Retailers shift their ad spending from TV, radio and print ads to digital ads.
But rising raw materials costs reduced profits.
The rising prices of sheepskin and raw materials hammered Deckers Outdoor Corp.’s third quarter profits, the company says, although online sales jumped 29.1%
For the quarter ended Sept. 30, Deckers, maker of Ugg and Teva brand footwear and No. 161 in the Internet Retailer Top 500 guide, reported:
- E-commerce sales of $13.3 million, up by about 29.1% from $10.3 million in the third quarter of 2011.
- Total sales of $376.4 million, a 9.2% decrease from $414.4 million.
- Retail sales increased about 12.7% to $39.1 million compared with $34.7 million for the same period last year.
- Same-store sales decreased 13.1%.
- Domestic sales decreased 6.1% to $242.2 million from $257.9 million.
- International sales decreased 14.2% to $134.2 million from $156.4 million.
- Ugg brand sales decreased11.7% to $332.8 million from $376.7 million.
- Teva brand sales increased 21.8% to $17.9 million compared to $14.7 million.
- Sanuk brand sales increased 17.3% to $18.3 million from $15.6 million.
- Net income of $43.1 million, a 30.8% decrease from $62.3 million.
The web comprised about 3.5% of total sales in the quarter, compared with 2.5% in Q3 of last year.
“Over the past two years, we have raised prices on selective key styles to help mitigate the impact of an 80% increase in our sheepskin and raw material costs over this same period,” says Angel Martinez, president, CEO and chairman. “We believe that these selective price increases, particularly during a period of one of the warmest years on record, has pushed us above the consumer’s price-value expectations for the Ugg brand.”
For the first nine months of 2012, the company reported:
- E-commerce sales of $44.8 million, a 13.4% increase from $39.5 million for first three quarters of 2011.
- Total sales of $797.1 million, a 3.1% increase from $773.4 million.
- Net income of $31.0 million, a 58.5% decrease from $74.7 million.
- Retail sales grew 28.0%, to $99.7 million from $77.9 million.
- Domestic sales were $542.0 million, a 14.6% increase over $473.1 million in the first nine months of 2011.
- International sales were $270.9 million, a 4.8% decrease from $284.7 million.
The online channel comprised 5.6% of total sales in the first three quarter of the year, compared with 5.1% last year.