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Deckers Outdoor Shares Plunge 11% On Weak Outlook; Q4 Results Top View

Shares of Deckers Outdoor Corp. (DECK) plunged nearly 11 percent in expended trading on Thursday after the footwear maker provided earnings and revenue outlook for the fourth quarter and full-year 2012, below Street view.

The company also reported a profit for the fourth quarter that increased from last year as higher costs were more than offset by strong revenue growth. Both earnings per share and quarterly revenues topped analysts' expectations.

Separately, Deckers Outdoor said it has reached a settlement with Romeo & Juliette, Inc. and Tom Romeo to resolve a litigation by mutual agreement and satisfaction.

"Our fourth quarter results exceeded expectations and were the highest in the history of the Company for sales and profitability. UGG brand sales once again grew at a robust pace during the holidays, fueling our record performance and easily pushing annual sales for the UGG brand above $1 billion for the first time," Chairman, President and CEO Angel Martinez said in a statement.

UGG brand sales for the fourth quarter also increased 37.7 percent to $568.5 million.

The company noted that increases in sheepskin prices have continued to negatively impact its results for the second consecutive year. However, selective price increases helped the company to overcome it.

The Goleta, California-based reported net income of $124.73 million or $3.18 per share for the fourth quarter, higher than $89.23 million or $2.27 per share in the prior-year quarter.

On average, 17 analysts polled by Thomson Reuters expected the company to report earnings of $3.14 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter increased 40.4 percent to a record $603.85 million from $430.12 million in the same quarter last year, and topped seventeen Wall Street analysts' consensus estimate of $565.21 million.

However, gross margin contracted 320 basis points to 51.0 percent from last year's 54.2 percent.

For fiscal 2011, earnings per share increased 25.8 percent to a record $5.07, and annual sales grew 37.6 percent to a record of $1.38 billion, with UGG brand sales rising 37.6 percent to a record $1.20 billion.

Looking ahead to the first quarter, the company expects earnings per share to half year-over-year, while revenues are expected to increase about 19 percent, implying earnings of $0.25 per share and revenues of $243.8 million. Analysts expect earnings of $0.63 per share on revenues of $263.25 million for the quarter.

For fiscal 2012, earnings are expected to be about flat with last year on sheepskin cost increases, while revenues are projected to growth about 15 percent from last year, implying earnings of $5.07 per share and revenues of $1.59 billion. Street is currently looking for full-year 2012 earnings of $5.79 per share on revenues of $1.60 billion.

DECK closed Thursday's regular trading session at $90.21, up $1.76 or 1.99% on a volume of 3.58 million shares. However, the stock plunged $9.75 or 10.81 in after-hours trading.

by RTT Staff Writer

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