Deckers Outdoor Corporation (DECK) has reported a 73.85 percent plunge in profit for the quarter ended Dec. 31, 2016. The company has earned $41.03 million, or $1.27 a share in the quarter, compared with $156.92 million, or $4.78 a share for the same period last year.
Revenue during the quarter dropped 4.47 percent to $760.34 million from $795.90 million in the previous year period. Gross margin for the quarter expanded 133 basis points over the previous year period to 50.46 percent. Total expenses were 93 percent of quarterly revenues, up from 74.56 percent for the same period last year. That has resulted in a contraction of 1844 basis points in operating margin to 7 percent.
Operating income for the quarter was $53.25 million, compared with $202.50 million in the previous year period.
"While the slow start to the holiday season limited our reorder opportunities and led to a shortfall in third quarter sales and earnings, sell-through of the UGG brand accelerated sharply late in the quarter. Our December performance helped drive a positive 4.7% Direct-to-Consumer (DTC) comparable sales increase and also ensured that our wholesale partners ended the calendar year with cleaner inventory levels compared with a year ago. While we are disappointed that our overall results fell short of projections, we are confident that our product, pricing and distribution strategies will benefit the long-term health of the UGG brand," said Dave Powers, president and chief executive officer.
For financial year 2017, Deckers Outdoor Corporation forecasts revenue to decline by 5 percent. The company projects diluted earnings per share to be in the range of $3.45 to $3.55 on adjusted basis.
For the fourth-quarter 2017, Deckers Outdoor Corporation expects revenue to decline in the range of 6 percent to 5 percent. On an adjusted basis, the company projects diluted loss per share to be $0.10.
Working capital increases
Deckers Outdoor Corporation has recorded an increase in the working capital over the last year. It stood at $641.72 million as at Dec. 31, 2016, up 8.50 percent or $50.25 million from $591.47 million on Dec. 31, 2015. Current ratio was at 2.96 as on Dec. 31, 2016, up from 2.85 on Dec. 31, 2015.
Cash conversion cycle (CCC) has decreased to 26 days for the quarter from 89 days for the last year period. Days sales outstanding went up to 32 days for the quarter compared with 29 days for the same period last year.
Days inventory outstanding has decreased to 46 days for the quarter compared with 110 days for the previous year period. At the same time, days payable outstanding went up to 51 days for the quarter from 50 for the same period last year.
Debt moves up
Deckers Outdoor Corporation has witnessed an increase in total debt over the last one year. It stood at $62.40 million as on Dec. 31, 2016, up 10.80 percent or $6.08 million from $56.31 million on Dec. 31, 2015. Total debt was 4.56 percent of total assets as on Dec. 31, 2016, compared with 4 percent on Dec. 31, 2015. Debt to equity ratio was almost stable at 0.06 as on Dec. 31, 2016, when compared with the last year.
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