Oct 28, 2011
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Deckers banks on UGG brand, cautious on Europe

Oct 28, 2011

Shoemaker Deckers Outdoor Corp raised its full-year revenue outlook for the third time this year on higher demand for its sheepskin boots, but said Europe will remain a concern going into the holiday season.

Deckers Outdoor, Uggs
Illustrations © UGG

Chief Executive Angel Martinez raised concerns about economic conditions in the region, which brings in roughly 20 percent of the company's revenue.

"We will continue to closely monitor sell-through (in Europe) as we head into the holiday period," he said on a conference call with analysts.

Earlier today, peer Crocs Inc also flagged concerns over the retail demand in Europe in the current quarter.

For the fourth quarter, Deckers forecast revenue to grow 29 percent, up from its prior view of 22 percent. It now expects full-year revenue to grow 33 percent, from the previous view of 26 percent.

UGG boots, which have been spurring sales at Deckers for more than ten quarters, contributed 91 percent of its total sales in the third quarter.

"The growth of the spring line earlier this year combined with the solid start to fall has created strong momentum for the UGG brand as we head into the holidays," Martinez said in a statement.

The company's shift to a wholesale model for some brands in Europe also boosted sales in the third quarter.

Third-quarter profit rose to $1.59 cents a share as its sheepskin UGG boots continue to enjoy strong demand. Analysts were looking for earnings of $1.36 per share, according to Thomson Reuters I/B/E/S.

The UGG parent, which competes with Skechers USA Inc , saw revenue rise 49 percent to $414.4 million.

Goleta, California-based Deckers shares were trading up at $112.00 on Thursday. They closed at $106.18 on Nasdaq.

By Ranjita Ganesan

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