California-based Deckers Outdoor Corp. (DECK) reported a loss in its fiscal first quarter on Thursday, but managed to beat Wall Street expectations, sending its stock up three percent in the first day of post-announcement trading.
In the three months ended June 30, net sales at the maker of Ugg, Teva and Sanuk increased 4.5% to $221 million on a constant currency basis compared to $211.5 million for the same period last year, beating analyst forecasts of $213 million. On a reported basis, net sales increased 1.1%.
As expected, Ugg brand net sales for the first quarter decreased 7.2% to $114.5 million, or three percent on a constant currency basis. The decrease in sales was driven by foreign currency pressure that hurt distributor sales and tourist traffic.
Teva brand net sales for the first quarter increased 6.8% to $41.9 million, or 12 percent on a constant currency basis. Sanuk brand net sales for the first quarter decreased seven percent to $33.5 million.
Gross margin declined to 40.5% compared to 41 percent for the same period last year. The decline in gross margin was driven by an approximately 200 basis point impact of the strong US dollar. This decline was partially offset by a higher proportion of direct-to-consumer sales.
SG&A expense as a percentage of sales was 70.3% compared to 64.9% for the same period last year.
The company lost $47.3 million, or $1.43 per diluted share, beating Wall Street estimates of a $1.51 per share loss, and a loss per share of $1.07 for the same period last year.
While wholesale and distributor sales for the first quarter decreased 0.4% to $153.4 million, direct-to-consumer sales increased 5.2% to $60.4 million, helped by the opening of 16 net new stores opened as well as three new country specific e-commerce sites launched within the last year. Direct-to-consumer comparable sales were flat over the same period last year.
CEO Angel Martinez told analysts on the quarterly earnings conference call: “We are pleased with the start of the year, and that the results continue to support our long-term strategy of driving diversified revenue growth across our channels, across our brands, and our regions. During the first quarter, each of our brands showcased their most robust and diverse spring collections ever. Our focus has been on further evolving the lifestyle nature of our brands, in order to broaden their commercial appeal, and selectively open new distributions.”
Deckers Brands products are sold in more than 50 countries and territories through department and specialty stores, 142 company-owned and operated retail stores, and select online stores, including company-owned websites.