Deckers' 2004 sales hit a record, increasing 77 percent
Deckers Outdoor Corp. (Nasdaq: DECK) had a banner year, and with its debt paid off, it told analysts during its quarterly earnings call that it's considering acquisition opportunities.
Fourth-quarter net sales increased 108 percent to $74.2 million versus $35.7 million in the same period last year -- a new record. Net income for the quarter rose 275 percent to $9.2 million, compared to net income of $2.5 million last year, and income per diluted share increased 279 percent to $0.72, versus $0.19 last year. The company said that income per diluted share for the fourth quarter of 2003 was negatively impacted by $0.02 as a result of repurchasing stock and paying down debt.
Net sales for FY2004 also set a record and increased 77 percent to $214.8 million versus $121.1 million in 2003. Net income increased 179 percent to $25.5 million, or $2.10 per diluted share, compared to net income of $9.2 million, or $0.77 per diluted share last year.
Also, for the year, Teva net sales increased 15 percent to $88.2 million from $76.5 million in 2003; UGG net sales in 2004 increased 215 percent to $116.2 million versus $36.9 million last year; and, Simple net sales increased 34 percent to $10.3 million compared to $7.7 million a year ago. All numbers include wholesale, Internet and catalog sales. Net sales for Internet and catalog business only aggregated approximately $19.9 million for the year, up 206 percent from $6.5 million for 2003.
During the conference call, CEO Doug Otto relayed Ugg's numbers first and devoted a lot of time to the division's success and direction. In California alone, the company shipped $30 million worth of Ugg product into the state in 2004 -- something Otto, of course, would like to repeat in the other 49 states. Retail feedback at the recent Outdoor Retailer and WSA trade shows said the demand is still there for Uggs and the company is expecting sales to grow to $140 million to $145 million in 2005. Otto added that Ugg slippers -- now 25 percent of the brand's sales -- are a sleeper category and that technology and innovation are going to make it explode down the line.
Teva sales grew in three of the four quarters, with the fourth quarter down. Retail feedback said the sandals are selling earlier this year. Simple improved significantly with sales up 34 percent in 2004 pushed by positive momentum among youth and moderate retailers, Otto said. The brand's resurgence was aided by strong performance of its clogs and sneakers, but the sheepskin collection did not do well.
During the Q&A session, Otto shared with analysts that Teva is eyeing the athletic and sporting goods market and will be testing product in 30 Champs stores. He said Deckers still wants Teva in stores that offer service and enhance the brand, and sees sport sandals as the right product for success there. Plus, having products in potentially 5,000 more doors wouldn't hurt either.
Otto added that he expects Deckers' international sales to reach its domestic numbers in the next three to five years. In 2004, Ugg's international sales were $13 million up from less than $1 million in 2003. "We want to grow incrementally rather than have a spike up, then a spike down," Otto told analysts.
VF's TNF European sales through the roof
2004 sales of VF Corp.'s (NYSE: VFC) The North Face brand in Europe shot up 43 percent over 2003 to $140.5 million. In Euro currency, full-year sales were up 29 percent, while fourth-quarter sales grew 48 percent to $36 million with growth across most product categories.
The company also reported that full-year growth was consistent across all European markets and particularly strong in the United Kingdom which had a 55 percent increase in sales. Sales for The North Face also grew 35 percent in Italy, 32 percent in BeNeLux, 27 percent in France, 18 percent in Spain, followed by 16 percent in the Germany, Austria and Swiss region.
"This positive performance continues thanks to the brand's constant attention to developing and introducing innovative technologies and products which in turn reinforces The North Face's reputation as a leading supplier of outdoor apparel and equipment," Karl Heinz Salzburger, president of VF's International Outdoor Coalition, said in a statement.
The company said it attributes The North Face's positive performance to a number of sales and marketing programs initiated during 2004 to support and further fuel this growth trend. The company also reported that the brand's spring 2005 bookings are up 22 percent.
Lands' End to close call center, eliminate 375 jobs
Sears-owned (NYSE: S) Lands' End is pulling the plug on its Cross Plains, Wis., phone center and eliminating 375 jobs by June 5 to control costs. The company said customers are buying product via other channels, such as the Internet, while phone sales have been on the decline. In addition to cutting 200 full-time and 175 part-time jobs, as well as some seasonal positions, it will streamline overall business operations and restructure its product development functions. Lands' End's merchandising, design, inventory, quality and sourcing resources will be restructured into specialized functions, and its Internet operations will be integrated into each area, the company said.
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