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Deckers Outdoor Cuts Full Year Forecast As Q1 Profit Slumps, Shares Fall

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4/27/2012 12:38 AM ET

Footwear maker Deckers Outdoor Corp. (DECK: Quote) on Thursday reported a sharp decline in profit for the first quarter, as higher costs hurt margins. The company expects a wider year-over-year loss for the second quarter and cut its full year forecast. The stock fell nearly 19 percent in after-hours trading.

Net income attributable to the company plunged to $7.89 million or $0.20 per share from $19.18 million or $0.49 per share in the same quarter last year. On average, 17 analysts polled by Thomson Reuters expected earnings of $0.25 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales increased 20.2 percent to $246.31 million from $204.85 million in the year-ago period. Analysts expected revenues of $246.48 million for the quarter.

Domestic sales increased over 15 percent to $170.6 million while International sales climbed 33.5 percent to $75.7 million.

UGG brand net sales grew 6.5 percent to $158.1 million, driven by an increase in sales at company-owned retail stores.

Teva brand net sales slipped 1.1 percent to $49.8 million owing to a decline in international wholesale sales even as domestic wholesale sales and domestic eCommerce sales were good.

Angel Martinez, CEO, said, "Our first quarter performance was mixed versus our expectations. Sales growth was driven by the addition of the Sanuk brand combined with increased demand for the UGG brand spring line, partially offset by softness in boots due to the unusually warm weather."

Gross margin was 46 percent compared to 50 percent for the same period last year. The company noted that the difference in the channel mix compared to projections, some higher closeouts for the Teva brand and non-Classic UGG brand styles put additional pressure on overall gross margins on top of higher product costs.

Selling, general and administrative expenses climbed to $101.36 million from $74.28 million.

The company currently expects second-quarter loss per share of about $0.60 compared to loss per share of $0.19 reported last year. Revenue is expected to increase around 8 percent over 2011.

Analysts expect the company to report a loss of $0.39 per share on revenues of $186.00 million for the second quarter.

For 2012, the company expects earnings per share to decrease 9 percent to 10 percent from 2011, compared to the previous guidance for earnings per share approximately flat with last year. The company now expects sales to increase around 14 percent over 2011, compared to the previous guidance of about 15 percent.

Analysts expect the company to report earnings of $5.16 per share for the year on revenues of $1.59 billion for fiscal 2012.

The company now sees a gross margin decline of 250 basis points from 2011 levels compared to the previous forecast of a decline of 200 basis points.

DECK closed the regular trade on Thursday at $69.46, up 2.74 percent from the previous close. But the stock lost 18.66 percent in after-hours trading and was trading at $56.50.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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