Ugg maker Deckers' 1Q profit shrinks 87 pct

1Q profit shrinks 87 percent at Deckers, maker of Ugg boots, Teva sandals; outlook disappoints

Associated Press

GOLETA, Calif. (AP) -- Deckers Outdoor Corp., the maker of Ugg boots and Teva sandals, on Friday said its first-quarter profit shrank 87 percent as costs rose, and its outlook disappointed investors.

For the quarter ended March 31, profit came to $1 million, or 3 cents per share, down from $8 million, or 20 cents per share, in the same quarter of 2012.

Revenue rose 7 percent, to $263.8 million from $246.3 million.

Analysts had expected worse: A loss of 8 cents per share on $253.3 million in revenue, according to FactSet.

Deckers said sales of Ugg boots rose 8 percent to $170.6 million. Sales in the company's own stores rose, but Ugg sales to department stores and other retailers fell.

Worries about slacking consumer demand for Ugg boots had shaken Deckers' stock last year. The company had been raising prices to offset higher costs, and sales fell off sharply. Deckers then cut prices to help revive demand for the brand.

Teva sales increased 4 percent to $51.6 million from the year before.

Overall, revenue in the company's stores open at least a year increased 6.6 percent. That metric is a key measure of a retailer's health, because it excludes sales at stores that recently opened or closed. Deckers has also opened 29 stores in the past year.

But the company's costs to make its shoes rose 5 percent to $140.2 million, and general expenses climbed 19 percent, to $120.9 million.

For the current quarter, Deckers said it expects to post a loss of about $1.10 per share on revenue of about $174 million. Analysts had predicted a loss of 96 cents per share on $184.2 million in revenue.

In heavy trading, Deckers shares dropped $5.53, or 9.3 percent, to $53.87 by midday. Shares have climbed back partially this year from a nearly 50 percent decline in 2012.

The Goleta, Calif., company still expects its earnings per share for 2013 to increase about 5 percent, while revenue rises 7 percent. That suggests profit of $3.62 per share and $1.51 billion in revenue. Analysts were forecasting earnings of $3.68 per share on $1.51 billion in revenue.

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