Deckers Brands Reports Third Quarter Fiscal 2021 Financial Results
GOLETA, Calif., Feb. 4, 2021 /PRNewswire/ — Deckers Brands (NYSE: DECK), a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories, today announced financial results for the third fiscal quarter ended December 31, 2020. The Company also provided an update regarding its response to COVID-19.
- Third Quarter Fiscal 2021 Revenue Increased 14.8% to a Record $1.078 Billion.
- Third Quarter Fiscal 2021 Earnings Per Share Increased 26.0% to a Record $8.99.
“Our record third quarter performance was propelled by demand across the UGG brand’s diversified product offering and the continued global expansion of the HOKA ONE ONE brand,” said Dave Powers, President and Chief Executive Officer. “The performance of our brands was primarily driven by our robust e-commerce engine and the resilience displayed by our teams to overcome significant operational and macro challenges related to the pandemic. With our strong portfolio of brands, stable operating model, and powerful balance sheet, Deckers is well positioned for continued success.”
Third Quarter Fiscal 2021 Financial Review
- Net sales increased 14.8% to $1.078 billion compared to $938.7 million for the same period last year. On a constant currency basis, net sales increased 13.8%.
- Gross margin was 57.0% compared to 54.1% for the same period last year.
- SG&A expenses were $285.2 million compared to $251.9 million for the same period last year.
- Income from operations was $328.7 million compared to $255.8 million for the same period last year.
- Income tax expense was $73.0 million compared to $55.0 million for the same period last year.
- Diluted earnings per share was $8.99 compared to $7.14 for the same period last year.
Brand Summary
- UGG® brand net sales for the third quarter increased 12.2% to $876.8 million compared to $781.1 million for the same period last year.
- HOKA ONE ONE® brand net sales for the third quarter increased 52.1% to $141.6 million compared to $93.1 million for the same period last year.
- Teva® brand net sales for the third quarter decreased 8.7% to $15.7 million compared to $17.2 million for the same period last year.
- Sanuk® brand net sales for the third quarter decreased 17.3% to $7.0 million compared to $8.5 million for the same period last year.
- Other brands net sales, primarily composed of Koolaburra®, for the third quarter decreased 5.5% to $36.7 million compared to $38.9 million for the same period last year.
Channel Summary (included in the brand net sales numbers above)
- Wholesale net sales for the third quarter increased 6.2% to $557.9 million compared to $525.1 million for the same period last year.
- DTC net sales for the third quarter increased 25.7% to $519.9 million compared to $413.7 million for the same period last year. DTC comparable sales increased 33.8% over the same period last year.
Geographic Summary (included in the brand and channel net sales numbers above)
- Domestic net sales for the third quarter increased 19.3% to $770.5 million compared to $645.7 million for the same period last year.
- International net sales for the third quarter increased 4.8% to $307.2 million compared to $293.1 million for the same period last year.
Balance Sheet (December 31, 2020 as compared to December 31, 2019)
- Cash and cash equivalents were $1.157 billion compared to $616.9 million.
- Inventories were $305.3 million compared to $365.9 million.
- Outstanding borrowings were $30.4 million compared to $37.1 million.
Stock Repurchase Program
During the third quarter, the Company did not repurchase any shares of its common stock. As of December 31, 2020, the Company had $160 million remaining under its stock repurchase authorizations. The Company paused share repurchase activity at the onset of the pandemic, but intends to recommence share repurchase under the existing outstanding authorization in future periods.
Financial Outlook
Given the ongoing and fluid economic environment related to the COVID-19 pandemic, the Company will not be providing full year guidance for fiscal year 2021.
COVID-19 Update
The Company continues to modify and evolve its operations in response to the COVID-19 pandemic. The Company will continue to review expert agency guidelines, as well as information from health officials and local authorities, while assessing and evolving the appropriate scope of operations and allocation of resources necessary to navigate this dynamic and unprecedented environment.
Retail Stores
Approximately 75% of the Company’s global stores were open for the entire third quarter. Stores continue to operate with limited capacity due to enhanced health and safety protocols. Given the ongoing and uncertain pandemic conditions, which include meaningful local and regional differences in restrictions imposed on retail store operations, the Company anticipates that temporary retail store closures in certain geographies will continue for at least a portion of the fourth fiscal quarter, and that there is a risk of ongoing or additional retail store closures and operating limitations based on expert agency guidance and local authority mandates.
Supply Chain
The Company’s distribution center in Moreno Valley, California, as well as other third-party distribution facilities that the Company leverages to service its operations, are currently in operation and supporting ongoing logistics. However, these facilities may continue to operate at limited capacity due to the enhanced health and safety measures now in place. The Company anticipates operational challenges related to capacity constraints as well as increased costs associated with warehouse employee safety and payroll expense. Our third-party logistics providers are also experiencing capacity constraints, which are having an adverse effect on our operations.
The Company maintains a network of strategic sourcing partners which includes material vendors and third-party manufacturers. The Company continued to experience certain capacity constraints within its sourcing network during the third quarter, in addition to disruptions related to travel restrictions between country borders and production facilities. While the effects of these disruptions have been mitigated thus far, it is possible that there will be disruptions in the future.
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®, Koolaburra®, HOKA ONE ONE®, Teva®, and Sanuk®. 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.
