Deckers Corporation, the owner of footwear brands such as Teva, Ugg and Sanuk, suffered a remarkable decline in net income in the first three months of its financial year: Profit decreased by 54 percent to $7.7 million compared with last year's first quarter.
Besides its expansion at retail, especially for Ugg, Deckers mentioned the development of sheepskin prices as a major issue that is putting margins under pressure. Gross margins fell by 4 percentage oints to 46.0 percent, partly also because of higher closeouts on discountinued styles.
Quarterly sales increased by 20 percent to $246.3 million. Ugg's sales rose by only 6.5 percent to $158.1 million, as warm weather hurt sell-throughs. Teva's turnover slipped by 1 percent to $49.8 million. Recently acquired, Sanuk reached sales of $32.4 million.
The turnover of the whole group in the U.S. was up by 15 percent to $170.6 million, but sales soared elsewhere around the world by 34 percent to $75.7 million.
Deckers has lowered its outlook for this year's sales increase from 15 to 14 percent, mainly due to uncertainties about its business overseas, notably in Europe. Sales of Ugg shoes in the U.K. were slightly lower than expected in the latest quarter, affecting sales as well as orders.