Deckers Outdoor Corp. (NYSE:DECK)

Inventory Turnover

The inventory turnover ratio exhibits a fluctuating pattern over the periods analyzed. Initially, it declined from 2.27 to 1.9 but increased to a peak of 4.21 by March 31, 2021. This was followed by another decrease and subsequent rise, reaching approximately 3.48 by December 31, 2023. These fluctuations indicate variability in how efficiently inventory is being managed, with periods of higher turnover suggesting better inventory utilization and lower holding costs.

Receivables Turnover

The receivables turnover shows a cyclical pattern with notable peaks and troughs. It ranged from lows around 6.1 to highs exceeding 15.8, suggesting seasonal or operational variations in credit management. The highest turnover was observed at June 30, 2020, indicating efficient collection practices, while certain periods such as September 30, 2018, and September 30, 2021, reflect reduced efficiency in collecting receivables.

Payables Turnover

Payables turnover ratios vary considerably within the timeframe, with occasional spikes, notably 7.84 on March 31, 2019, and 6.78 on March 31, 2023. Overall, the ratio tends to oscillate between approximately 2.5 and 4.0 in most periods, indicating variable payment timing strategies. Higher turnover ratios suggest faster payment to suppliers, while lower ratios imply extended payment terms.

Working Capital Turnover

The working capital turnover ratio remains relatively stable throughout the periods, fluctuating between 1.84 and 3.12. A general downward trend is evident around late 2020 with some recovery afterward. This stability suggests a consistent level of efficiency in utilizing working capital to generate sales, although slight declines may indicate periods of increased investment in working capital or slower asset turnover.

Average Inventory Processing Period

The average inventory processing period exhibits inverse behavior relative to inventory turnover. Early periods show higher days, reaching over 190 days, followed by reductions down to approximately 87 days in March 2021. The metric then rises again, surpassing 190 days in late 2022 before declining toward the end of the period. These patterns imply cycles of inventory build-up and depletion, affecting liquidity and carrying costs.

Average Receivable Collection Period

This period varies from a low of around 23 to highs near 60 days. Longer collection periods correspond with lower receivables turnover, indicative of slower collections. Fluctuations suggest periods of lenient credit terms or challenges in receivables management, while shorter periods indicate improved collection efficiency.

Operating Cycle

The operating cycle ranges between 118 and 261 days, reflecting the sum of inventory processing and receivable collection periods. The cycle lengthens during mid-periods, particularly around mid-2019 and late 2022, and contracts around early 2021 and late 2023. These variations impact working capital requirements and signify shifts in operational efficiency.

Average Payables Payment Period

The average payables payment period generally hovers between 47 and 137 days, with peaks suggesting extended payment terms. Notable increases occur around late 2021 and 2022, pointing to strategies to conserve cash by delaying payments. Shorter periods occur intermittently, reflecting quicker settlements with suppliers.

Cash Conversion Cycle

The cash conversion cycle demonstrates considerable volatility, with values spanning from as low as 35 days to above 149 days. Periods of shorter cycles indicate efficient cash flow management by reducing the time between outlay and recovery of cash, notably around early 2021 and end of 2023. Longer cycles occur during mid-2019 and 2022, suggesting periods where cash is tied up longer in operations, potentially affecting liquidity.

Cost of Sales

The cost of sales demonstrates a pronounced seasonal pattern with periodic peaks and troughs generally recurring around the end and the middle of each year. Noticeably, there was a significant rise from June to December in most years, with the peak in December 2022 reaching its highest point of 633,111 thousand USD. Despite fluctuations, the cost of sales generally trended upwards over the examined period, indicating potential growth in sales volume or cost structure changes.

Inventories

Inventories followed a somewhat cyclical pattern, with lower levels typically recorded in the first quarter of each year and higher levels during mid-year or towards the end of some years. A notable upward shift in inventory levels occurred starting from mid-2021, peaking significantly in September 2022 at 925,043 thousand USD, which likely correlates with strategic stock building or increased product demand anticipation. High inventory values in 2022 and early 2023 suggest either expansion or cautious inventory management in response to market conditions.

Inventory Turnover Ratio

The inventory turnover ratio exhibited considerable volatility, reflecting fluctuations in sales efficiency relative to inventory held. Generally, turnover ratios increased in the first quarter and declined towards the middle and end of most years, consistent with seasonal sales cycles. Peaks in turnover ratios, such as 4.21 in March 2021 and 3.48 in December 2023, indicate periods of improved inventory management or higher sales velocity. Conversely, lower turnover values around mid-2022, down to 1.86 in September 2022, point to slower inventory movement during that time.

Overall Trends and Insights

The data indicates a clear seasonality in both cost of sales and inventory levels, aligning with operational cycles. The increasing trend in cost of sales over the years suggests expanding business activity or inflationary pressures impacting costs. Inventory levels rose substantially from mid-2021 through 2022, possibly reflecting strategic inventory accumulation to mitigate supply chain risks or respond to market demand. Meanwhile, the inventory turnover ratio's volatility highlights periods where inventory management effectiveness varied, with some quarters showing strong turnover efficiency and others pointing to slower stock movement.

Net Sales

Net sales exhibit a pronounced seasonal pattern with peaks typically occurring near the end of the calendar year, particularly in the fourth quarter. Over the period analyzed, there is a general upward trend in sales figures, with the highest value recorded in December 2023. Despite seasonal fluctuations, the quarterly sales amounts have markedly increased from mid-2018 through to the end of 2023, suggesting overall growth in revenue generation. Mid-year quarters tend to show lower sales compared to year-end quarters, consistent with cyclical retail demand patterns.

Trade Accounts Receivable, Net

Trade accounts receivable balances demonstrate somewhat irregular fluctuations without a clear upward or downward long-term trend, although spikes often align with quarters that have higher net sales. The highest receivables balance is observed in December 2023, corresponding with the peak in sales during the same period. The variation in receivables suggests adjustments in credit policies or collection efficiency, compensating for the increasing sales volumes.

Receivables Turnover Ratio

The receivables turnover ratio shows significant volatility across quarters, with values oscillating approximately between 6 and 15. This ratio generally decreases during quarters with the largest sales and higher receivables balances, and increases when sales and receivables are lower. There is no consistent directional trend over time, indicating fluctuations in the efficiency of collections relative to credit sales. Periods of higher receivables turnover reflect quicker collection cycles, while lower ratios suggest slower receivables conversion.

Overall Observations

The company experiences strong seasonality in revenues, with consistent year-over-year growth from 2018 through 2023. Correspondingly, trade receivables also increase during high sales periods, though their changes are less systematic. The fluctuating receivables turnover ratio indicates variability in how efficiently the company converts credit sales into cash. This variability might be influenced by changing customer payment behaviors, credit terms, or internal collection processes. The simultaneous increase in sales and receivables at year-end suggests the company manages a larger credit sales volume but should maintain focus on efficient receivables management to optimize cash flows.

Cost of Sales

The cost of sales figures exhibit significant seasonal fluctuations as well as an overall increasing trend from 2018 through 2023. Peaks are typically observed in the fourth quarter of each year, with the highest costs recorded at the end of 2022 and late 2023. Notably, the first quarters generally show reduced costs compared to the preceding quarters, indicating a recurring pattern likely tied to business seasonality.

Trade Accounts Payable

The trade accounts payable demonstrate high variability over the examined period. While the amounts fluctuate quarter-to-quarter, there is a notable upward trend starting in mid-2021, where payable balances increase substantially, reaching peaks in mid-2022 before slightly moderating but remaining elevated compared to earlier years. This suggests that the company might be extending payment terms or experiencing growth in procurement volumes.

Payables Turnover Ratio

The payables turnover ratio shows marked variability with a cyclical pattern correlating inversely with payables levels. The ratio tends to peak in the first quarters of several years, showing accelerated payments or lower payable balances, and dips in other periods, especially mid-year. A notable sharp increase occurred in early 2019 and again in early 2023, indicating periods where payables were settled more rapidly. Overall, the ratio tends to average between approximately 3 and 4 times per year, reflecting a moderate payment cycle duration.

Summary

The interplay between cost of sales, trade accounts payable, and payables turnover reflects typical seasonal and operational dynamics. Cost spikes in the fourth quarters drive higher payable balances seen in subsequent quarters, while payables turnover adjusts in response to changing payables volumes and payment policies. Recent years indicate an expansion phase with increased costs and higher payables levels, alongside fluctuations in payment speed that suggest active working capital management efforts.

Working Capital

The working capital values show a general upward trend over the analyzed period. Starting at approximately 685 million US dollars at mid-2018, it rose with some fluctuations to reach over 1.7 billion US dollars by the end of 2023. There were noticeable increases in certain quarters, for example, a sharp rise observed around late 2020 and again near the end of 2023. Despite some minor declines in mid-2022 and mid-2023, the overall growth indicates improving liquidity and an expanding asset base over time.

Net Sales

Net sales exhibited considerable volatility across the quarters. Initial values were relatively modest but saw significant spikes, particularly towards the end of each year, with the highest spikes occurring in late 2020 and late 2023, where sales exceeded one billion US dollars. Periods such as early 2019 and early 2020 showed declines, likely reflecting seasonal or external market influences. The data suggests that sales performance is influenced by cyclical factors, possibly seasonality, with strong growth toward the end of years and some decline in early quarters. Despite the fluctuations, there is a discernible upward trajectory in sales over the five-year period.

Working Capital Turnover

The working capital turnover ratio fluctuated between approximately 1.8 and 3.1 throughout the observed period. The ratio showed a gradual decline from mid-2018 into early 2021, reaching a low point around the end of 2020, coinciding with a peak in working capital value. Afterward, the ratio resumed a pattern of fluctuation but remained mostly above 2.3, with occasional peaks nearing 2.9 in late 2022. This indicates varying efficiency in using working capital to generate sales. Higher turnover values tend to correspond to periods of lower working capital or higher sales, reflecting more efficient asset utilization, whereas lower turnover ratios suggest accumulation of working capital or relatively lower sales activity in certain quarters.

The analysis of the quarterly financial data reveals notable fluctuations in inventory management efficiency over the observed periods.

Inventory Turnover Ratio

The inventory turnover ratio exhibits considerable variability across quarters, with values ranging from a low near 1.8 to peaks above 4.2. Generally, there is a cyclical pattern where the ratio increases during certain quarters before decreasing again. Notably, the highest turnover ratio appears around the first quarter of 2021, reaching approximately 4.21, indicating a period of stronger inventory movement. However, this is followed by a decline to levels closer to 1.8-2.0 in the subsequent quarters, suggesting slower inventory turnover. Towards the latest quarters, the ratio improves again, reaching values around 3.4 to 3.5, indicating a strengthening in inventory efficiency.

Average Inventory Processing Period

The average inventory processing period, measured in days, corresponds inversely to the inventory turnover ratio, as expected. This period fluctuates between approximately 87 days to near 202 days, signaling variability in how long inventory remains before being sold. Low points in this metric coincide with periods of high inventory turnover, such as around March 2021 when the processing period shortens to 87 days, reflecting rapid stock movement. Conversely, elevated processing periods above 190 days indicate slower inventory cycles, observed notably in mid to late 2018 and again in parts of 2022. Recent quarters show a reduction in the average processing period back to closer to 105 days, aligning with increased turnover.

Overall, the data suggest alternating periods of efficient inventory management with rapid turnover and shorter holding periods contrasted by intervals of slower inventory movement and extended processing times. The presence of these oscillations may indicate seasonal influences, operational adjustments, or market demand shifts impacting inventory control strategies. The recent trend towards higher turnover ratios and reduced average processing periods points to an improvement in inventory handling efficiency in the latest quarters analyzed.

The analysis of the receivables turnover ratio and the average receivable collection period over multiple quarters reveals significant fluctuations with some underlying cyclical patterns.

Receivables Turnover Ratio

The receivables turnover ratio shows considerable variation across the quarters, alternating between higher and lower values rather than demonstrating a consistent upward or downward trend. Periods such as June 30, 2018 (14.74), June 30, 2020 (15.82), and December 31, 2023 (12.42) show peaks in turnover, indicating more efficient collection of receivables during those times.

Conversely, several quarters record markedly lower turnover ratios around 6 to 8, for example September 30, 2018 (6.1), September 30, 2019 (6.24), and September 30, 2022 (7.85). These dips suggest periods of slower collection or possibly higher outstanding receivables relative to sales.

Overall, the fluctuations imply that the company's management of receivables is somewhat volatile with periodic improvements and deteriorations rather than stable performance.

Average Receivable Collection Period

The average receivable collection period, expressed in days, inversely mirrors the turnover ratio as expected. Periods with high turnover ratios correspond to shorter average collection times, indicating faster receipt of payments from customers.

For instance, collection periods are lowest in June 2020 (23 days), June 2018 (25 days), and June 2023 (27 days), coinciding with the high turnover ratio quarters. Conversely, collection times stretch substantially during quarters like September 2018 (60 days), September 2019 (59 days), and September 2020 (54 days), matching the quarters with lower turnover.

This pattern suggests a cyclical nature to the collection efficiency, potentially influenced by seasonal sales variations, credit policy adjustments, or broader economic conditions.

Trend Insights

The data indicates no clear long-term improvement or degradation in receivables management but rather a repeating pattern of efficiency gains followed by regressions. This alternating performance may warrant further investigation into causes such as changes in customer payment behavior, internal credit controls, or external market factors impacting cash flow.

Periods of low turnover and prolonged collection could pose temporary liquidity risks, while periods of high turnover enhance cash flow and financial flexibility.

Maintaining a more stable and consistently high receivables turnover would improve predictability and operational efficiency.

Average Inventory Processing Period

The average inventory processing period exhibits notable fluctuations over the observed timeframe. Initially, it shows a rising trend from 161 days in mid-2018 to a peak of 202 days in late 2019. Subsequently, it decreases to a low of 87 days in early 2021 before rising again to around 189-197 days during late 2022. Recently, it has trended downward to 105 days by the end of 2023. This cyclical pattern suggests variability in inventory turnover efficiency, with periods of slower inventory movement followed by improvements.

Average Receivable Collection Period

The average receivable collection period also reveals a cyclical pattern with moderate variability. Values range roughly between 23 and 60 days. Peaks are observed near mid-2018 and late 2019, reaching 60 and 59 days respectively, indicating longer collection durations during these periods. Conversely, reductions to the low 20s occur roughly in mid-2020 and towards the end of 2023, reflecting more efficient receivables management in those quarters. Overall, the receivable collection period does not show a clear upward or downward long-term trend but fluctuates within a moderate range.

Operating Cycle

The operating cycle duration mirrors the trends found in inventory processing and receivable collection periods. It increases significantly from mid-2018 (186 days) to a peak near the end of 2019 (261 days), indicating lengthened working capital turnover times. After reaching this peak, the cycle shortens sharply to approximately 118 days in early 2021, suggesting improved operational efficiency. Subsequently, it elongates again to over 240 days by late 2022 before shortening back to 134 days at the end of 2023. This pattern reflects alternating phases of operational efficiency and delay, influenced mainly by inventory and receivables management patterns.

The payables turnover ratio and the average payables payment period exhibit noticeable fluctuations over the examined quarterly periods. These metrics reveal variations in the company's payment efficiency and liquidity management concerning its payables.

Payables Turnover Ratio

The payables turnover ratio demonstrates a pattern of cyclical changes, with values oscillating between approximately 2.67 and 7.84. Peaks are observed notably in March of several years (7.84 in March 2019 and 6.96 in March 2020, 6.78 in March 2023), indicating periods where the company accelerated its payments to suppliers, shortening the time liabilities remain outstanding. Conversely, troughs occur mid-year and towards the end of some years, suggesting slower payment activity during these quarters.

Average Payables Payment Period

This metric inversely corresponds to the turnover ratio and fluctuates between roughly 47 days and 137 days. The shortest payment periods occur around the first quarter of the years, notably 47 days in March 2019 and 52 days in March 2020, aligning with peaks in turnover ratio. Extended payment periods around mid-year and the latter parts of the year, such as 137 days in September 2021 and 136 days in September 2022, indicate slower payments to creditors during these spans.

Overall Trends and Insights

There is a clear seasonal or cyclical trend in payment behavior, with faster payables turnover and shorter payment periods typically realized in early quarters, followed by slower turnover and longer payment durations in the mid-to-late quarters. This pattern may reflect cash flow management strategies aligning payments with operating cycles or seasonal business fluctuations.

Overall, the data suggest the company actively manages its payables, adjusting its payment schedule throughout the year, with marked variability that could be driven by operational needs, supplier terms, or liquidity optimization practices.

Average Inventory Processing Period

The average inventory processing period exhibits notable fluctuations over the observed periods. Initially, it showed an increasing trend, peaking around late 2018 and again in mid-2019, followed by a declining phase toward early 2020. Subsequently, there were periods of increase in late 2021 and late 2022, interspersed with shorter declines. The period generally ranges between approximately 87 and 202 days, indicating variability in inventory turnover efficiency with occasional lengthening especially during late 2018, 2019, and 2022.

Average Receivable Collection Period

This metric shows relatively moderate volatility with values generally oscillating between 23 and 60 days. Periods of elevated receivable collection times are observed notably in late 2018, late 2019, and late 2021, suggesting intermittent challenges in collections. Conversely, shorter collection periods are apparent around mid-2020 and mid-2021. Overall, the average receivable collection period maintains a moderate range, reflecting some variability in accounts receivable management.

Average Payables Payment Period

The average payables payment period demonstrates both upward and downward trends over the quarters. Early quarters show elevated payment periods exceeding 100 days, particularly in mid-2019 and late 2021 to mid-2022, indicating longer durations to settle payables during those times. There are shorter payment periods notably in early 2020 and early 2023. The data suggests the company occasionally extends payment cycles, which could impact supplier relationships or reflect cash management strategies.

Cash Conversion Cycle

The cash conversion cycle generally fluctuates between approximately 35 and 149 days. It tends to follow the trend of inventory processing and receivables collection periods, with peaks aligning around late 2018, mid-2019, late 2022, and smaller troughs in early 2021 and late 2023. The lowest observed cycle was near the end of 2023, indicating improved efficiency in converting inventory and receivables into cash. These variations imply ongoing changes in working capital management effectiveness over time.