The parent company of Ugg, Teva, Tsubu and Ahnu completed on July 5 the acquisition of Sanuk, a surf-inspired brand whose sales jumped by 57 percent in the first half of this year to about $43 million.
Meanwhile, the shift from distributors to direct wholesale distribution in the U.K. and the Benelux countries caused a temporary drop of $30 million in Deckers Outdoor Corporation's turnover for the second quarter ended June 30, and the associated costs precipated the company into a loss.
The group's total revenues were up by only 12.5 percent to $154.2 million for the quarter, and they were actually $11 million higher than planned. In particular, Ugg's sales rose by only 8 percent to $108.3 million in the quarter, and those of Teva went up by 29.2 percent to $40.3 million, driven by a higher proportion of closed-toe shoes. The latter made up 12 percent of Teva's sales for the spring season, double the ratio of one year ago, leading retailers in the U.K., Benelux and France to allocate more shelf space to the brand.
Ugg's sales in the U.S. rose by 29.4 percent, and shipments to foreign distributors increased, too. While spring continues to be a relatively weak season for the brand, the enlargement of the range and the opening of 11 new Ugg stores helped to sustain the brand's overall turnover. The range will be further expanded with the introduction of a men's line in September.
Combined with the cost of transitioning to direct sales in the U.K. and Benelux, the cost of opening the new stores, higher marketing investments and legal costs caused Deckers to suffer a net loss of $7.5 million in the quarter, against a net profit of $8.9 million in the year-ago period.
The loss was lower than expected, and the management is still projecting increased profitability for the next two quarters, with sales rising by 38 percent in the third one and 22 percent in the fourth one.
Overall, the group's revenues should go up by 26 percent for the full year - better than a previous forecast of 21 percent. The outlook for Ugg has been upgraded to a rise of 25 percent, up from a previously projected 21 percent increase. Net earnings per share are due to rise by about 17 percent for the year.