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Deckers ups full-year outlook after revenues rise

Deckers Outdoor Corporation has upped its full-year outlook after posting positive financial results for third quarter until the end of September late yesterday.

The US footwear company now expects full-year revenue to increase by around a third from 2010. This is up from a previous forecast of 26%. Deckers had, however, $45.0m (£27.89m) in outstanding borrowings at the end of the quarter, compared with none this year. It had used the money to buy the Sanuk brand, which it acquired in July.

Operating revenues were up 49.1% to $414.4 m (£257m) from $277.9m  (£172.6m) this time last year, helped by increases in sales of its UGG brand.

Sales of UGG increased 47.3% to $376.7m (£233m) compared to $255.8m (£158.8m) last year, generating the most revenue out of its brand portfolio. The period also benefited from the conversion to a wholesale business model in the UK.

Teva brand net sales for the third quarter was up 7.3% to $14.7m (£9.12m) from $13.7m (£8.5m) last year, while revenue from newly-acquired Sanuk was $15.6m (£9.67m). The results include the Sanuk operations from when it was acquired on the 1 July.

Despite growth in UGG and Teva, the combined revenue from the firm’s other brands was down 11.7% to $7.4m (£4.59m) for the third quarter compared to $8.4m (£5.21m) for the same period last year. This was due to the phasing out the Simple® brand, which is being discontinued at the end of 2011, according to a Deckers’ statement.

The brand’s international sales increased 113.8% to $156.4m (£96.7m) compared to $73.2m (£45.4m) last year, while domestic sales also increased 26.0% to $257.9m (£160m) from $204.7m (£127m) last year.

Retail sales shot up 72.1% to $34.7m (£21.5m) compared to $20.2m (£12.54m) last year. Sales were driven by 13 new stores and a same store sales increase of 15.4% for stores that were open for the full three-month periods ended September 30, 2010 and 2011. Same store sales rose 15.4%.

Online sales were also up - 18.3% on last year to $10.3m (£6.39m. Deckers attributed this to a higher demand for the new UGG products and the launch of the UGG UK website.

The firm’s gross margin increased 1.9 percentage points to 49.0% compared to 47.1% last year.

“The third quarter was an exceptionally strong period of sales and earnings growth for our Company led by the UGG brand,” Angel Martinez, President, Chief Executive Officer and Chair of the Board of Directors said in a statement.

“We experienced higher domestic wholesale demand for the UGG brand fall line versus a year ago driven by the introduction of several new styles and new collections, including a broader assortment of men’s product.

“Fiscal 2011 is on track to be another record year for Deckers Outdoor Corporation with the UGG brand poised to surpass $1bn (£0.62bn) in annual sales. Equally important, we have made strategic investments that have strengthened our global operating platform and better positioned the company for sustainable long-term growth.”

Martinez added that while the company was “optimistic” about growth opportunities “despite current headwinds facing the global economy”, Deckers would experience further increases in raw materials prices in 2012.

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