Strong quarterly performance
On July 26, Deckers Outdoor (DECK) reported its fiscal first quarter of 2019 results. Sales of $250.6 million topped analysts’ consensus estimate of $227.2 million. On a YoY (year-over-year) basis, sales rose 19.5%, while on a constant currency basis, sales were up 17.6%.
Contributing to its top-line growth were strength across all brands (especially UGG and Hoka) and a robust performance for its DTC (direct-to-consumer) business and international operations. However, DECK stock rose just 0.7% in after-market trading on July 26.
Adjusted loss per share of $0.98 came in much narrower than analysts’ projection of a loss of $1.42. On a reported basis, the loss was $1 per share compared to a loss per share of $1.32 in fiscal Q1 2017. Higher sales cushioned its bottom line. During the quarter, the company repurchased stock worth $10 million.
Deckers also revised its outlook for the year due to strong first-quarter results. For fiscal 2019, sales are now expected to be $1.93 billion–$1.955 billion compared to the earlier projection of $1.925 billion–$1.95 billion. It now estimates adjusted EPS at $6.25–$6.45 compared to the earlier projected range of $6.20–$6.40.
The company expects its fiscal second-quarter sales to be $485 million–$495 million. Its adjusted EPS is projected to be $1.60–$1.70.
By brand, UGG reported sales growth of 18.9%. The brand’s spring summer collection resonated well with customers, seeing higher full-price selling. HOKA ONE ONE and Teva delivered sales growth of 53.1% and 6.2%, respectively. Its DTC business was up 12% to $73 million, while international sales rose 22.3% to $108.9 million.
The company’s gross margin increased 270 basis points to 45.9%, driven primarily by higher DTC sales for all brands. Its adjusted SG&A (selling, general, and administrative) expenses rose 6.2% YoY. Its adjusted operating loss narrowed to $38.9 million YoY compared to $54.3 million.