Joining many other companies that want to use their strong cash better than in capital markets, Deckers Outdoor says it wants to acquire a global lifestyle brand and hopes to find a potential target in the near term.
Deckers performed better than expected in the fourth quarter as revenues continued to be lifted by double-digit growth at its UGG and Teva brands. Much of this growth is being generated by the addition of new products under these brands, and the process will continue this year.
The company expects UGG to grow by about 19 percent and Teva above 20 percent in 2011, contributing to an overall sales increase of 20 percent for the year. Ultimately, the company is targeting a doubling in turnover to $2 billion in 2015, with UGG's sales reaching $1.65 billion, Teva $200 million and its other brands $150 million.
The 20 percent rise in revenues expected for this year will be fueled by higher growth abroad than in the U.S. Incremental sales of about $50 million will be generated by the substitution of distributors in the U.K., the Benelux region and France with a direct wholesale operation. A direct presence in the two markets will also enable the company to develop its local e-commerce sales. The shift in distribution will generate a onetime cost of $8 million, largely in the first quarter.
In the past financial year, Deckers' revenues rose by 23.1 percent to $1,001 million, breaking the $1 billion barrier for the first time. UGG grew by 22.7 percent to $873.1 million and Teva went up by 30.4 percent to $101.3 million. The gross margin widened to 50.2 percent from 45.6 percent. Net profit increased by 37.2 percent to $160.4 million. (more in Shoe Intelligence and The Outdoor Industry Compass).
