Footwear Retailers Drop On Disappointing Guidance

| About: Deckers Outdoor (DECK)

After the bell on Thursday, two footwear retailers reported their earnings.

Deckers Outdoor (NASDAQ:DECK)

Deckers reported an excellent fourth quarter number but guidance was extremely disappointing.

Deckers reported a blowout revenue number, coming in at $603.9 million, well ahead of the $565 million analysts were expecting. Deckers is known mostly for its UGGs brand, which reported sales of $412.8 million, up almost 38% over last year's period. That is still a large portion of the business reliant on one segment. For the quarter, gross margins came in at 51% compared to last year's 54.2%. Earnings per share came in at $3.18, four cents ahead of expectations.

The beat in the fourth quarter led to the company's full year results exceeding expectations as well. Revenues of $1.377 billion beat expectations for $1.34 billion. Earnings per share of $5.07 beat by three cents per share. UGG sales were $1.202 billion for the year, representing 87% of all revenues.

The company announced it would buy back up to $100 million of its own stock in private transactions, but the buyback was overshadowed by the weak guidance.

Here was the concerning guidance they gave.

  • Full year 2012 revenues expected to be up 15%, while analysts currently expect 19.8% growth.
  • Full year diluted earnings are expected to be flat due to an increase in sheepskin costs, which the company estimates will hurt profitability by $1.40 per share. Current expectations were for $5.79 a share, up from the 2011 number of $5.07.
  • First quarter 2011 revenue guidance of a 19% increase over the 2011 period, much less than the 28.5% currently expected.
  • First quarter diluted earnings per share expected to be down approximately 50% compared to 2011. Analysts were expecting earnings to rise from $0.49 to $0.63.

Obviously, the guidance is extremely disappointing for Deckers. Revenues are not expected to show as much improvement in 2012 as was expected, which is why the stock was hit in the after-hours. Also, the earnings guidance is way below expectations, especially for the first quarter. I've been warning investors for the past few months on Deckers, and today's report was close to my expectations.


Crocs reported a mixed fourth quarter, but it was the poor guidance that did its stock in.

For the fourth quarter, Crocs reported revenues of $203.7 million, which missed analyst expectations of $205.3 million. Earnings per share did increase to 6 cents per share, beating expectations by two cents. For the full year, revenues of $1.0 billion were in-line with expectations and earnings per share of $1.24 beat by a penny.

But, like Deckers, guidance was not good.

  • First quarter revenue guidance was in the range of $263 million to $268 million. Analysts are currently expecting $268.74 million, so Crocs is totally below estimates.
  • Earnings per share are expected to be in the range of $0.24 to $0.26, well below the $0.30 analysts are expecting.

Crocs did not report a great fourth quarter like Deckers did, but the guidance for Crocs was better than Deckers'. However, it was still below expectations.

At time of writing, Crocs was down about 11% in the extended hours trading period and Deckers was down 10%.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.