Ugg boot owner backs away from sheepskin
Deckers Outdoor Corp has reported third-quarter profit well ahead of analysts' estimates as the use of a lower cost sheepskin substitute in its popular Ugg boots boosted gross margins.
"Ugg Pure has had an immediate impact on enhancing our product line and will result in reduced costs," said Deckers CEO Angel Martinez.
Ugg Pure is wool woven into a durable backing that is being used as a substitute for sheepskin in the lining and footbeds of some of the company's shoes.
The company’s sheepskin costs will drop 10% in 2014, thanks to a drop in prices of the raw material as well as the increased use of Ugg Pure.
"The benefits of Ugg Pure will also extend beyond the brand's core footwear business into adjacent categories like home and allow us to target new consumers, particularly in China," Mr Martinez said.
Sales of Ugg products, which accounted for 87% of Decker's third-quarter revenue, rose 1.3% to $337 million.
