The parent company of Ugg, Teva, Sanuk and other brands reported increased net losses of $47.3 million for its first quarter, ended June 30, as compared to $37.0 million in the same period a year ago. At 40.5 percent, the gross margin was 0.5 percentage points lower than a year ago, as foreign currencies reduced it by two full percentage points.
Deckers Brands' sales inched up by 1.1 percent to $221 million, although they were 4.5 percent higher on a currency-neutral basis. Revenues in the U.S. went up by 1.7 percent to $134.5 million. International sales went up by 0.1 percent to $79.3 million, and they were 9.1 percent higher in local currencies.
Direct-to-consumer sales were up by 5 percent to $60.2 million, thanks to new stores and three new country-specific e-commerce sites, but they were flat on a comparable store basis, and they were down for Ugg, mainly due to lower international tourist traffic. The company is reacting by lowering the planned number of additional stores for this year from 16 to 11. It will forego three pop-up stores in Japan and one in Hong Kong. It will also close one store.
In constant currencies, sales were down by about 3 percent for Ugg and 7 percent for Sanuk, but they were up by 12 percent for Teva. Other brands delivered 85.6 percent higher revenues, reaching a total of $23.9 million, thanks mainly to a $9.8 million increase for Hoka One One, the company's recently acquired brand of running shoes.
At Ugg, a global increase in wholesale revenues partially offset lower retail sales and a drop in sales to international distributors, which was attributed to foreign currency pressure.
The second half of the year should be better than the first one. The management is forecasting overall sales increases of 8.0 percent in dollars and 10.5 percent in local currencies, but the gross margin should be down by approximately 0.3 percentage points.