Uggs classic

The forward-looking statements made on this call are based on currently available information, and because this business is subject to a number of risks and uncertainties, some of which may be beyond its control, actual operating results in the future may differ materially from the future financial performance expected at the current time. Deckers has explained some of these risks and uncertainties in its earnings press release and in its SEC filings, including the Risk Factors section of its annual report on Form 10-K, and its other documents filed with the SEC. Listeners are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. The company undertakes no obligation to publicly release or update the results of any revisions to forward-looking statements. I would now like to turn the conference over to the President, Chief Executive Officer and Chairman of the Board of Directors, Mr. Angel Martinez. Please go ahead, sir.

Good afternoon, and thank you to everyone for joining us today. With me on the call is Zohar Ziv, Chief Operating Officer; and Tom George, Chief Financial Officer.As you saw from our press release, first quarter sales and earnings came in ahead of projections. The upside was driven primarily by better-than-expected consumer demand for the UGG brand in both our wholesale and direct-to-consumer channels. This was partially offset by some temporary softness in the Sanuk brand’s international business due primarily to inventory buildup at some key distributors.Overall, we are pleased with our start to the year and feel good about the strategic direction of our brands. For the UGG brand, sell-through of classics, as well as casual slippers and spring fashion boots performed very well in double digits on a weekly basis throughout the quarter at key accounts, buoyed in part by colder temperatures across much of the U.S. versus the same period a year ago. In addition, several new spring casual styles have sold extremely well as consumers responded favorably to our new introductions carrying more attractive opening price points. The Mara, the Inda and the Liza [ph] casuals are selling in double digits, all in the $70 to $100 retail price points. The brands‘ continued momentum following the solid end to 2012 further validates our belief in the strength of the UGG brand and the desirability of our growing product collections.

Ugg boot-maker Deckers reported awful third quarter results Thursday afternoon. Revenue fell 9% year-over-year to $376 million, which was worse than consensus estimates. Earnings fell 26% year-over-year to $1.18 per share, roughly in-line with consensus expectation. We are placing shares of the firm under review due to the materially more negative guidance.However, headline numbers were far from the worst developments during the quarter. Gross margins fell 670 basis points year-over-year to 42.3%, negatively impacted by both rising costs and the need to lower prices. We wouldn’t be too worried about this number after the huge surge in sheepskin prices (key input to Ugg boots), but the company’s decision to reposition its pricing is an enormous red flag suggesting demand may be waning. Further, a laundry list of excuses from CEO Angel Martinez frustrated investors and revealed a lack of responsibility for the business‘ performance. Martinez has spoken many times as to how Uggs are a fashion brand, but he proceeded to blame warm weather in the US as one of the primary drivers for the brand’s weakness.