstanding borrowings.
Stock Repurchase Program
During the third fiscal quarter, the Company repurchased approximately 196 thousand shares of its common stock for a total of
Full Fiscal Year 2024 Outlook for the Twelve Month Period Ending March 31, 2024
The Company's full fiscal year 2024 outlook is forward-looking in nature, reflecting our expectations as of February 1, 2024, 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: changes in economic conditions, including consumer confidence and discretionary spending, inflationary pressures, and foreign currency fluctuation; geopolitical tensions; and supply chain disruptions, constraints and related expenses.
- Net sales are now expected to be approximately
$4.15 billion - Gross margin is now expected to be approximately
54.5% . - SG&A expenses as a percentage of net sales are now expected to be approximately
34.5% . - Operating margin is now expected to be approximately
20% . - Effective tax rate is now expected to be approximately
22% . - Diluted earnings per share is now expected to be in the range of
$26.25 $26.50 - The earnings per share guidance does not assume any impact from potential future 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 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 DTC comparable net 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 third quarter fiscal year 2024 will be broadcast live today, Thursday, February 1, 2024, 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 50 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
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, 2023, 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.
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 December 31, | Nine Months Ended December 31, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Net sales | $ 1,560,307 | $ 1,345,640 | $ 3,328,005 | $ 2,835,715 | |||
Cost of sales | 643,738 | 633,111 | 1,481,993 | 1,406,513 | |||
Gross profit | 916,569 | 712,529 | 1,846,012 | 1,429,202 | |||
Selling, general, and administrative expenses | 428,670 | 349,869 | 1,062,760 | 882,370 | |||
Income from operations | 487,899 | 362,660 | 783,252 | 546,832 | |||
Total other income, net | (11,154) | (2,644) | (31,482) | (4,392) | |||
Income before income taxes | 499,053 | 365,304 | 814,734 | 551,224 | |||
Income tax expense | 109,134 | 86,642 | 182,716 | 126,189 | |||
Net income | 389,919 | 278,662 | 632,018 | 425,035 | |||
Total other comprehensive income (loss), net of tax | 7,077 | 12,086 | (3,339) | (15,321) | |||
Comprehensive income | $ 396,996 | $ 290,748 | $ 628,679 | $ 409,714 | |||
Net income per share | |||||||
Basic | $ 15.19 | $ 10.55 | $ 24.35 | $ 16.00 | |||
Diluted | $ 15.11 | $ 10.48 | $ 24.20 | $ 15.90 | |||
Weighted-average common shares outstanding | |||||||
Basic | 25,664 | 26,418 | 25,953 | 26,570 | |||
Diluted | 25,811 | 26,586 | 26,114 | 26,740 | |||
DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (dollar amounts in thousands) | |||
December 31, 2023 | March 31, 2023 | ||
ASSETS | (AUDITED) | ||
Current assets | |||
Cash and cash equivalents | $ 1,650,802 | $ 981,795 | |
Trade accounts receivable, net | 331,677 | 301,511 | |
Inventories | 538,963 | 532,852 | |
Other current assets | 127,412 | 94,095 | |
Total current assets | 2,648,854 | 1,910,253 | |
Property and equipment, net | 300,815 | 266,679 | |
Operating lease assets | 232,179 | 213,302 | |
Other noncurrent assets | 165,611 | 165,969 | |
Total assets | $ 3,347,459 | $ 2,556,203 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current liabilities | |||
Trade accounts payable | $ 507,161 | $ 265,605 | |
Operating lease liabilities | 51,124 | 50,765 | |
Other current liabilities | 369,157 | 181,010 | |
Total current liabilities | 927,442 | 497,380 | |
Long-term operating lease liabilities | 222,867 | 195,723 | |
Other long-term liabilities | 92,960 | 97,367 | |
Total long-term liabilities | 315,827 | 293,090 | |
Total stockholders' equity | 2,104,190 | 1,765,733 | |
Total liabilities and stockholders' equity | $ 3,347,459 | $ 2,556,203 | |
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SOURCE Deckers Brands
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