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Deckers striding into a $500M year

By   /   Friday, July 25th, 2008  /   Comments Off on Deckers striding into a $500M year

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Although Goleta-based Deckers Outdoors isn’t the first footwear maker to use recycled materials and even hemp in its products, few others are poised to make more than $500 million in sales this year.

Perhaps best known for it sheepskin-lined Ugg boots and Teva sandals, Deckers plans to increase overseas sales in the coming months while using more recycled materials in its burgeoning product line.

“We’re selling shoes and doing something good,” Zohar Ziv, Deckers chief operating officer, told the CPA Law Society of Santa Barbara at a July 17 luncheon at the Canary Hotel.

However, Ziv admitted it costs more to make shoes and sandals from such materials as recycled bicycle tires than it does to use a more common substance such as leather.

“The chemicals used to treat leather [for shoe making] cause a lot of pollution,” he said.
But Ziv said Deckers will continue to use “sustainable” materials because it is part of the company’s mission to be environmentally conscious.

“We’re not a ‘green’ company,” Ziv said. “But sustainability will always be a part of what we do.”
Along with the environment, Ziv said his company is socially conscious in that children are prohibited from working in its factories in China where 99 percent of its products are made.

The presentation to the CPA Law Society was generally what Ziv gives to potential investors. In it, he described how a surfer, Doug Otto, a University of California, Santa Barbara, student, started the company in 1973 by making sandals – a natural product for a surfer to manufacture and sell. Otto retired several years ago, but Deckers lives on with its Teva, Ugg, Simple and new Tsubo lines of sandals, shoes, boots and accessories.

Deckers acquired Carlsbad-based Tsubo earlier this year. A high-end casual footwear company, Tsubo reported $10 million in 2007 sales.
Ziv said Deckers has been able to diversify and remain competitive in the massive international shoe market in recent years by growing internationally from its California base.

Deckers’ sales have spread more evenly across the United States and have even found a toehold in Europe.

International sales are increasingly on Ziv’s mind since Deckers announced a joint venture in China earlier this year. Despite the foreign market push, Deckers isn’t paying less attention to its growing number of domestic customers.

Last year, Deckers opened its fifth retail store in Woodbury, N.Y. It has outlets in Camarillo, Ventura, Wrentham, Mass., and Riverhead, N.Y.
Ziv said since Angel Martinez took over as chief executive officer in 2005, Deckers’ Teva brand has been picking up the pace.

“It was a tired line that was re-engineered,” Ziv said.

“Now, its shoes are based upon proprietary technology.”

Ziv said Deckers’ Simple line of shoes, which it purchased in 1993, “has the biggest potential” because it capitalizes on environmentally friendly materials, such as hemp, and because it appeals to the mid-level shoe market. That segment is that which buys shoes and sandals year round.

Simple products are even sold in health food stores.
They include shoes called Ecosneaks, which are made from recycled tires. “Even though they are more expensive to make, they are good for business,” Ziv said.

Another way Deckers has remained so competitive in such a crowded market is by offering more shoes that can be worn year-round.

iv said more customers across the nation are learning about Deckers’ product lines from its Web site. As a result, e-commerce is increasing as well.

Tom Hilldebrandt, who was named Deckers chief financial officer in April, also spoke to the CPA Law Society.

He said the company could see $750 million in sales in future years. He noted 30 percent of that will probably be in international sales.

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