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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Deckers Outdoor | NYSE:DECK | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 819.48 | 0 | 09:32:17 |
|
Delaware
|
95-3015862
|
(State of incorporation)
|
(I.R.S. Employer Identification No.)
|
Large accelerated filer
x
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Accelerated filer
o
|
|
|
Non-accelerated filer
o
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Smaller reporting company
o
|
|
|
|
Emerging growth company
o
|
|
|
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 2.
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Item 3.
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Defaults Upon Senior Securities
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*
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Item 4.
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Mine Safety Disclosures
|
*
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Item 5.
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Other Information
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*
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Item 6.
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||
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•
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the results of and costs associated with our restructuring and operating profit improvement plans;
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•
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our global business, growth, operating, investing, and financing strategies;
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•
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our product offerings, distribution channels, and geographic mix;
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•
|
consumer preferences with respect to our brands and products;
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•
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the purchasing trends impacting the buying patterns of wholesale customers and retail consumers;
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•
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the impact of seasonality and weather on consumer behavior and our results of operations;
|
•
|
expectations regarding and trends affecting our financial condition, operating results, capital expenditures, liquidity or cash flows;
|
•
|
expectations relating to the expansion of Direct-to-Consumer capabilities;
|
•
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our plans to consolidate certain United States (US) distribution center operations;
|
•
|
overall global economic trends, including foreign currency exchange rate fluctuations;
|
•
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reliability of overseas factory production and storage;
|
•
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availability and cost of raw materials;
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•
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our strategies for managing our market risk exposure;
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•
|
the value of goodwill and other intangible assets, and potential write-downs or impairment charges;
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•
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changes impacting our tax liability and effective tax rates, including as a result of changes in tax laws or treaties, foreign income or loss, and the realization of net deferred tax assets;
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•
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completed and expected repatriation of earnings of non-US subsidiaries and any related foreign withholding taxes, as well as other related tax impacts;
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•
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potential impacts of our ongoing operational system upgrades;
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•
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commitments and contingencies, including purchase obligations for product and sheepskin; and
|
•
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the impact of recent accounting pronouncements.
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|
September 30, 2018
|
|
March 31, 2018
|
||||
ASSETS
|
(UNAUDITED)
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
182,192
|
|
|
$
|
429,970
|
|
Trade accounts receivable, net of allowances ($14,019 and $33,462 as of September 30, 2018 and March 31, 2018, respectively)
|
321,784
|
|
|
143,704
|
|
||
Inventories, net of reserves ($8,136 and $9,020 as of September 30, 2018 and March 31, 2018, respectively)
|
514,927
|
|
|
299,602
|
|
||
Prepaid expenses
|
21,160
|
|
|
17,639
|
|
||
Other current assets
|
36,671
|
|
|
17,599
|
|
||
Income tax receivable
|
1,731
|
|
|
2,176
|
|
||
Total current assets
|
1,078,465
|
|
|
910,690
|
|
||
|
|
|
|
||||
Property and equipment, net of accumulated depreciation ($219,969 and $210,763 as of September 30, 2018 and March 31, 2018, respectively)
|
215,720
|
|
|
220,162
|
|
||
Goodwill
|
13,990
|
|
|
13,990
|
|
||
Other intangible assets, net of accumulated amortization ($68,755
and $66,065 as of September 30, 2018 and March 31, 2018, respectively)
|
54,356
|
|
|
57,850
|
|
||
Deferred tax assets, net
|
38,878
|
|
|
38,381
|
|
||
Other assets
|
22,559
|
|
|
23,306
|
|
||
Total assets
|
$
|
1,423,968
|
|
|
$
|
1,264,379
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Short-term borrowings
|
$
|
71,473
|
|
|
$
|
578
|
|
Trade accounts payable
|
277,577
|
|
|
93,939
|
|
||
Accrued payroll
|
31,692
|
|
|
55,695
|
|
||
Other accrued expenses
|
42,887
|
|
|
24,446
|
|
||
Income taxes payable
|
14,283
|
|
|
11,006
|
|
||
Value added tax payable
|
10,305
|
|
|
3,502
|
|
||
Total current liabilities
|
448,217
|
|
|
189,166
|
|
||
|
|
|
|
||||
Mortgage payable
|
31,210
|
|
|
31,504
|
|
||
Income tax liability
|
62,053
|
|
|
64,735
|
|
||
Deferred rent obligations
|
20,505
|
|
|
22,499
|
|
||
Other long-term liabilities
|
15,196
|
|
|
15,696
|
|
||
Total long-term liabilities
|
128,964
|
|
|
134,434
|
|
||
|
|
|
|
||||
Commitments and contingencies
|
|
|
|
||||
|
|
|
|
||||
Stockholders' equity
|
|
|
|
||||
Common stock ($0.01 par value; 125,000 shares authorized; shares issued and outstanding of 29,371
and 30,447 as of September 30, 2018 and March 31, 2018, respectively)
|
294
|
|
|
304
|
|
||
Additional paid-in capital
|
171,094
|
|
|
167,587
|
|
||
Retained earnings
|
695,580
|
|
|
785,871
|
|
||
Accumulated other comprehensive loss
|
(20,181
|
)
|
|
(12,983
|
)
|
||
Total stockholders' equity
|
846,787
|
|
|
940,779
|
|
||
Total liabilities and stockholders' equity
|
$
|
1,423,968
|
|
|
$
|
1,264,379
|
|
|
Three Months Ended
September 30,
|
|
Six Months Ended
September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net sales
|
$
|
501,913
|
|
|
$
|
482,460
|
|
|
$
|
752,507
|
|
|
$
|
692,177
|
|
Cost of sales
|
250,026
|
|
|
257,343
|
|
|
385,655
|
|
|
376,435
|
|
||||
Gross profit
|
251,887
|
|
|
225,117
|
|
|
366,852
|
|
|
315,742
|
|
||||
Selling, general and administrative expenses
|
161,475
|
|
|
157,762
|
|
|
315,854
|
|
|
304,643
|
|
||||
Income from operations
|
90,412
|
|
|
67,355
|
|
|
50,998
|
|
|
11,099
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Interest income
|
(814
|
)
|
|
(509
|
)
|
|
(2,400
|
)
|
|
(961
|
)
|
||||
Interest expense
|
1,640
|
|
|
1,531
|
|
|
2,874
|
|
|
2,538
|
|
||||
Other (income) expense, net
|
(189
|
)
|
|
12
|
|
|
(200
|
)
|
|
(212
|
)
|
||||
Total other expense, net
|
637
|
|
|
1,034
|
|
|
274
|
|
|
1,365
|
|
||||
Income before income taxes
|
89,775
|
|
|
66,321
|
|
|
50,724
|
|
|
9,734
|
|
||||
Income tax expense
|
15,403
|
|
|
16,762
|
|
|
6,759
|
|
|
2,296
|
|
||||
Net income
|
74,372
|
|
|
49,559
|
|
|
43,965
|
|
|
7,438
|
|
||||
Other comprehensive (loss) income, net of tax
|
|
|
|
|
|
|
|
||||||||
Unrealized (loss) gain on cash flow hedges
|
(1,197
|
)
|
|
(911
|
)
|
|
4,126
|
|
|
(4,683
|
)
|
||||
Foreign currency translation (loss) gain
|
(3,861
|
)
|
|
2,968
|
|
|
(11,324
|
)
|
|
4,518
|
|
||||
Total other comprehensive (loss) income
|
(5,058
|
)
|
|
2,057
|
|
|
(7,198
|
)
|
|
(165
|
)
|
||||
Comprehensive income
|
$
|
69,314
|
|
|
$
|
51,616
|
|
|
$
|
36,767
|
|
|
$
|
7,273
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
2.49
|
|
|
$
|
1.55
|
|
|
$
|
1.46
|
|
|
$
|
0.23
|
|
Diluted
|
$
|
2.48
|
|
|
$
|
1.54
|
|
|
$
|
1.45
|
|
|
$
|
0.23
|
|
Weighted-average common shares outstanding
|
|
|
|
|
|
|
|
||||||||
Basic
|
29,849
|
|
|
32,015
|
|
|
30,134
|
|
|
32,003
|
|
||||
Diluted
|
30,028
|
|
|
32,272
|
|
|
30,327
|
|
|
32,256
|
|
|
Six Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
OPERATING ACTIVITIES
|
|
|
|
||||
Net income
|
$
|
43,965
|
|
|
$
|
7,438
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
||||
Depreciation, amortization and accretion
|
22,134
|
|
|
24,453
|
|
||
Loss on extinguishment of debt
|
445
|
|
|
—
|
|
||
Bad debt expense
|
2,394
|
|
|
4,678
|
|
||
Deferred tax benefit
|
(2,029
|
)
|
|
(3,449
|
)
|
||
Stock-based compensation
|
7,362
|
|
|
6,798
|
|
||
Employee stock purchase plan
|
90
|
|
|
68
|
|
||
Excess tax benefits from stock compensation
|
1,336
|
|
|
76
|
|
||
(Gain) loss on sale of assets
|
(94
|
)
|
|
273
|
|
||
Impairment of intangible and other long-lived assets
|
—
|
|
|
393
|
|
||
Restructuring charges
|
295
|
|
|
1,518
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Trade accounts receivable, net
|
(158,883
|
)
|
|
(152,607
|
)
|
||
Inventories, net
|
(227,257
|
)
|
|
(256,709
|
)
|
||
Prepaid expenses and other current assets
|
(4,965
|
)
|
|
(2,096
|
)
|
||
Income tax receivable
|
445
|
|
|
16,999
|
|
||
Other assets
|
1,722
|
|
|
(667
|
)
|
||
Trade accounts payable
|
183,638
|
|
|
148,894
|
|
||
Accrued expenses
|
(28,120
|
)
|
|
11,132
|
|
||
Income taxes payable
|
(540
|
)
|
|
5,208
|
|
||
Long-term liabilities
|
(2,675
|
)
|
|
4,810
|
|
||
Net cash used in operating activities
|
(160,737
|
)
|
|
(182,790
|
)
|
||
|
|
|
|
||||
INVESTING ACTIVITIES
|
|
|
|
||||
Purchases of property and equipment
|
(14,091
|
)
|
|
(10,158
|
)
|
||
Proceeds from sales of property and equipment, net
|
68
|
|
|
7
|
|
||
Net cash used in investing activities
|
(14,023
|
)
|
|
(10,151
|
)
|
||
|
|
|
|
||||
FINANCING ACTIVITIES
|
|
|
|
||||
Proceeds from short-term borrowings
|
108,001
|
|
|
156,751
|
|
||
Repayments of short-term borrowings
|
(37,000
|
)
|
|
(24,000
|
)
|
||
Proceeds on issuance of stock for employee stock purchase plan
|
474
|
|
|
353
|
|
||
Cash paid for shares withheld for taxes
|
(4,589
|
)
|
|
(1,871
|
)
|
||
Cash paid for repurchases of common stock
|
(134,735
|
)
|
|
—
|
|
||
Loan origination costs on short-term borrowings
|
(1,276
|
)
|
|
—
|
|
||
Repayment of mortgage principal
|
(279
|
)
|
|
(265
|
)
|
||
Net cash (used in) provided by financing activities
|
(69,404
|
)
|
|
130,968
|
|
||
|
|
|
|
||||
Effect of foreign currency exchange rates on cash
|
(3,614
|
)
|
|
795
|
|
||
Net change in cash and cash equivalents
|
(247,778
|
)
|
|
(61,178
|
)
|
||
Cash and cash equivalents at beginning of period
|
429,970
|
|
|
291,764
|
|
||
Cash and cash equivalents at end of period
|
$
|
182,192
|
|
|
$
|
230,586
|
|
|
Six Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
SUPPLEMENTAL CASH FLOW DISCLOSURE
|
|
|
|
||||
Cash paid (refunded) during the period
|
|
|
|
||||
Income taxes, net of refunds and payments of $3,730 and $4,111, as of September 30, 2018 and 2017, respectively
|
$
|
8,682
|
|
|
$
|
(14,397
|
)
|
Interest
|
2,272
|
|
|
1,607
|
|
||
Non-cash investing and financing activities
|
|
|
|
||||
Accrued for purchases of property and equipment
|
2,968
|
|
|
2,757
|
|
||
Accrued for asset retirement obligations
|
70
|
|
|
540
|
|
|
Cumulative Restructuring Charges
|
||
|
|||
UGG brand wholesale
|
$
|
2,238
|
|
Sanuk brand wholesale
|
3,068
|
|
|
Other brands wholesale
|
2,263
|
|
|
Direct-to-Consumer
|
23,454
|
|
|
Unallocated overhead costs
|
24,596
|
|
|
Total
|
$
|
55,619
|
|
|
Lease Terminations
|
|
Other*
|
|
Total
|
||||||
Balance as of March 31, 2018
|
$
|
3,645
|
|
|
$
|
1,083
|
|
|
$
|
4,728
|
|
Additional charges
|
295
|
|
|
—
|
|
|
295
|
|
|||
Paid in cash
|
(474
|
)
|
|
—
|
|
|
(474
|
)
|
|||
Balance as of September 30, 2018
|
$
|
3,466
|
|
|
$
|
1,083
|
|
|
$
|
4,549
|
|
Standard
|
|
Description
|
|
Impact on Adoption
|
ASU No. 2014-09,
Revenue from Contracts with Customers (as amended by ASUs 2015-14, 2016-08, 2016-10, 2016-11, 2016-12, 2017-13, and 2017-14)
|
|
Requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers and replaces most existing revenue recognition guidance under US GAAP.
The FASB issued additional guidance which clarifies how to apply the implementation guidance related to principal versus agent considerations, how to identify performance obligations, as well as licensing implementation guidance.
|
|
The Company adopted this ASU (the new revenue standard) using the modified retrospective transition method.
Prior to adoption, the Company deferred recognition of revenue for certain wholesale and E-Commerce sales arrangements until the product was delivered. However, the Company elected the practical expedient allowed under the new revenue standard to define shipping and handling costs as a fulfillment service, not a performance obligation. Accordingly, the Company will now recognize revenue for these arrangements upon shipment, rather than delivery. As a result, on adoption of this ASU, the Company recorded a cumulative effect adjustment net after tax increase to opening retained earnings of approximately $1,000 in its condensed consolidated balance sheets.
The Company historically recorded a trade accounts receivable allowance for sales returns (allowance for sales returns) related to its wholesale channel sales, and the cost of sales for the product-related inventory was recorded in inventories, net of reserves, in its condensed consolidated balance sheets. As of March 31, 2018, the Company recorded an allowance for sales returns for the wholesale channel of $20,848 and product-related inventory for all channels of $11,251 in its condensed consolidated balance sheets. As of June 30, 2018, and in connection with the adoption of the new revenue standard, the Company reclassified the allowance for sales returns for the wholesale channel of $9,816 to other accrued expenses and the product-related inventory for all channels of $4,819 to other current assets in its condensed consolidated balance sheets. For the DTC channel, the allowance for sales returns was recorded in other accrued expenses, which is consistent with the prior period presented. The comparative condensed consolidated financial statements have not been adjusted and continue to be reported under legacy US GAAP.
Refer to Note 2, "Revenue Recognition," for expanded disclosures regarding this change in accounting policy and refer to Note 12, "Reportable Operating Segments," for the Company's disaggregation of revenue by distribution channel and region.
|
Standard
|
|
Description
|
|
Impact on Adoption
|
ASU No. 2016-15,
Statement of Cash Flows, Classification of Certain Cash Receipts and Cash Payments
|
|
Eliminates the diversity in practice related to the classification of certain cash receipts and payments.
|
|
The Company evaluated its business policies and processes around cash receipts and payments and determined that this ASU did not have a material impact on its condensed consolidated financial statements and related disclosures.
|
ASU No. 2016-16,
Accounting for Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory
|
|
Requires that the income tax impact of intra-entity sales and transfers of property, except for inventory, be recognized when the transfer occurs.
|
|
The Company evaluated its business policies and processes around intra-entity transfers of assets, other than inventory, and determined that this ASU did not have a material impact on its condensed consolidated financial statements and related disclosures.
|
ASU No. 2017-09,
Compensation - Stock Compensation: Scope of Modification Accounting
|
|
Modification accounting is required to be applied for share-based payment awards immediately before the original award is modified unless the fair value, vesting conditions, and classification of the modified awards are the same as the fair value, vesting conditions and classification of the original award, respectively.
|
|
The Company evaluated its business policies and processes around share-based payment modifications and determined that this ASU did not have a material impact on its condensed consolidated financial statements and related disclosures.
|
Standard
|
|
Description
|
|
Planned Period of Adoption
|
|
Expected Impact on Adoption
|
ASU No. 2018-15,
Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract
|
|
Aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software and hosting arrangements that include an internal use software license. Requires companies to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement.
|
|
Q3 FY 2019
|
|
The Company has completed an initial assessment of the effect that the adoption of this ASU will have on its condensed consolidated financial statements and related disclosures and does not expect a material impact. The Company will early adopt the requirements of this ASU on a prospective basis.
|
SEC Release No. 33-10532,
Disclosure Update and Simplification
|
|
Amends certain disclosure requirements that have become redundant, duplicative, overlapping, outdated, or superseded, in light of other SEC disclosure requirements, US GAAP, or changes in the information environment.
|
|
Q3 FY 2019
|
|
The Company has completed an initial assessment of the effect that the adoption of this SEC update will have on its condensed consolidated financial statements and related disclosures, and currently expects to include its condensed consolidated statements of stockholders' equity in interim reporting and to simplify its disclosures in interim and annual reporting. The Company will adopt the requirements of this ASU on a prospective basis.
|
ASU No. 2017-12,
Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities
|
|
Seeks to improve the transparency and understandability of information conveyed to financial statement users about an entity's risk management activities and to reduce the complexity of and simplify the application of hedge accounting. This ASU eliminates the requirement to separately measure and report hedge ineffectiveness.
|
|
Q1 FY 2020
|
|
The Company has completed an initial assessment of the effect that the adoption of this SEC update will have on its condensed consolidated financial statements and related disclosures, and will eliminate effectiveness testing for its derivative contracts designated as cash flow hedges; however, this change is not expected to have a material impact.
|
Standard
|
|
Description
|
|
Planned Period of Adoption
|
|
Expected Impact on Adoption
|
ASU No. 2016-02,
Leases (as amended by ASUs 2015-14, 2018-01, 2018-10 and 2018-11)
|
|
Requires a lessee to recognize a lease asset and lease liability in its consolidated balance sheets. A lessee should recognize a right-of-use (ROU) asset representing its right to use the underlying asset for the lease term, and a liability to make lease payments.
|
|
Q1 FY 2020
|
|
The Company has completed an initial assessment of the effect that the adoption of this ASU will have on its condensed consolidated financial statements and related disclosures and expects a material impact. The result is expected to be a material increase in assets and liabilities due to the recognition of an ROU asset and corresponding lease liability, including for lease commitments that are currently classified as operating leases, such as retail stores, showrooms, offices, and distribution facilities. The classification and recognition of lease expense is not expected to materially change from legacy US GAAP. Further, the adoption of this ASU will result in expanded disclosures on existing and new lease commitments.
The Company expects to adopt this ASU on a prospective basis and elect the "package of practical expedients" allowed with adoption of this ASU, which provides a number of transition options, including (1) reassessment of prior conclusions about lease identification, classification and initial direct costs is not required; (2) the ability to elect a short-term lease recognition exemption for current and new vehicle, IT and office equipment leases that qualify to be excluded from the recognized ROU asset and related liability; and (3) separation of lease and non-lease components is not required.
The Company does not expect a significant change in its lease activities leading up to adoption of this ASU. Further, the Company has selected a software provider, has a project team in place and implementation is currently underway.
|
ASU No. 2017-04,
Goodwill and Other: Simplifying the Test for Goodwill Impairment
|
|
Requires annual and interim goodwill impairment test
s
be performed
by comparing the fair value of a reporting unit with its carrying amount, effectively eliminating step two of the goodwill impairment test under legacy US GAAP. The amount by which the carrying amount exceeds the reporting unit’s fair value should be recognized as an impairment charge.
|
|
Q1 FY 2021
|
|
The Company is evaluating the timing and effect that adoption
of this ASU will have on its condensed consolidated financial statements and related disclosures.
|
ASU No. 2016-13,
Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments
|
|
Replaces the incurred loss impairment methodology in legacy US GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.
|
|
Q1 FY 2021
|
|
The Company is evaluating the timing and effect that adoption
of this ASU will have on its condensed consolidated financial statements and related disclosures.
|
|
Contract Asset
|
|
Contract Liability
|
||||
Balance as of March 31, 2018
|
$
|
11,251
|
|
|
$
|
23,156
|
|
Change in estimate of sales returns, net of sales recognized
|
12,277
|
|
|
38,098
|
|
||
Actual returns
|
(14,650
|
)
|
|
(40,538
|
)
|
||
Balance as of September 30, 2018
|
$
|
8,878
|
|
|
$
|
20,716
|
|
|
September 30, 2018
|
|
March 31, 2018
|
||||
Goodwill
|
|
|
|
||||
UGG brand
|
$
|
6,101
|
|
|
$
|
6,101
|
|
HOKA brand
|
7,889
|
|
|
7,889
|
|
||
Total
|
13,990
|
|
|
13,990
|
|
||
Other intangible assets
|
|
|
|
||||
Indefinite-lived intangible assets
|
|
|
|
||||
Trademarks
|
15,454
|
|
|
15,454
|
|
||
Definite-lived intangible assets
|
|
|
|
||||
Trademarks
|
55,245
|
|
|
55,245
|
|
||
Other
|
52,412
|
|
|
53,216
|
|
||
Total gross carrying amount
|
107,657
|
|
|
108,461
|
|
||
Accumulated amortization
|
(68,755
|
)
|
|
(66,065
|
)
|
||
Net definite-lived intangible assets
|
38,902
|
|
|
42,396
|
|
||
Total
|
54,356
|
|
|
57,850
|
|
||
Total
|
$
|
68,346
|
|
|
$
|
71,840
|
|
Balance as of March 31, 2018
|
$
|
57,850
|
|
Amortization expense
|
(3,400
|
)
|
|
Foreign currency exchange rate fluctuations, net
|
(94
|
)
|
|
Balance as of September 30, 2018
|
$
|
54,356
|
|
•
|
Level 1: Quoted prices in active markets for identical assets or liabilities.
|
•
|
Level 2: Observable inputs other than quoted prices in active markets for identical assets and liabilities.
|
•
|
Level 3: Unobservable inputs in which little or no market activity exists, therefore requiring the reporting entity to develop its own assumptions.
|
|
September 30, 2018
|
|
Measured Using
|
||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
Non-qualified deferred compensation asset
|
$
|
7,542
|
|
|
$
|
7,542
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-qualified deferred compensation liability
|
(5,378
|
)
|
|
(5,378
|
)
|
|
—
|
|
|
—
|
|
||||
Designated Derivative Contracts asset
|
6,722
|
|
|
—
|
|
|
6,722
|
|
|
—
|
|
||||
Non-Designated Derivative Contracts asset
|
747
|
|
|
—
|
|
|
747
|
|
|
—
|
|
||||
Non-Designated Derivative Contracts liability
|
(20
|
)
|
|
—
|
|
|
(20
|
)
|
|
—
|
|
|
March 31, 2018
|
|
Measured Using
|
||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
Non-qualified deferred compensation asset
|
$
|
7,172
|
|
|
$
|
7,172
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-qualified deferred compensation liability
|
(4,296
|
)
|
|
(4,296
|
)
|
|
—
|
|
|
—
|
|
||||
Designated Derivative Contracts asset
|
950
|
|
|
—
|
|
|
950
|
|
|
—
|
|
||||
Designated Derivative Contracts liability
|
(143
|
)
|
|
—
|
|
|
(143
|
)
|
|
—
|
|
||||
Non-Designated Derivative Contracts liability
|
(10
|
)
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
•
|
the total adjusted leverage ratio must not be greater than
3:75
to
1:00
;
|
•
|
the sum of the consolidated annual earnings before interest, taxes, depreciation, and amortization and annual rental expense, divided by the sum of the annual interest expense and the annual rental expense must be greater than
2:25
to
1:00
; and
|
•
|
no limits on shares repurchases if the total adjusted leverage ratio does not exceed
3:50
to
1:00
.
|
|
Three Months Ended September 30, 2018
|
|
Six Months Ended September 30, 2018
|
||||||||||
|
Shares Granted
|
|
Weighted-average grant date fair value
|
|
Shares Granted
|
|
Weighted-average grant date fair value
|
||||||
Annual RSUs
|
42,876
|
|
|
$
|
114.42
|
|
|
59,235
|
|
|
$
|
115.65
|
|
Annual PSUs
|
17,208
|
|
|
114.42
|
|
|
31,320
|
|
|
116.34
|
|
||
Total
|
60,084
|
|
|
$
|
114.42
|
|
|
90,555
|
|
|
$
|
115.89
|
|
|
Designated Derivative Contracts
|
|
Non-Designated Derivative Contracts
|
|
Total
|
||||||
Notional value
|
$
|
86,015
|
|
|
$
|
38,582
|
|
|
$
|
124,597
|
|
Fair value recorded in other current assets
|
6,722
|
|
|
747
|
|
|
7,469
|
|
|||
Fair value recorded in other accrued expenses
|
—
|
|
|
(20
|
)
|
|
(20
|
)
|
|
Three Months Ended September 30,
|
|
Six Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Amount of gain (loss) on derivative instruments (effective portion) recognized in other comprehensive (loss) income
|
$
|
588
|
|
|
$
|
(3,900
|
)
|
|
$
|
7,358
|
|
|
$
|
(9,790
|
)
|
Amount of gain (loss) reclassified from accumulated other comprehensive loss into net sales (effective portion)
|
2,166
|
|
|
(2,283
|
)
|
|
2,166
|
|
|
(2,283
|
)
|
||||
Amount of gain excluded from effectiveness testing recognized in SG&A expenses
|
634
|
|
|
439
|
|
|
1,480
|
|
|
772
|
|
|
Three Months Ended September 30,
|
|
Six Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Amount of gain (loss) on derivative instruments recognized in SG&A expenses
|
$
|
250
|
|
|
$
|
(1,065
|
)
|
|
$
|
737
|
|
|
$
|
(2,668
|
)
|
Average price paid per share
|
$
|
117.03
|
|
Total number of shares repurchased*
|
1,151,260
|
|
|
Dollar value of shares repurchased
|
$
|
134,735
|
|
Balance as of March 31, 2018
|
$
|
785,871
|
|
Net income
|
43,965
|
|
|
Repurchase of common stock*
|
(134,724
|
)
|
|
Impact from adoption of ASUs, net of tax
|
468
|
|
|
Balance as of September 30, 2018
|
$
|
695,580
|
|
|
September 30, 2018
|
|
March 31, 2018
|
||||
Unrealized gain on cash flow hedges
|
$
|
4,369
|
|
|
$
|
243
|
|
Cumulative foreign currency translation loss
|
(24,550
|
)
|
|
(13,226
|
)
|
||
Total
|
$
|
(20,181
|
)
|
|
$
|
(12,983
|
)
|
|
Three Months Ended September 30,
|
|
Six Months Ended
September 30,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Basic
|
29,849,000
|
|
|
32,015,000
|
|
|
30,134,000
|
|
|
32,003,000
|
|
Dilutive effect of stock-based awards and options
|
179,000
|
|
|
257,000
|
|
|
193,000
|
|
|
253,000
|
|
Diluted
|
30,028,000
|
|
|
32,272,000
|
|
|
30,327,000
|
|
|
32,256,000
|
|
|
|
|
|
|
|
|
|
||||
Excluded*
|
|
|
|
|
|
|
|
||||
Annual RSUs and Annual PSUs
|
29,000
|
|
|
92,000
|
|
|
55,000
|
|
|
132,000
|
|
LTIP PSUs
|
84,000
|
|
|
269,000
|
|
|
84,000
|
|
|
269,000
|
|
LTIP NQSOs
|
377,000
|
|
|
397,000
|
|
|
377,000
|
|
|
397,000
|
|
Deferred Non-Employee Director Equity Awards
|
—
|
|
|
3,000
|
|
|
1,000
|
|
|
3,000
|
|
|
Three Months Ended September 30,
|
|
Six Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net sales
|
|
|
|
|
|
|
|
||||||||
UGG brand wholesale
|
$
|
319,589
|
|
|
$
|
322,050
|
|
|
$
|
400,942
|
|
|
$
|
385,323
|
|
HOKA brand wholesale
|
43,561
|
|
|
35,699
|
|
|
83,515
|
|
|
62,237
|
|
||||
Teva brand wholesale
|
15,878
|
|
|
16,494
|
|
|
49,074
|
|
|
48,617
|
|
||||
Sanuk brand wholesale
|
10,933
|
|
|
12,087
|
|
|
31,436
|
|
|
34,307
|
|
||||
Other brands wholesale
|
18,064
|
|
|
4,822
|
|
|
20,701
|
|
|
5,249
|
|
||||
Direct-to-Consumer
|
93,888
|
|
|
91,308
|
|
|
166,839
|
|
|
156,444
|
|
||||
Total
|
$
|
501,913
|
|
|
$
|
482,460
|
|
|
$
|
752,507
|
|
|
$
|
692,177
|
|
|
Three Months Ended September 30,
|
|
Six Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Income (loss) from operations
|
|
|
|
|
|
|
|
||||||||
UGG brand wholesale
|
$
|
134,029
|
|
|
$
|
117,218
|
|
|
$
|
139,898
|
|
|
$
|
116,197
|
|
HOKA brand wholesale
|
8,170
|
|
|
7,549
|
|
|
13,898
|
|
|
8,809
|
|
||||
Teva brand wholesale
|
1,847
|
|
|
1,916
|
|
|
9,911
|
|
|
6,859
|
|
||||
Sanuk brand wholesale
|
291
|
|
|
1,228
|
|
|
4,491
|
|
|
5,645
|
|
||||
Other brands wholesale
|
5,287
|
|
|
494
|
|
|
5,637
|
|
|
260
|
|
||||
Direct-to-Consumer
|
2,975
|
|
|
(3,403
|
)
|
|
(4,449
|
)
|
|
(15,505
|
)
|
||||
Unallocated overhead costs
|
(62,187
|
)
|
|
(57,647
|
)
|
|
(118,388
|
)
|
|
(111,166
|
)
|
||||
Total
|
$
|
90,412
|
|
|
$
|
67,355
|
|
|
$
|
50,998
|
|
|
$
|
11,099
|
|
|
September 30, 2018
|
|
March 31, 2018
|
||||
Assets
|
|
|
|
||||
UGG brand wholesale
|
$
|
661,623
|
|
|
$
|
229,894
|
|
HOKA brand wholesale
|
71,919
|
|
|
65,943
|
|
||
Teva brand wholesale
|
46,021
|
|
|
85,980
|
|
||
Sanuk brand wholesale
|
52,646
|
|
|
79,322
|
|
||
Other brands wholesale
|
41,666
|
|
|
8,866
|
|
||
Direct-to-Consumer
|
103,741
|
|
|
112,355
|
|
||
Total assets from reportable operating segments
|
977,616
|
|
|
582,360
|
|
||
Unallocated cash and cash equivalents
|
182,192
|
|
|
429,970
|
|
||
Unallocated deferred tax assets
|
38,878
|
|
|
38,381
|
|
||
Unallocated other corporate assets
|
225,282
|
|
|
213,668
|
|
||
Total
|
$
|
1,423,968
|
|
|
$
|
1,264,379
|
|
|
Three Months Ended September 30,
|
|
Six Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
International Net Sales
|
$
|
190,320
|
|
|
$
|
179,783
|
|
|
$
|
299,207
|
|
|
$
|
268,787
|
|
% of Net Sales
|
37.9
|
%
|
|
37.3
|
%
|
|
39.8
|
%
|
|
38.8
|
%
|
||||
Net Sales in Foreign Currencies
|
$
|
162,587
|
|
|
$
|
160,195
|
|
|
$
|
227,013
|
|
|
$
|
209,427
|
|
% of Net Sales
|
32.4
|
%
|
|
33.2
|
%
|
|
30.2
|
%
|
|
30.3
|
%
|
|
September 30, 2018
|
|
March 31, 2018
|
||||
US
|
$
|
199,192
|
|
|
$
|
203,956
|
|
All other countries*
|
16,528
|
|
|
16,206
|
|
||
Total
|
$
|
215,720
|
|
|
$
|
220,162
|
|
|
Cumulative Restructuring Charges
|
||
Lease terminations
|
$
|
18,282
|
|
Retail store fixed asset impairment
|
9,372
|
|
|
Severance costs
|
9,776
|
|
|
Software and office fixed asset impairment
|
6,987
|
|
|
Other*
|
11,202
|
|
|
Total
|
$
|
55,619
|
|
|
Cumulative Annualized SG&A Expense Savings
|
||
UGG brand wholesale
|
$
|
1,000
|
|
Sanuk brand wholesale
|
1,000
|
|
|
Other brands wholesale
|
1,000
|
|
|
Direct-to-Consumer
|
41,000
|
|
|
Unallocated overhead costs
|
17,000
|
|
|
Total
|
$
|
61,000
|
|
•
|
Sales of our products are highly seasonal and are sensitive to weather conditions, which are unpredictable and beyond our control. To address seasonality, we are continuing to drive our strategy of introducing counter-seasonal products through category expansion, including the UGG brand’s spring and summer products, and the active lifestyle products of the HOKA brand. Even though we continue to expand our product lines with the goal of creating more year-round styles for our brands to drive sales and offset the impact of weather conditions, the effect of favorable or unfavorable weather on our aggregate sales and operating results may continue to be significant.
|
•
|
We believe there has been a meaningful shift in the way consumers shop for products and make purchasing decisions. In particular, brick and mortar retail stores are experiencing significant and prolonged decreases in consumer traffic as customers continue to migrate to shopping online. This shift is impacting the performance of our DTC business and our wholesale customers, and is transforming the way we approach our digital marketing efforts.
|
•
|
In light of the shift in consumer shopping behavior, we are seeking to optimize our brick and mortar retail footprint. In pursuing retail store closures, we have been impacted by costs related to lease terminations, retail store fixed asset impairments, severance costs, and other closure costs. However, we currently do not anticipate incurring material incremental retail store closure costs, primarily because remaining store closures are expected to occur as retail store leases expire to avoid incurring potentially significant lease termination costs, as well as through conversions to partner retail stores.
|
•
|
We expect our E-Commerce business will continue to be a driver of long-term growth, although we expect the year-over-year growth rate will decline over time as the size of our E-Commerce business increases.
|
•
|
Beginning in fall 2018, we are implementing an allocation and segmentation distribution strategy for the UGG brand's Classics franchise in the US wholesale channel.
|
•
|
We believe consumers are buying product closer to the particular wearing occasion ("buy now, wear now"), which tends to shorten the purchasing windows for weather-dependent product. Not only does this trend impact our DTC business, we believe it is also impacting the purchasing behavior of our large wholesale customers. In particular, these customers appear to be shortening their purchasing windows to address the evolving behavior of retail consumers and to manage their own product-related inventories.
|
•
|
Foreign currency exchange rate fluctuations have the potential to cause variations in our operating results. While we seek to hedge some of the risks associated with foreign currency exchange rate fluctuations, these changes are largely outside of our control. We expect these changes will continue to impact the future purchasing patterns of our customers, as well as our operating results.
|
•
|
High consumer brand loyalty due to consistently delivering quality and luxuriously comfortable footwear, apparel, and accessories.
|
•
|
Diversification of our product lines, including women's spring and summer, men's, and lifestyle offerings. Our strategy of product diversification aims to decrease our reliance on sheepskin and mitigate the impacts of seasonality.
|
•
|
Continued enhancement of our Omni-Channel and digital marketing capabilities to enable us to better engage existing and prospective consumers and expose them to our brands.
|
|
Three Months Ended September 30,
|
|||||||||||||||||||
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|||||||||
Net sales
|
$
|
501,913
|
|
|
100.0
|
%
|
|
$
|
482,460
|
|
|
100.0
|
%
|
|
$
|
19,453
|
|
|
4.0
|
%
|
Cost of sales
|
250,026
|
|
|
49.8
|
|
|
257,343
|
|
|
53.3
|
|
|
7,317
|
|
|
2.8
|
|
|||
Gross profit
|
251,887
|
|
|
50.2
|
|
|
225,117
|
|
|
46.7
|
|
|
26,770
|
|
|
11.9
|
|
|||
Selling, general and administrative expenses
|
161,475
|
|
|
32.2
|
|
|
157,762
|
|
|
32.7
|
|
|
(3,713
|
)
|
|
(2.4
|
)
|
|||
Income from operations
|
90,412
|
|
|
18.0
|
|
|
67,355
|
|
|
14.0
|
|
|
23,057
|
|
|
34.2
|
|
|||
Other expense, net
|
637
|
|
|
0.1
|
|
|
1,034
|
|
|
0.2
|
|
|
397
|
|
|
38.4
|
|
|||
Income before income taxes
|
89,775
|
|
|
17.9
|
|
|
66,321
|
|
|
13.8
|
|
|
23,454
|
|
|
35.4
|
|
|||
Income tax expense
|
15,403
|
|
|
3.1
|
|
|
16,762
|
|
|
3.5
|
|
|
1,359
|
|
|
8.1
|
|
|||
Net income
|
$
|
74,372
|
|
|
14.8
|
%
|
|
$
|
49,559
|
|
|
10.3
|
%
|
|
$
|
24,813
|
|
|
50.1
|
%
|
|
Three Months Ended September 30,
|
|||||||||||||
|
2018
|
|
2017
|
|
Change
|
|||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
%
|
|||||||
Net sales by location
|
|
|
|
|
|
|
|
|||||||
US
|
$
|
311,593
|
|
|
$
|
302,677
|
|
|
$
|
8,916
|
|
|
2.9
|
%
|
International
|
190,320
|
|
|
179,783
|
|
|
10,537
|
|
|
5.9
|
|
|||
Total
|
$
|
501,913
|
|
|
$
|
482,460
|
|
|
$
|
19,453
|
|
|
4.0
|
%
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|||||||||||||
|
2018
|
|
2017
|
|
Change
|
|||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
%
|
|||||||
Net sales by brand and channel
|
|
|
|
|
|
|
|
|
|
|||||
UGG brand
|
|
|
|
|
|
|
|
|
|
|||||
Wholesale
|
$
|
319,589
|
|
|
$
|
322,050
|
|
|
$
|
(2,461
|
)
|
|
(0.8
|
)%
|
Direct-to-Consumer
|
76,745
|
|
|
78,317
|
|
|
(1,572
|
)
|
|
(2.0
|
)
|
|||
Total
|
396,334
|
|
|
400,367
|
|
|
(4,033
|
)
|
|
(1.0
|
)
|
|||
HOKA brand
|
|
|
|
|
|
|
|
|||||||
Wholesale
|
43,561
|
|
|
35,699
|
|
|
7,862
|
|
|
22.0
|
|
|||
Direct-to-Consumer
|
8,533
|
|
|
4,884
|
|
|
3,649
|
|
|
74.7
|
|
|||
Total
|
52,094
|
|
|
40,583
|
|
|
11,511
|
|
|
28.4
|
|
|||
Teva brand
|
|
|
|
|
|
|
|
|
|
|||||
Wholesale
|
15,878
|
|
|
16,494
|
|
|
(616
|
)
|
|
(3.7
|
)
|
|||
Direct-to-Consumer
|
5,671
|
|
|
4,933
|
|
|
738
|
|
|
15.0
|
|
|||
Total
|
21,549
|
|
|
21,427
|
|
|
122
|
|
|
0.6
|
|
|||
Sanuk brand
|
|
|
|
|
|
|
|
|
|
|||||
Wholesale
|
10,933
|
|
|
12,087
|
|
|
(1,154
|
)
|
|
(9.5
|
)
|
|||
Direct-to-Consumer
|
2,863
|
|
|
3,136
|
|
|
(273
|
)
|
|
(8.7
|
)
|
|||
Total
|
13,796
|
|
|
15,223
|
|
|
(1,427
|
)
|
|
(9.4
|
)
|
|||
Other brands
|
|
|
|
|
|
|
|
|
|
|||||
Wholesale
|
18,064
|
|
|
4,822
|
|
|
13,242
|
|
|
274.6
|
|
|||
Direct-to-Consumer
|
76
|
|
|
38
|
|
|
38
|
|
|
100.0
|
|
|||
Total
|
18,140
|
|
|
4,860
|
|
|
13,280
|
|
|
273.3
|
|
|||
Total
|
$
|
501,913
|
|
|
$
|
482,460
|
|
|
$
|
19,453
|
|
|
4.0
|
%
|
|
|
|
|
|
|
|
|
|||||||
Total Wholesale
|
$
|
408,025
|
|
|
$
|
391,152
|
|
|
$
|
16,873
|
|
|
4.3
|
%
|
Total Direct-to-Consumer
|
93,888
|
|
|
91,308
|
|
|
2,580
|
|
|
2.8
|
|
|||
Total
|
$
|
501,913
|
|
|
$
|
482,460
|
|
|
$
|
19,453
|
|
|
4.0
|
%
|
•
|
Wholesale net sales of our UGG brand decreased due to a lower weighted-average price per pair (WASPP), primarily driven by a shift in product mix related to our UGG Classics allocation and product segmentation strategy as well as a higher volume of closeouts, mostly offset by a higher volume of pairs sold, compared to the prior period. On a constant currency basis, wholesale net sales of our UGG brand decreased
1.6%
compared to the prior period.
|
•
|
Wholesale net sales of our HOKA brand increased due to a higher volume of pairs sold driven by its continued global growth, primarily in the US and Europe, as well as additional sales generated by updates to key franchises, as well as a higher WASPP driven by product mix and higher full-priced selling.
|
•
|
Wholesale net sales of our Teva brand decreased due to a lower WASPP, partially offset by a higher volume of pairs sold driven by changes in product mix.
|
•
|
Wholesale net sales of our Sanuk brand decreased due to a lower WASPP, primarily driven by lower performance in the domestic surf specialty channel, partially offset by a higher volume of pairs sold driven by higher closeouts.
|
•
|
Wholesale net sales of our Other brands increased due to a higher volume of pairs sold driven by continued growth in the US family value chain for the Koolaburra brand, partially offset by a decrease in WASPP due to product mix.
|
•
|
DTC net sales increased
2.8%
due to a higher volume of pairs sold, primarily driven by the HOKA and UGG brands, partially offset by a lower WASPP due to product mix. Comparable DTC net sales for the 13 weeks ended September 30, 2018 increased
4.8%
compared to the same period during
fiscal year 2018
. The increase in comparable DTC net sales was largely due to growth in our E-Commerce business for the UGG, HOKA, and Teva brands.
|
•
|
International sales, which are included in the reportable operating segment sales presented above, increased by
5.9%
compared to the prior period. International sales represented
37.9%
and
37.3%
of total net sales for the
three months ended September 30, 2018
and
2017
, respectively. The increase was due to higher sales, primarily driven by the HOKA brand in Europe and Asia, as well as the UGG brand for the wholesale channel in Asia, Latin America, and Canada, partially offset by lower sales in Europe.
|
•
|
increased compensation costs of
$3,641
, primarily due to higher accruals for variable performance-based compensation and higher global headcount;
|
•
|
increased foreign currency-related losses of
$1,978
driven by changes in foreign currency exchange rates for Canadian and Asian currencies; and
|
•
|
decreased impairment and depreciation charges of approximately
$1,928
, primarily due to lower retail store-related impairments and depreciation for retail store closures completed in prior periods.
|
|
Three Months Ended September 30,
|
|||||||||||||
|
2018
|
|
2017
|
|
Change
|
|||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
%
|
|||||||
Income (loss) from operations
|
|
|
|
|
|
|
|
|||||||
UGG brand wholesale
|
$
|
134,029
|
|
|
$
|
117,218
|
|
|
$
|
16,811
|
|
|
14.3
|
%
|
HOKA brand wholesale
|
8,170
|
|
|
7,549
|
|
|
621
|
|
|
8.2
|
|
|||
Teva brand wholesale
|
1,847
|
|
|
1,916
|
|
|
(69
|
)
|
|
(3.6
|
)
|
|||
Sanuk brand wholesale
|
291
|
|
|
1,228
|
|
|
(937
|
)
|
|
(76.3
|
)
|
|||
Other brands wholesale
|
5,287
|
|
|
494
|
|
|
4,793
|
|
|
970.2
|
|
|||
Direct-to-Consumer
|
2,975
|
|
|
(3,403
|
)
|
|
6,378
|
|
|
187.4
|
|
|||
Unallocated overhead costs
|
(62,187
|
)
|
|
(57,647
|
)
|
|
(4,540
|
)
|
|
(7.9
|
)
|
|||
Total
|
$
|
90,412
|
|
|
$
|
67,355
|
|
|
$
|
23,057
|
|
|
34.2
|
%
|
•
|
The increase in income from operations of UGG brand wholesale was due to higher gross margins and lower SG&A expenses, partially offset by lower sales.
|
•
|
The increase in income from operations of Other brands wholesale was due to higher sales at higher gross margins.
|
•
|
The increase in income from operations of DTC was primarily due to higher sales at higher gross margins, as well as lower overall retail store operating costs driven by store closures completed in prior periods, including related impairments and depreciation costs.
|
•
|
The increase in unallocated overhead costs was primarily due to higher variable performance-based compensation, changes in foreign currency exchange rates for Canadian and Asian currencies, and higher warehouse-related expenses associated with the Moreno Valley warehouse and distribution center expansion.
|
|
Three Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Income tax expense
|
$
|
15,403
|
|
|
$
|
16,762
|
|
Effective income tax rate
|
17.2
|
%
|
|
25.3
|
%
|
|
Six Months Ended September 30,
|
|||||||||||||||||||
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|||||||||
Net sales
|
$
|
752,507
|
|
|
100.0
|
%
|
|
$
|
692,177
|
|
|
100.0
|
%
|
|
$
|
60,330
|
|
|
8.7
|
%
|
Cost of sales
|
385,655
|
|
|
51.2
|
|
|
376,435
|
|
|
54.4
|
|
|
(9,220
|
)
|
|
(2.4
|
)
|
|||
Gross profit
|
366,852
|
|
|
48.8
|
|
|
315,742
|
|
|
45.6
|
|
|
51,110
|
|
|
16.2
|
|
|||
Selling, general and administrative expenses
|
315,854
|
|
|
42.0
|
|
|
304,643
|
|
|
44.0
|
|
|
(11,211
|
)
|
|
(3.7
|
)
|
|||
Income from operations
|
50,998
|
|
|
6.8
|
|
|
11,099
|
|
|
1.6
|
|
|
39,899
|
|
|
359.5
|
|
|||
Other expense, net
|
274
|
|
|
0.1
|
|
|
1,365
|
|
|
0.2
|
|
|
1,091
|
|
|
79.9
|
|
|||
Income before income taxes
|
50,724
|
|
|
6.7
|
|
|
9,734
|
|
|
1.4
|
|
|
40,990
|
|
|
421.1
|
|
|||
Income tax expense
|
6,759
|
|
|
0.9
|
|
|
2,296
|
|
|
0.3
|
|
|
(4,463
|
)
|
|
(194.4
|
)
|
|||
Net income
|
$
|
43,965
|
|
|
5.8
|
%
|
|
$
|
7,438
|
|
|
1.1
|
%
|
|
$
|
36,527
|
|
|
491.1
|
%
|
|
Six Months Ended September 30,
|
|||||||||||||
|
2018
|
|
2017
|
|
Change
|
|||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
%
|
|||||||
Net sales by location
|
|
|
|
|
|
|
|
|||||||
US
|
$
|
453,300
|
|
|
$
|
423,390
|
|
|
$
|
29,910
|
|
|
7.1
|
%
|
International
|
299,207
|
|
|
268,787
|
|
|
30,420
|
|
|
11.3
|
|
|||
Total
|
$
|
752,507
|
|
|
$
|
692,177
|
|
|
$
|
60,330
|
|
|
8.7
|
%
|
|
|
|
|
|
|
|
|
|||||||
Net sales by brand and channel
|
|
|
|
|
|
|
|
|
|
|||||
UGG brand
|
|
|
|
|
|
|
|
|
|
|||||
Wholesale
|
$
|
400,942
|
|
|
$
|
385,323
|
|
|
$
|
15,619
|
|
|
4.1
|
%
|
Direct-to-Consumer
|
131,863
|
|
|
129,776
|
|
|
2,087
|
|
|
1.6
|
|
|||
Total
|
532,805
|
|
|
515,099
|
|
|
17,706
|
|
|
3.4
|
|
|||
HOKA brand
|
|
|
|
|
|
|
|
|||||||
Wholesale
|
83,515
|
|
|
62,237
|
|
|
21,278
|
|
|
34.2
|
|
|||
Direct-to-Consumer
|
15,583
|
|
|
9,055
|
|
|
6,528
|
|
|
72.1
|
|
|||
Total
|
99,098
|
|
|
71,292
|
|
|
27,806
|
|
|
39.0
|
|
|||
Teva brand
|
|
|
|
|
|
|
|
|
|
|||||
Wholesale
|
49,074
|
|
|
48,617
|
|
|
457
|
|
|
0.9
|
|
|||
Direct-to-Consumer
|
12,476
|
|
|
10,472
|
|
|
2,004
|
|
|
19.1
|
|
|||
Total
|
61,550
|
|
|
59,089
|
|
|
2,461
|
|
|
4.2
|
|
|||
Sanuk brand
|
|
|
|
|
|
|
|
|
|
|||||
Wholesale
|
31,436
|
|
|
34,307
|
|
|
(2,871
|
)
|
|
(8.4
|
)
|
|||
Direct-to-Consumer
|
6,798
|
|
|
7,091
|
|
|
(293
|
)
|
|
(4.1
|
)
|
|||
Total
|
38,234
|
|
|
41,398
|
|
|
(3,164
|
)
|
|
(7.6
|
)
|
|||
Other brands
|
|
|
|
|
|
|
|
|
|
|||||
Wholesale
|
20,701
|
|
|
5,249
|
|
|
15,452
|
|
|
294.4
|
|
|||
Direct-to-Consumer
|
119
|
|
|
50
|
|
|
69
|
|
|
138.0
|
|
|||
Total
|
20,820
|
|
|
5,299
|
|
|
15,521
|
|
|
292.9
|
|
|||
Total
|
$
|
752,507
|
|
|
$
|
692,177
|
|
|
$
|
60,330
|
|
|
8.7
|
%
|
|
Six Months Ended September 30,
|
|||||||||||||
|
2018
|
|
2017
|
|
Change
|
|||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
%
|
|||||||
Total Wholesale
|
$
|
585,668
|
|
|
$
|
535,733
|
|
|
$
|
49,935
|
|
|
9.3
|
%
|
Total Direct-to-Consumer
|
166,839
|
|
|
156,444
|
|
|
10,395
|
|
|
6.6
|
|
|||
Total
|
$
|
752,507
|
|
|
$
|
692,177
|
|
|
$
|
60,330
|
|
|
8.7
|
%
|
•
|
Wholesale net sales of our UGG brand increased due to a higher volume of pairs sold driven by higher selling of our summer and spring product lines, strength of fall product shipments for Asia, as well as a higher volume of closeouts, compared to the prior period. These impacts were partially offset by a lower WASPP driven by higher closeouts and a shift in product mix related to our UGG Classics allocation and product segmentation strategy, compared to the prior period. On a constant currency basis, wholesale net sales of our UGG brand increased
3.1%
compared to the prior period.
|
•
|
Wholesale net sales of our HOKA brand increased, primarily due to a higher volume of pairs sold driven by its continued global growth, primarily in the US and Europe, as well as additional sales generated by updates to key franchises compared to the prior period.
|
•
|
Wholesale net sales of our Teva brand increased due to a higher WASPP, primarily driven by changes in product mix and fewer closeout sales.
|
•
|
Wholesale net sales of our Sanuk brand decreased due to a lower WASPP, primarily driven by lower performance in the domestic surf specialty channel and lower international sales in connection with our strategic focus on US markets for this brand.
|
•
|
Wholesale net sales of our Other brands increased due to a higher volume of pairs sold driven by its continued growth in the US family value chain for the Koolaburra brand, partially offset by a decrease in WASPP due to product mix.
|
•
|
DTC net sales increased
6.6%
due to a higher volume of pairs sold, primarily driven by the UGG, HOKA, and Teva brands, partially offset by a lower WASPP, primarily due to product mix. Comparable DTC net sales for the 26 weeks ended September 30, 2018 increased
5.0%
compared to the same period during
fiscal year 2018
. The increase in comparable DTC net sales was largely due to growth in our E-Commerce business for the UGG, HOKA and Teva brands.
|
•
|
International sales, which are included in the reportable operating segment sales presented above, increased by
11.3%
compared to the prior period. International sales represented
39.8%
and
38.8%
of total net sales for the
six months ended September 30, 2018
and
2017
, respectively. The increase was due to higher sales for the HOKA brand in Europe and Asia, as well as the UGG brand in Asia, Latin America and Canada.
|
•
|
increased compensation costs of
$7,695
, primarily due to higher accruals for variable performance-based compensation, costs related to our in-house converted sales team, and higher global headcount, partially offset by consulting costs related to the strategic review process in the prior period;
|
•
|
increased foreign currency-related losses of
$4,748
driven by changes in foreign currency exchange rates for Asian, European and Canadian currencies;
|
•
|
increased variable advertising, promotion and other operating expenses of
$2,158
, primarily due to higher investment to drive international sales, partially offset by one-time charges for legal costs incurred for the contested annual meeting in the prior period;
|
•
|
increased rent and occupancy expenses of
$1,237
, primarily due to the Moreno Valley distribution center expansion and lease termination costs;
|
•
|
decreased bad debt expense of
$2,283
, primarily due to improved customer collections and the write off of unsettled customer accounts in the prior period; and
|
•
|
decreased impairment and depreciation charges of approximately
$2,983
, primarily due to lower retail store-related impairments and depreciation for retail store closures completed in prior periods.
|
|
Six Months Ended September 30,
|
|||||||||||||
|
2018
|
|
2017
|
|
Change
|
|||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
%
|
|||||||
Income (loss) from operations
|
|
|
|
|
|
|
|
|||||||
UGG brand wholesale
|
$
|
139,898
|
|
|
$
|
116,197
|
|
|
$
|
23,701
|
|
|
20.4
|
%
|
HOKA brand wholesale
|
13,898
|
|
|
8,809
|
|
|
5,089
|
|
|
57.8
|
|
|||
Teva brand wholesale
|
9,911
|
|
|
6,859
|
|
|
3,052
|
|
|
44.5
|
|
|||
Sanuk brand wholesale
|
4,491
|
|
|
5,645
|
|
|
(1,154
|
)
|
|
(20.4
|
)
|
|||
Other brands wholesale
|
5,637
|
|
|
260
|
|
|
5,377
|
|
|
2,068.1
|
|
|||
Direct-to-Consumer
|
(4,449
|
)
|
|
(15,505
|
)
|
|
11,056
|
|
|
71.3
|
|
|||
Unallocated overhead costs
|
(118,388
|
)
|
|
(111,166
|
)
|
|
(7,222
|
)
|
|
(6.5
|
)
|
|||
Total
|
$
|
50,998
|
|
|
$
|
11,099
|
|
|
$
|
39,899
|
|
|
359.5
|
%
|
•
|
The increase in income from operations of UGG, HOKA, Teva and Other brand wholesale was due to higher sales at higher gross margins, as well as lower SG&A expenses, with the exception of HOKA brand wholesale which had higher SG&A expenses, primarily driven by higher marketing and selling expenses.
|
•
|
The decrease in income from operations of Sanuk brand wholesale was primarily due to lower sales.
|
•
|
The increase in income from operations of DTC was primarily due to higher sales at higher gross margins, as well as lower overall retail store operating costs driven by store closures completed in prior periods, including related impairments and depreciation costs.
|
•
|
The increase in unallocated overhead costs was primarily due to changes in foreign currency exchange rates for Canadian, European and Asian currencies, higher variable performance-based compensation, and higher warehouse-related expenses associated with the Moreno Valley warehouse and distribution center expansion, partially offset by lower charges incurred in the prior period for consulting costs related to our strategic review process and legal costs for our contested annual meeting.
|
|
Six Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Income tax expense
|
$
|
6,759
|
|
|
$
|
2,296
|
|
Effective income tax rate
|
13.3
|
%
|
|
23.6
|
%
|
|
Six Months Ended September 30,
|
|||||||||||||
|
2018
|
|
2017
|
|
Change
|
|||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
%
|
|||||||
Net cash used in operating activities
|
$
|
(160,737
|
)
|
|
$
|
(182,790
|
)
|
|
$
|
22,053
|
|
|
12.1
|
%
|
Net cash used in investing activities
|
(14,023
|
)
|
|
(10,151
|
)
|
|
(3,872
|
)
|
|
(38.1
|
)
|
|||
Net cash (used in) provided by financing activities
|
(69,404
|
)
|
|
130,968
|
|
|
(200,372
|
)
|
|
(153.0
|
)
|
|
|
Total number of shares repurchased*
|
|
Average price paid per share
|
|
Dollar value of shares repurchased
|
|
Dollar value of shares that may yet be repurchased
|
|||||||
May 1 - May 31, 2018
|
|
17,831
|
|
|
$
|
112.16
|
|
|
$
|
2,000
|
|
|
$
|
248,607
|
|
June 1 - June 30, 2018
|
|
67,961
|
|
|
117.71
|
|
|
8,000
|
|
|
240,607
|
|
|||
July 1 - July 31, 2018
|
|
144,758
|
|
|
110.14
|
|
|
15,944
|
|
|
224,663
|
|
|||
August 1 - August 31, 2018
|
|
834,900
|
|
|
118.00
|
|
|
98,518
|
|
|
126,145
|
|
|||
September 1 - September 30, 2018
|
|
85,810
|
|
|
119.72
|
|
|
10,273
|
|
|
115,872
|
|
Exhibit
Number
|
|
Description of Exhibit
|
*31.1
|
|
|
*31.2
|
|
|
**32
|
|
|
*101.INS
|
|
XBRL Instance Document
|
*101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
*101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
*101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
*101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
*101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
DECKERS OUTDOOR CORPORATION
(Registrant)
|
/s/ STEVEN J. FASCHING
|
Steven J. Fasching
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
1 Year Deckers Outdoor Chart |
1 Month Deckers Outdoor Chart |
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