Deckers Outdoor Posts Strong Q2 2019 Results



Sneak peek at quarterly performance

Deckers Outdoor (DECK) reported its second quarter of fiscal 2019[1. The second quarter of fiscal 2019 ended on September 30, 2018.] results on October 25. Sales of $501.9 million topped analysts’ consensus estimate of $494.4 million, rising 4% YoY (year-over-year). On a constant currency basis, sales increased 3.3%.

Adjusted EPS of $2.38 was much better than analysts’ projection of $1.72. On a reported basis, EPS was $2.48 compared to $1.54 in the second quarter of fiscal 2017. Higher sales and share repurchases cushioned its bottom line. It repurchased stock worth $125 million in the quarter.

Contributing to its top-line growth were its robust DTC (direct-to-consumer) business and international operations. However, DECK stock rose just 0.7% in after-market trading on October 25.

By brand, UGG sales were down 1% due to an allocation and product segmentation strategy. The brand’s DTC channel performance remained robust. Hoka One One sales rose 28.4%. Its DTC business increased 2.8% to $93.9 million, and its international sales rose 5.9% to $190.3 million.

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DECK’s second-quarter gross margin increased 350 basis points to 50.2%, driven primarily by higher DTC sales for all brands and a reduction in airfreight costs. Its adjusted SG&A (selling, general, and administrative) expenses rose 2% YoY. Its adjusted operating profit increased 33.8% to $90.7 million.

Raised outlook

With a strong quarterly performance, Deckers Outdoor revised its outlook. For fiscal 2019, it expects sales of $1.935 billion–$1.96 billion compared to its earlier projection of $1.93 billion–$1.955 billion. It now estimates adjusted EPS at $6.65–$6.85 compared to the previous $6.25–$6.45.

It expects its third quarter of fiscal 2019 sales to be $805 million–$825 million and projects adjusted EPS at $5.10–$5.25.


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