Deckers Outdoor Earnings: Margins Shrink with Revenues, Shares Drop 18%

Deckers Outdoor Corporation (NASDAQ:DECK) reported its results for the third quarter. Deckers Outdoor Corporation is a designer, producer, marketer, and brand manager of innovative, high-quality footwear and accessories.

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Deckers Outdoor Corporation Earnings Cheat Sheet

Results: Net income for Deckers Outdoor Corporation fell to $43.1 million ($1.18 per share) vs. $62.5 million ($1.59 per share) a year earlier. This is a decline of 31.1% from the year-earlier quarter.

Revenue: Fell 9.2% to $376.4 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Deckers Outdoor Corporation beat the mean analyst estimate of $1.02 per share. It beat the average revenue estimate of $166.7 million.

Quoting Management: “Over the past two years, we have raised prices on selective key styles to help mitigate the impact of an 80% increase in our sheepskin and raw material costs over this same period,” stated Angel Martinez, President, Chief Executive Officer and Chair of the Board of Directors. “We believe that these selective price increases, particularly during a period of one of the warmest years on record, has pushed us above the consumer’s price-value expectations for the UGG brand. We also believe that this has resulted in softer than expected third quarter sell-through trends in our Company owned stores, and has pushed back the start of the brand’s key selling season at retail this year. However, based on positive consumer feedback, the performance of new product introductions, and market research data, we continue to be confident in the strength and popularity of our brand portfolio and the multiple growth opportunities that still lie ahead.”

Key Stats:

A year-over-year revenue decrease last quarter snaps a streak of four consecutive quarters of revenue increases. The best quarter in that span was the third quarter of the last fiscal year, which saw revenue rise 49.1%.

The company has now beaten estimates the last two quarters. In the second quarter, it topped expectations with a loss of -53 cents versus a mean estimate of a loss of 59 cents per share.

After sitting in the red the quarter before, the company reported a profit last quarter. The company booked a net loss of $7.9 million, or 20 cents per share, in the first quarter.

Looking Forward: Expectations for the company’s next-quarter results are lower than they have been. Over the past sixty days, the average estimate for fourth quarter has fallen from $3.74 per share to $3.38. For the fiscal year, the average estimate has moved down from $4.47 a share to $3.95 over the last sixty days.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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