Deckers Outdoor Corporation, the company behind the Teva, Ugg and Simple footwear brands, is reinforcing its European operations through the acquisition of its Dutch and British distribution partners. It opened a subsidiary for the Benelux countries and France at the start of this year and will do the same in the U.K. from the beginning of next year.
Deckers Benelux B.V. was established after the takeover of W.J. Sportswear, based in Rijswijk, which has been selling Teva in the Netherlands and Belgium for many years. France was added to the W.J. Sportswear territory after the termination of a distribution deal with Sun Valley, a French ski apparel company, two years ago.
The new Deckers subsidiary covers the same markets as W.J. Sportswear and with the same team, headed by Rob de Jong. Along with Dick Wijsman, former European general manager of Teva and then of Crocs, he is a shareholder of W.J. Holding, which formerly owned W.J. Sportswear and still owns Crocs Benelux B.V. This unit operates entirely separately from the former W.J. Sportswear and now Deckers Benelux.
In the next months Deckers is to go ahead with the acquisition of Radicals, another Dutch distribution company, which supervises sales of Ugg and Simple in the Netherlands, Belgium and France. The three Deckers footwear brands will then be brought together under the same roof. Deckers Benelux currently employs 25 people, including the staff at its warehouse. The Benelux region is the largest European market for Teva, with sales of about 450,000 pairs for Belgium, the Netherlands and France, with the latter making up only a small share of these sales.
A similar move is in the works in the U.K., where Deckers is preparing to take over AMG Footwear, its distributor for Teva, Ugg and Simple. AMG Footwear is part of the AMG Group, a Scottish company that owns several camping brands, from Force Ten to Vango, Lichfield and Black’s of Greenock. Furthermore, it holds U.K. distribution rights for several other brands from Rossignol skis to Trangia stoves and Wayfarer food.
The company said that the investments would have an impact of about $8.0 million on its pre-tax earnings in 2010, and about 65 percent of this would be a one-time cost. However, the moves should contribute incremental sales and lift the company’s gross margin, most of which will become apparent from 2011.
Deckers’ total revenues rose by 14.7 percent to $348.0 million in the fourth quarter of last year, boosted by higher direct sales and sales outside the U.S., which compensated for a poor wholesale business. Net income grew by 67.4 percent to $67.7 million. The gross margin was up by 4.5 percentage points to 49.8 percent thanks to the development of the company’s higher-margin retail and e-commerce operations.
Sales abroad nearly doubled, jumping by 96.0 percent to $39.3 million, retail was up by 88.7 percent to $46.6 million and online sales rose by 27.0 percent to $45.9 million. Comparable store sales rose by 29.7 percent, and there were five more stores in 2009. Sales in the U.S. rose by 8.9 percent to $308.6 million.
For all of 2009, the group’s net sales rose by 17.9 percent to $813.2 million and net income increased by 57.9 percent to $116.8 million. On an annual basis, Ugg’s sales rose by 22.3 percent to $711.8 million. Teva dropped by 10.2 percent to $77.7 million. Simple’s sales were down by 17.7 percent to $14.1 million. Its other brands - Ahnu and Tsubo - had turnover of $9.6 million. E-commerce revenues rose by 10.0 percent for the year to $75.7 million. Company-owned retail stores recorded annual growth of 105.3 percent to $79.0 million, with a 27.6 percent increase in comparable store sales.
Deckers’ sales should go up by about 7 percent in the current first quarter and by 11 percent for the full year. Domestic wholesale should be up by the mid single digits. Foreign sales will be partly boosted by the takeover of the distribution in several European countries.It is looking for a double-digit increase in Teva’s sales this year as orders for the spring are at record levels.
Deckers is still forecasting total revenues of $1.1 billion by 2012, even sooner if it makes an acquisition. This would be broken down into $900 million from Ugg, $120 million from Teva and $80 million from other brands.
