Deckers Outdoor Corporation

Deckers Brands
Public
Traded as NYSE: DECK
S&P 400 Component
Founder Doug Otto and Karl F. Lopker
Headquarters Goleta, CA, United States
Key people

Dave Powers, President & CEO
Angel Martinez, Chairman of the Board
Stefano Caroti, President, Omni-Channel
Tom George, Chief Financial Officer

David LaFitte, Chief Operating Officer
Products Footwear, apparel, and accessories
Revenue $1.56 billion worldwide
Number of employees
 Approx. 3,200 Globally
Website deckers.com

Deckers Brands is a footwear designer and distributor based in Goleta, California, United States, founded in 1973 by University of California, Santa Barbara alumni Doug Otto and Karl F. Lopker.[1][2][3][4] In 1975, the company was incorporated in California under the name Deckers Corporation. In October 1993, Deckers initiated a public offering of stock in its company.

Deckers portfolio of brands includes: UGG, Teva, Sanuk, HOKA ONE ONE, and Ahnu.[5] Deckers Brands products are sold in more than 50 countries and territories through select department and specialty stores, 138 Company-owned and operated retail stores, and select online stores, including Company-owned websites.

History

Milestones

Some key milestones include:[6] In 1973, Doug Otto began his career making and selling flip-flops at craft fairs along the West Coast of the United States.

In 1975, he visited Hawaii on business and found that locals referred to his sandals as "deckas", a slang word based on their striped layered construction that resembled a "deck" of stacked wood. Liking the name, Otto named his brand Deckers.

In 1985, Deckers expanded its range of sandals when it entered into a licensing agreement to produce and distribute Teva sandals.

In 1993, Otto renamed his company Deckers Outdoor Corporation when it went public on the NASDAQ, and Deckers purchased Simple Shoes.

In 1995, Deckers purchased UGG Holdings.

In 2002, Deckers purchased Teva's patents, trademarks, and other assets.

In 2003, Decker's UGG boots became a fashion hit after Oprah Winfrey featured the boots on The Oprah Winfrey Show's Favorite Things segment.

In 2010, Deckers acquired MOZO Shoes, a brand that produced footwear for the culinary industry.

In 2011, Deckers acquired Sanuk shoes.

In 2012, Deckers acquired Hoka One One.

In 2015, Deckers acquired Koolaburra.

Corporate structure

Deckers corporate subsidiaries include:[7]

In Asia

In the Caribbean

In Europe

In North America

Teva

Teva
Founded 1984 (1984)
Founder Mark Thatcher
Products Footwear and accessories
Parent Deckers Brands
Website teva.com
An example of the original pair of Teva sandals, which featured a thong between the toes.
A pair of Teva sport sandals

Geophysicist Mark Thatcher invented Teva (pronounced "teh-vah" not "tee-vah," Hebrew for "nature"טבע[8][9]). While working as a rafting guide in 1982 he noticed the lack of proper shoes for river activities. Sneakers would become heavy when wet and would take days to dry, and flip-flops would slide off feet very easily.

Thatcher added a nylon ankle strap to a traditional thong-style sandal, thus creating the first sports sandal. Thatcher patented his invention and signed a deal with the shoemaker California Pacific to manufacture the shoes, while he marketed the "amphibious utility sandals" as their salesman, selling 200 pairs the first year. Although it was effective water sports footwear, it proved less effective for regular sports, as the first Teva users often complained of blisters between the first and second toes caused by the thong-style strapping system. However, in 1984 a sudden high demand of Teva sandals arose as young Americans found the sandal highly fashionable. California Pacific then claimed rights over the Teva name and patent, stating that Thatcher was merely an employee of their company. Thatcher sued California Pacific and won his case the following year, severing links with California Pacific. He then originated the Tevas company in Flagstaff, Arizona.[10]

In late 1985, Thatcher set up an exclusive licensing agreement with Deckers Corporation to manufacture and distribute Teva sandals. Deckers eventually obtained exclusive rights to Teva, including patent #4,793,075 for the basic design and a trademark for the brand name. The sandal was redesigned, creating the Universal Strapping System. The first model, called "Hurricane", is the basis of all Teva sandals.

On November 25, 2002, Deckers acquired the worldwide Teva patents, trademarks, and other assets from Mark Thatcher. After this transfer, Teva continued to grow under the supervision of the Deckers Outdoor Corporation.

Construction

The basic model consists of a 2-layer sole:

The Universal strapping system consists of 3 parts:

Each strap is connected to the others by triangular "rings"; each strap goes around one side of the ring.

UGG Australia

UGG brand boots, known as UGG Australia in Australia and New Zealand, feature a sheepskin upper with a wool inner lining and a tanned outer surface worn by men and women. Surfing helped popularise the boots outside of Australia and New Zealand, when surfer Brian Smith started selling the boots in the US through UGG Holdings, Inc. in 1979.[11] UGG classic boots have been identified as a fashion trend since the early 2000s in the United States, with celebrities such as Kate Hudson, and Sarah Jessica Parker wearing them.[12][13]

Impact of the UGG brand on performance

Deckers is considered a niche market supplier due to the dominance of the brand boots, a high fashion luxury item, in its sales, and as such the company is more reliant than traditional clothing manufacturers on its products' remaining fashionable.[14]

In the economic downturn of 2008, Deckers continued to show solid earnings and sales growth.[15]

In 2010, UGG boots were Deckers' primary source of revenue, accounting for 77% of net sales and 80% of the company's revenue.[14]

In 2012, Deckers raised prices on its UGG boots to cover the rising cost of materials. However, the resulting decline in sales volume over the first half of 2012 led to a price reduction, which successfully stimulated sales. UGG boots accounted for 87% of the company's revenue with some analysts expressing concern that UGG was losing its appeal. While 2012 annual revenue remained approximately the same as in the prior year, profit was down 36.1% from 2011, and share prices dropped 62%.[16][17][18]

Trademark dispute

UGG is a registered trademark in the US, Europe and many other countries. There have been various disputes within Australia, Europe, and the United States about the validity of Ugh/Ugg trademark. Deckers trades as Ugg Holdings, Inc. in Australia,[19] where it is known for a trademark dispute over the use of the widely used term "ugg boots"(sometimes called uggs).[20]

In 1971, Australian surfer Shane Steadman began selling ugg boots and registered the name Ugh-boots as a trademark in Australia.[21] In 1979 Brian Smith, another Australian surfer, brought several pairs of Australian-made sheepskin boots to the US and began selling them in New York and California.[22] He set up Ugg Holdings Inc. and in 1985 registered a US trademark on a rams head logo with the words "Original UGG Boot UGG Australia. He later acquired the Australian mark from Steadman. In 1995, he sold his interest to Deckers Outdoor Corporation.[21] In 1996 Deckers registered a trademark for "UGG" in the US. In 1999, Deckers began asserting its new trademark and sent cease and desist letters to Australian manufacturers but did not press the issue beyond that.[21]

In 2005, the validity of the UGG trademark was challenged in Federal Court in California; the court ruled for Deckers, stating that consumers in the United States consider Ugg to be a brand name.[23] In his final order, the judge hearing the case stated that, although the defendants had provided anecdotal evidence of the term being used generically, Deckers had countered this by "submitted ... declarations from four footwear industry professionals, each of whom states that 'UGG' is widely recognized in the industry as a brand-name and not a generic term" and that the defendants' evidence "fails to demonstrate that the term 'UGG' is generic."[23] In his finding the judge did not consider whether or not "ugg" was a generic term in Australia or New Zealand, as the doctrine of foreign equivalents only relates to non-English speaking countries.[23] A similar challenge was also rejected by a Dutch court.[24]

It was only in the early 2000s, when demand for ugg boots was soaring, partly as a result of several celebrity endorsements of the UGG brand,[21] and Australian manufacturers began selling uggs over the Internet, that Deckers' law firm Middletons of Melbourne began a serious effort to halt Australian companies from using the word "ugg" in their salesefforts.[21] In 2004, Deckers sent cease and desist letters to 20 Australian manufacturers, and Mortels Sheepskin Factory was prevented from selling uggs on eBay or from using the word in domain names.[21]

In response to these actions by Deckers, Australian manufacturers formed the Ugg Boot Footwear Association to fight the corporation's claim, arguing that "ugg" is a generic term referring to flat-heeled, pull-on sheepskin boots. They further argued that Australian manufacturers had been making and trading this style of boot for decades, including in the US. In 2003, Bruce and Bronwyn McDougall, owners of Uggs-N-Rugs, a Western Australia-based manufacturer, started legal action alleging that Deckers had not actively used the UGH-BOOT registration in Australian commerce for the past three years. Their action was successful in 2006, and the UGH-BOOT registration was removed from the Australian Trademark Registry.[21][25] The officer who heard the case stated that the "evidence overwhelmingly supports the proposition that the terms (ugg, ugh and ug boots) are interchangeably used to describe a specific style of sheepskin boot and are the first and most natural way in which to describe these goods."[21] The ruling only applies in Australia, with Deckers still owning the trademarks in all other jurisdictions, including the US, China, Japan and the European Union.[21]

Counterfeit products

Deckers has also been challenged by the marketing of counterfeit products, principally from China. According to the Glasgow Evening Times in July 2010,

Gangs of criminals have flooded Glasgow with fake footwear. ... Authorities across the west of Scotland have seized hundreds of pairs of the must-have footwear ... Neil Coltart, at Glasgow City Council, said: "These boots come in boxes that look like the real thing, with tags and labels. But the product clearly isn't the quality you'd expecty from Ugg." ... Out of their slick packaging, the boots were clearly not made of Ugg's comfy sheepskin, but a cheap man-made fur. One even had its distinctive Ugg trademark glued onto its heel upside down. Holding up a pair, [Coltart] said: "I think most people would be pretty disappointed if they bought Ugg boots and brought these home."[26]

In 2009, US customs agents confiscated 60,000 pairs of fake UGG boots, and the company took action against 2500 websites that were selling fraudulent products, as well as some 170,000 listings on eBay, Craigslist and similar sites.[27][28] Leah Evert-Burks, director of brand protection for Deckers, told The New York Times: "The consumer is blind as to the source of the product ... Counterfeit Web sites go up pretty easily, and counterfeiters will copy our stock photos, the text of our Web site, so it will look and feel like" the Deckers website.[27]

Sanuk

Sanuk, a novelty sandal brand based in Southern California, was founded in 1997 and acquired by Deckers in 2011[29] for $120 million.[30] "Sanuk" is the Thai word for fun.[31] Founder Jeff Kelley, a Southern California native, started by making sandals out of indoor-outdoor carpet[32][33] and inner tubes.[34] Sanuk promotes a positive lifestyle, as its slogan ("Smile, Pass it On!") suggests.[33] Sanuk's brand is distributed across the United States and in some 70 countries throughout Europe, Asia, South America and Australia.[35][36] Sanuk sponsors a diverse group of professional athletes ranging from surfers Donavon Frankenreiter and Matt Meola, rock climbers Chris Sharma and Daniel Woods, and snowboarder Jeremy Jones.[35] In 2010, Sanuk's "Yoga Mat Sandal" was awarded SIMA's "Footwear Product of the Year".[37]

References

  1. ↑ Deckers Corporate Website
  2. ↑ Leff, Lisa (February 16, 1997). "Money, Fame And Family". The Los Angeles Times. Retrieved October 14, 2014.
  3. ↑ Stewart, Ethan (December 8, 2011). "Diamonds on the Soles of Their Shoes". The Independent. Retrieved October 14, 2014.
  4. ↑ Olsen, Patricia R. (January 23, 2010). "The Joy of a Family Shop". The New York Times. Retrieved October 14, 2014.
  5. ↑ Deckers.com
  6. ↑ "Company History". Deckers Outdoor Corporation. Retrieved 14 April 2014.
  7. ↑ "Deckers SEC filings". Deckers.com. 2013.
  8. ↑ "Teva History". Teva.com. teva.com.
  9. ↑ "Deckers > Teva > History". Deakers > Teva. Deckers.com. Archived from the original on 2011-03-12.
  10. ↑ "Inventor of the Week: Archive". MIT. August 1998. Retrieved 2007-03-28.
  11. ↑ Marks, Kathy (17 February 2004). "There's no business like shoe business". The Independent. London, United Kingdom. Retrieved 17 November 2009.
  12. ↑ Brown, Suzanne S. (21 December 2003). "Ooh, so comfy, but ugh! so hard to find". Chicago Tribune. p. 7B.
  13. ↑ Grant, Sarah (28 February 2007). "Pammy puts the boot into her uggs". Daily Telegraph. Sydney, Australia. p. 3.
  14. 1 2 Deckers Outdoor 10-K 2010 U.S. Securities and Exchange Commission Deckers Outdoor Form 10-K
  15. ↑ http://education.investors.com/daily-stock-analysis/092010-547767-will-triple-digit-earnings-growth-push-deckers-outdoor-into-higher-ground-.aspx
  16. ↑ For Deckers, it's Ugg or Bust! Leo Sun March 3, 2013
  17. ↑ Deckers Rallies on New Takeover Buzz investorguide.com November 27, 2012
  18. ↑ Deckers Collapses 11% on Weak Guidance investorguide.com February 27, 2012
  19. ↑ Samantha Joseph, "", ART+law, Arts Law Centre of Australia, June 2004
  20. ↑ Australian Broadcasting Corporation (2006). "The Good, The Bad and The Ugg Boot". A Jumping Dog Productions.
  21. 1 2 3 4 5 6 7 8 9 Kathy Marks (18 January 2006). "Ugg: How a minnow put the boot into a fashion giant". The Independent. Retrieved 21 May 2010.
  22. ↑ Julie Neigher (20 December 2009). "It looks like Ugg love". Los Angeles Times. Retrieved 19 June 2010.
  23. 1 2 3 Koolaburra Decision
  24. ↑ "Dutch Decision, December 2008". 1 April 2010. (PDF)
  25. ↑ Decision of a delegate of the Registrar of Trade Marks with reasons published by IP Australia 16 January 2006
  26. ↑ Leask, David. " 'Fuggs' flood the city's market in fake goods." Glasgow Evening Times, July 31, 2010, p. 9.
  27. 1 2 Clifford, Stephanie. "Economic Indicator: Even Cheaper Knockoffs." The New York Times, July 31, 2010.
  28. ↑ http://www.brandchannel.com/home/post/2010/08/03/New-Counterfeit-Gambit-Knock-Off-Cheaper-Brands.aspx
  29. ↑ http://www.deckers.com/company/history
  30. ↑ http://www.utsandiego.com/news/2011/sep/12/entrepreneur-put-best-foot-forward/
  31. ↑ Thai Culture in Language
  32. ↑ Happy Pursuits: Sanuk In Manila - INQUIRER.net
  33. 1 2 http://www.sanuk.com/history.html
  34. ↑ http://www.zappos.com/b/sanuk/brand/556
  35. 1 2 https://www.facebook.com/SanukFootwear/info
  36. ↑ http://www.pinterest.com/sanukfootwear/
  37. ↑ http://www.simaimageawards.com/pastwinners.html
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