Deckers Brands has been looking into selling itself for more than six months, but it’s halting the active search for a deal.
The California company, which owns Ugg boots as well as shoe brands Teva, Ahnu, Sanuk and Hoka One, said in April it was mulling a transaction that could see a full sale of Deckers, but a subsequent search and inquiries with at least 90 potential buyers failed to turn up a deal.
“The board remains open to considering strategic and financial alternatives as part of its ongoing efforts to enhance stockholder value, but will not actively pursue a sale of the entire company at this time,” Deckers wrote in a statement.
Board chairman John Gibbons added that the sale review process was “comprehensive” and Deckers gauged the interest of domestic and international companies, but he reiterated that Deckers is “open” to some sort of transaction, even though an active hunt is over.
Without a deal to be had, Gibbons said Deckers is staying focused on its “long-term business optimization plan.”
“We stand fully behind Deckers’ strategic plan, portfolio of iconic brands, ongoing cost improvement initiatives, and leadership team,” Gibbons said. “The board is focused on enhancing stockholder value and approaches that objective with an open mind.”
With that, Gibbons said the board also authorized an increased stock repurchase program of $400 million, from an original $65 million, in an effort to improve profits. The program is expected to be completed by 2020, with about $100 million repurchased by March.
“The strength of our balance sheet and our conviction in our future prospects makes this an appropriate time to repurchase stock and return capital to stockholders,” Gibbons added.
The repurchase will be funded through available cash and “modest incremental leverage,” Deckers said.
Earlier this year, Deckers embarked on a plan to cut $100 million in costs, and chief executive officer Dave Powers said the company’s “strategic initiatives position us well to achieve the operating profit targets established for fiscal 2018 and longer-term.”
But sales are still lagging. Deckers released financial figures for its second fiscal quarter showing net sales down by 0.7 percent to $482.5 million.
Deckers longtime star brand Ugg saw sales fall by 2.9 percent during the quarter, while sales of sandal brand Sanuk fell by 19.3 percent.
Profits improved, however, with operating income for the quarter coming in at $67.4 million from $54 million a year ago, partly attributable to a 34.4 percent increase in sales of its Hoka One One sneakers and a 24.9 percent increase in its resurgent Teva brand.
Wholesale sales for the quarter fell by 2.2 percent to $391.2 million, but direct-to-consmer sales rose 6.2 percent to 91.3 million, while comparable sales rose 3.7 percent.
Even with a mixed sales picture and apparently wobbly financial position, Deckers upped its full-year financial outlook. The company expects net sales to rise between 1 and 2 percent.
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