Besides Wolverine Worldwide, which will announce its financial results later this month, another big American multi-brand conglomerate, Deckers Brands, is changing its brand management structure, too. It is creating two new business units: the Fashion Lifestyle Group with Ugg and the recently acquired Koolaburra brand, and the Performance Lifestyle group with Teva, Sanuk and Hoka One One. The Performance Lifestyle Group will be led by Wendy Yang, who was hired last year as president of Teva. Deckers is looking for a leader for the Fashion Lifestyle Group.
Deckers will also close down the head offices of Ahnu and Sanuk as well as about 20 stores that generate about 15 percent of its retail turnover. Sanuk's management will move to the group's head office in Goleta, California. It will seek “strategic alternatives” for Ahnu. Deckers already moved Hoka's team to Goleta last October.
Deckers Brands saw its share price go down by more than 8 percent after releasing lower than expected figures for its third quarter, ended Dec. 31. Its quarterly gross margin of 49.1 percent was 3.8 percentage points lower than in the same period a year ago, with 1.1 percentage points of the decline attributed to foreign currencies. The rest of the damage stemmed mostly from higher-than-planned promotional activity, prompted by unseasonably warm weather conditions and lower tourist traffic due to the high U.S. dollar. Net earnings inched up to $154.8 million from $149.4 million.
The group's sales rose by only 1.4 percent during the period to $795.9 million, with increases of 1.0 percent at Ugg and 3.2 percent for Teva, and a drop of 17.0 percent for Sanuk. A $6.7 million increase in sales of Hoka One One shoes contributed to a jump of 48.4 percent for other brands to $21.6 million.
In terms of local currencies, the group's total revenues rose by 3.2 percent in the U.S., reaching a total of $543.2 million, and by 4.5 percent elsewhere
With sales of $743.2 million for the quarter, Ugg remained the biggest brand in Deckers' portfolio, and its sales were up by about 3.3 percent in terms of local currencies. Lower wholesale revenues outside the U.S. were offset by higher wholesale revenues in the U.S. and higher direct-to-consumer (DTC) sales, excluding five major tourist destinations. Ugg's new Classic Slim line of boots performed well.
Teva's sales of $14.1 million were up by about 4.1 percent in constant currencies, and unlike Ugg, the brand experienced lower wholesale revenues at home and higher revenues from international distributors.
Sanuk generated sales of $17.0 million in the quarter. An increase in global DTC sales partially offset lower global wholesale and international distributor sales. Across all of Deckers' brand, DTC revenues went up by 3.4 percent to $351.3 million, and they were up by 5.8 percent in constant currencies.
The management said it will streamline its organization, targeting annual savings of about $35 million and will reinvest $10 million into the business, dedicating more resources to its largest market opportunities. Downgrading its previous guidance, it is projecting a 5.0 percent currency-neutral sales increase for the full financial year ending March 31, but the gross margin is expected to drop by 2.3 percentage points to about 46 percent.