GOLETA, Calif., May 21, 2020 /PRNewswire/ -- Deckers Brands
(NYSE: DECK), a global leader in designing, marketing, and
distributing innovative footwear, apparel, and accessories, today
announced financial results for the fourth fiscal quarter and
fiscal year ended March 31, 2020. The Company also provided an
update regarding its response to COVID-19.
"Fiscal year 2020 performance was driven by the strength of our
brand portfolio, fueled by targeted investments in our key
initiatives, coupled with disciplined financial management," said
Dave Powers, President and Chief
Executive Officer. "We expect fiscal year 2021 results to be
impacted depending on the duration and severity of the COVID-19
pandemic, but our in-demand brands, omni-channel capabilities, and
healthy balance sheet position us well to weather this challenging
environment."
Throughout this release, references to Non-GAAP financial
measures from the prior year exclude the impact of certain charges
relating to restructuring costs, organizational changes, legal
matters and other one-time or non-recurring amounts. Although the
Company is not reporting any Non-GAAP financial measures for the
current period, a reconciliation between its reported GAAP measures
and its Non-GAAP financial measures for the fourth fiscal quarter
and fiscal year ended March 31, 2019
is set forth under the heading "Non-GAAP Financial Measures"
below.
Fourth Quarter Fiscal 2020 Financial Review
- Net sales decreased 4.9% to $374.9 million compared to $394.1 million for the same period last year. On
a constant currency basis, net sales decreased 4.5%.
- Gross margin was 51.5% compared to 51.6% for the same
period last year.
- SG&A expenses were $176.3
million compared to GAAP SG&A expenses last year of
$171.7 million and Non-GAAP SG&A
expenses last year of $170.4
million.
- Operating income was $16.7
million compared to GAAP operating income of $31.6 million for the same period last year and
Non-GAAP operating income of $32.9
million for the same period last year.
- Income tax expense was $0.6
million compared to GAAP income tax expense of $9.6 million for the same period last year and
Non-GAAP income tax expense of $9.9
million for the same period last year.
- Diluted earnings per share was $0.57 compared to GAAP diluted earnings per share
of $0.82 for the same period last
year and Non-GAAP diluted earnings per share of $0.85 for the same period last year.
Full Year Fiscal 2020 Financial Review
- Net sales increased 5.6% to $2.133 billion compared to $2.020 billion for the same period last year. On
a constant currency basis, net sales increased 6.5%.
- Gross margin was 51.8% compared to 51.5% for the same
period last year.
- SG&A expenses were $765.5
million compared to GAAP SG&A expenses last year of
$712.9 million for and Non-GAAP
SG&A expenses last year of $713.3
million.
- Operating income was $338.1
million compared to GAAP operating income of $327.3 million for the same period last year and
Non-GAAP operating income of $327.0
million for the same period last year.
- Income tax expense was $64.7
million compared to GAAP and Non-GAAP income tax expense of
$64.6 million for the same period
last year.
- Diluted earnings per share was $9.62 compared to GAAP and Non-GAAP diluted
earnings per share of $8.84 for the
same period last year.
Brand Summary
- UGG® brand net sales for the fourth quarter decreased 17.9% to
$196.3 million compared to
$239.0 million for the same period
last year. For fiscal year 2020, net sales decreased 0.8% to
$1.521 billion.
- HOKA ONE ONE® brand net sales for the fourth quarter increased
51.8% to $101.9 million compared to
$67.1 million for the same period
last year. For fiscal year 2020, net sales increased 58.0% to
$352.6 million.
- Teva® brand net sales for the fourth quarter increased 12.5% to
$59.6 million compared to
$52.9 million for the same period
last year. For fiscal year 2020, net sales increased 0.4% to
$138.0 million.
- Sanuk® brand net sales for the fourth quarter decreased 57.8%
to $13.3 million compared to
$31.5 million for the same period
last year. For fiscal year 2020, net sales decreased 38.1% to
$51.2 million.
Channel Summary (included in the brand sales numbers
above)
- Wholesale net sales for the fourth quarter decreased 2.9% to
$230.7 million compared to
$237.5 million for the same period
last year. For fiscal year 2020, wholesale net sales increased 6.9%
to $1.396 billion.
- DTC net sales for the fourth quarter decreased 7.9% to
$144.2 million compared to
$156.6 million for the same period
last year. DTC comparable sales in the fourth quarter decreased
3.7% versus the prior year, which excludes the final two weeks of
retail store sales due to COVID-19 impacts. For fiscal year 2020,
DTC net sales increased 3.1% to $736.9
million and DTC comparable sales increased 5.0% over the
same period last year.
Geographic Summary (included in the brand and channel sales
numbers above)
- Domestic net sales for the fourth quarter decreased 8.4% to
$230.8 million compared to
$252.0 million for the same period
last year. For fiscal year 2020, domestic net sales increased 9.6%
to $1.402 billion.
- International net sales for the fourth quarter increased 1.4%
to $144.1 million compared to
$142.1 million for the same period
last year. For fiscal year 2020, international net sales decreased
1.5% to $731.0 million.
Balance Sheet (March 31, 2020 as compared to
March 31, 2019)
- Cash and cash equivalents were $649.4
million compared to $589.7
million.
- Inventories were $311.6 million
compared to $278.8 million.
- Outstanding borrowings were $30.9
million compared to $31.5
million. The full amount of outstanding borrowings relate to
the mortgage on the Company's corporate headquarters.
Stock Repurchase Program
During the fourth quarter, the Company did not repurchase
any shares of its common stock. As of March 31, 2020, the
Company had $160 million
remaining under its stock repurchase authorizations. The
Company has paused share repurchase activity for the time being,
but retains the discretion to commence share repurchase activity 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 the appropriate
scope of operations and allocation of resources necessary to
navigate this dynamic and unprecedented environment.
Company Liquidity
As of March 31, 2020, the
Company had a liquidity position of over $1
billion dollars, which included $649.4 million in cash and cash equivalents and
$469.5 million available under its
existing revolving credit facilities.
As of fiscal year end, the Company did not have any outstanding
borrowings under any of its existing revolving credit
facilities.
Retail Stores
On March 17,
2020, the Company announced a temporary closure of its
retail stores in North America and
Europe. Subsequently, store
locations in Japan were also
temporarily closed. These temporary closures largely remain in
effect across many locations at this point in time. Due to the
extended closure for many of these store locations, the Company has
furloughed a portion of its retail employees. As stores begin to
reopen, they will do so with modified operations including enhanced
health and safety protocols. Additionally, some stores that have
recently reopened are operating at a limited capacity as
they continue to adapt to new and evolving challenges related to
COVID-19.
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 maintains a network of strategic sourcing partners
which includes material vendors and production factories. The
Company experienced certain disruptions to sourcing with its
third-party manufacturers during the fourth quarter of fiscal year
2020. While these disruptions have since been mitigated, it is
possible that there will be disruptions in the future.
Operating Expense Plans
To mitigate the adverse impact
the COVID-19 pandemic may have on its business and operations, the
Company has reduced planned levels of operating expense for the
upcoming fiscal year and has implemented a number of temporary
measures to reduce operating expense, including restricting
employee travel, suspending hiring of certain non-essential
employees, suspending annual salary increases, canceling or
postponing certain events, converting in-person meetings to virtual
platforms, eliminating or deferring other discretionary
expenditures, and in certain cases seeking payment accommodations
or deferrals.
Non-GAAP Financial Measures
The Company presents certain Non-GAAP financial measures for the
prior year in this press release, including constant currency,
Non-GAAP SG&A expenses, Non-GAAP operating income (loss),
Non-GAAP income tax expense (benefit) and Non-GAAP diluted earnings
(basic loss) per share, 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, such as charges relating to
restructuring costs, organizational changes, legal matters and
other one-time or non-recurring amounts. In particular, the Company
believes the exclusion of certain costs and one-time amounts allows
for a more meaningful comparison of results from period to period.
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 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
re-measurements in the condensed consolidated balance sheets. 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. A
reconciliation of each of the GAAP financial measures to the most
directly comparable Non-GAAP financial measures has been provided
under the heading "Reconciliation of GAAP Financial Measures to
Non-GAAP Financial Measures" in the financial statement tables
attached to this press release.
Conference Call Information
The Company's conference call to review the results for the
fourth quarter and fiscal year 2020 will be broadcast live today,
Thursday, May 21, 2020, at 4:30 pm
Eastern Time and hosted at ir.deckers.com. You can
access the broadcast by clicking on the "Investors" tab and then
clicking on 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®, 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.
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 anticipated financial
performance, cost savings and liquidity position, the scope of
operations at our distribution centers, the timing of commencement
of our operations, the impacts of COVID-19 on our business and
operations, our ability to compete in our industry, our product and
brand positioning and strategies, 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, 2019, 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 COVID-19,
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
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
|
(dollar and share
data amounts in thousands, except per share data)
|
|
|
Three Months Ended
March 31,
|
|
Years Ended March
31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net
sales
|
$
|
374,910
|
|
|
$
|
394,130
|
|
|
$
|
2,132,689
|
|
|
$
|
2,020,437
|
|
Cost of
sales
|
181,912
|
|
|
190,825
|
|
|
1,029,016
|
|
|
980,187
|
|
Gross
profit
|
192,998
|
|
|
203,305
|
|
|
1,103,673
|
|
|
1,040,250
|
|
Selling, general and
administrative expenses
|
176,343
|
|
|
171,701
|
|
|
765,538
|
|
|
712,930
|
|
Income from
operations
|
16,655
|
|
|
31,604
|
|
|
338,135
|
|
|
327,320
|
|
|
|
|
|
|
|
|
|
Other (income)
expense, net
|
10
|
|
|
(1,939)
|
|
|
(2,731)
|
|
|
(1,614)
|
|
Income before
income taxes
|
16,645
|
|
|
33,543
|
|
|
340,866
|
|
|
328,934
|
|
Income tax
expense
|
555
|
|
|
9,574
|
|
|
64,724
|
|
|
64,626
|
|
Net
income
|
16,090
|
|
|
23,969
|
|
|
276,142
|
|
|
264,308
|
|
Other
comprehensive (loss) income, net of tax
|
|
|
|
|
|
|
|
Unrealized loss on
cash flow hedges
|
(207)
|
|
|
(1,241)
|
|
|
—
|
|
|
(243)
|
|
Foreign currency
translation (loss) gain
|
(2,249)
|
|
|
1,115
|
|
|
(2,905)
|
|
|
(9,428)
|
|
Total other
comprehensive loss
|
(2,456)
|
|
|
(126)
|
|
|
(2,905)
|
|
|
(9,671)
|
|
Comprehensive
income
|
$
|
13,634
|
|
|
$
|
23,843
|
|
|
$
|
273,237
|
|
|
$
|
254,637
|
|
|
|
|
|
|
|
|
|
Net income per
share
|
|
|
|
|
|
|
|
Basic
|
$
|
0.57
|
|
|
$
|
0.82
|
|
|
$
|
9.73
|
|
|
$
|
8.92
|
|
Diluted
|
$
|
0.57
|
|
|
$
|
0.82
|
|
|
$
|
9.62
|
|
|
$
|
8.84
|
|
Weighted-average
common shares outstanding
|
|
|
|
|
|
|
|
Basic
|
27,992
|
|
|
29,134
|
|
|
28,385
|
|
|
29,641
|
|
Diluted
|
28,279
|
|
|
29,407
|
|
|
28,694
|
|
|
29,903
|
|
DECKERS OUTDOOR
CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED BALANCE
SHEETS
|
(dollar amounts in
thousands)
|
|
|
As of March
31,
|
|
2020
|
|
2019
|
ASSETS
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
649,436
|
|
|
$
|
589,692
|
|
Trade accounts
receivable, net
|
185,596
|
|
|
178,602
|
|
Inventories,
net
|
311,620
|
|
|
278,842
|
|
Other current
assets
|
47,459
|
|
|
48,269
|
|
Total current
assets
|
1,194,111
|
|
|
1,095,405
|
|
Property and
equipment, net
|
209,037
|
|
|
213,796
|
|
Operating lease
assets
|
243,522
|
|
|
—
|
|
Other noncurrent
assets
|
118,448
|
|
|
118,005
|
|
Total
assets
|
$
|
1,765,118
|
|
|
$
|
1,427,206
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities
|
|
|
|
Short-term
borrowings
|
$
|
638
|
|
|
$
|
603
|
|
Trade accounts
payable
|
147,892
|
|
|
124,974
|
|
Operating lease
liabilities
|
49,091
|
|
|
—
|
|
Other current
liabilities
|
103,325
|
|
|
124,947
|
|
Total current
liabilities
|
300,946
|
|
|
250,524
|
|
Mortgage
payable
|
30,263
|
|
|
30,901
|
|
Long-term operating
lease liabilities
|
215,724
|
|
|
—
|
|
Other long-term
liabilities
|
78,065
|
|
|
100,651
|
|
Total long-term
liabilities
|
324,052
|
|
|
131,552
|
|
Total stockholders'
equity
|
1,140,120
|
|
|
1,045,130
|
|
Total liabilities
and stockholders' equity
|
$
|
1,765,118
|
|
|
$
|
1,427,206
|
|
DECKERS OUTDOOR
CORPORATION AND SUBSIDIARIES
|
RECONCILIATION OF
GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
|
(dollar and share
data amounts in thousands, except per share data)
|
|
|
Three Months Ended
March 31, 2019
|
|
GAAP
Measures
(As
Reported)
|
|
Other Charges
(1)
|
|
Non-GAAP
Measures
(Excluding Items)
(2)
|
Net
sales
|
$
|
394,130
|
|
|
|
|
$
|
394,130
|
|
Cost of
sales
|
190,825
|
|
|
|
|
190,825
|
|
Gross
profit
|
203,305
|
|
|
|
|
203,305
|
|
Selling, general and
administrative expenses
|
171,701
|
|
|
(1,280)
|
|
|
170,421
|
|
Income from
operations
|
31,604
|
|
|
1,280
|
|
|
32,884
|
|
|
|
|
|
|
|
Other income,
net
|
(1,939)
|
|
|
|
|
(1,939)
|
|
Income before
income taxes
|
33,543
|
|
|
1,280
|
|
|
34,823
|
|
Income tax
expense
|
9,574
|
|
|
|
|
9,939
|
|
Net
Income
|
$
|
23,969
|
|
|
|
|
$
|
24,884
|
|
|
|
|
|
|
|
Net income per
share
|
|
|
|
|
|
Basic
|
$
|
0.82
|
|
|
|
|
$
|
0.85
|
|
Diluted
|
$
|
0.82
|
|
|
|
|
$
|
0.85
|
|
Weighted-average
common shares outstanding
|
|
|
|
|
|
Basic
|
29,134
|
|
|
|
|
29,134
|
|
Diluted
|
29,407
|
|
|
|
|
29,407
|
|
|
(1) Adjustments as of
March 31, 2019 reflect amounts related to organizational changes
and other one-time or non-recurring amounts.
|
(2) The tax rate
applied to the Non-GAAP measures is 28.5%, which is equal to the
GAAP effective income tax rate for the three months ended March 31,
2019.
|
DECKERS OUTDOOR
CORPORATION AND SUBSIDIARIES
|
RECONCILIATION OF
GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
|
(dollar and share
data amounts in thousands, except per share data)
|
|
|
Year Ended March
31, 2019
|
|
GAAP
Measures
(As
Reported)
|
|
Restructuring
and
Other Charges
(1)
|
|
Non-GAAP
Measures
(Excluding Items)
(2)
|
Net
sales
|
$
|
2,020,437
|
|
|
|
|
$
|
2,020,437
|
|
Cost of
sales
|
980,187
|
|
|
|
|
980,187
|
|
Gross
profit
|
1,040,250
|
|
|
|
|
1,040,250
|
|
Selling, general and
administrative expenses
|
712,930
|
|
|
327
|
|
|
713,257
|
|
Income from
operations
|
327,320
|
|
|
(327)
|
|
|
326,993
|
|
|
|
|
|
|
|
Other income,
net
|
(1,614)
|
|
|
(445)
|
|
|
(2,059)
|
|
Income before
income taxes
|
328,934
|
|
|
118
|
|
|
329,052
|
|
Income tax
expense
|
64,626
|
|
|
|
|
64,649
|
|
Net
income
|
$
|
264,308
|
|
|
|
|
$
|
264,403
|
|
|
|
|
|
|
|
Net income per
share
|
|
|
|
|
|
Basic
|
$
|
8.92
|
|
|
|
|
$
|
8.92
|
|
Diluted
|
$
|
8.84
|
|
|
|
|
$
|
8.84
|
|
Weighted-average
common shares outstanding
|
|
|
|
|
|
Basic
|
29,641
|
|
|
|
|
29,641
|
|
Diluted
|
29,903
|
|
|
|
|
29,903
|
|
|
(1) Adjustments as of
March 31, 2019 reflect amounts related to restructuring costs,
organizational changes, legal matters, charges in connection with
the Company's refinancing of its prior credit facility, and other
one-time and non-recurring amounts.
|
(2) The tax rate
applied to the Non-GAAP measures is 19.6%, which is equal to the
GAAP effective income tax rate for the year ended March 31,
2019.
|
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SOURCE Deckers Brands