Deckers Outdoor Corporation

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Deckers Outdoor Corporation
Traded as NASDAQDECK
Founder(s) Doug Otto
Headquarters Goleta, CA, United States
Key people Angel Martinez, Chairman/President/CEO
Tom George, Chief Financial Officer
Dave Powers, President, Omni-Channel
Constance Rishwain, President, UGG Australia and TSUBO
Products Footwear, apparel, and accessories
Revenue $1.56 billion worldwide
Employees approx. 3,200
Website deckers.com

Deckers Outdoor Corporation is a footwear designer and distributor based in Goleta, California, United States, founded in 1973 by Doug Otto, a University of California, Santa Barbara student.[1] 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, Tsubo, Ahnu, Hoka One One, and Mozo.[2] Deckers Outdoor Corporation products are sold in more than 50 countries and territories through select department and specialty stores, 120 Company-owned and operated retail stores, and select online stores, including Company-owned websites.

History[edit]

Doug Otto began his career in 1973 making and selling Flip-flops at craft fairs along the West Coast of America. In 1975, Otto visited Hawaii on business to find 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. Otto later named his company Deckers Outdoor Corporation when it went public on the NASDAQ in 1993. Deckers purchased Simple shoes in 1993, UGG Holdings in 1995 and in 2002 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. Deckers acquired Sanuk shoes in 2011 and HOKA ONE ONE in 2012.[3]

Deckers is considered a niche market supplier due to the dominance of UGG boots in its sales, and as such the company is more reliant than traditional clothing manufacturers on its products remaining fashionable.[4] UGG boots, a high fashion luxury item, were Deckers primary source of revenue in 2010, accounting for 77% of net sales and 80% of the company's revenue.[4] In the first few years of the worldwide economic downturn which started in 2008, Deckers was praised by analysts for continuing to show rapid growth.[citation needed] 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. While 2012 annual revenue remained approximately the same as the prior year, profit was down 36.1% from 2011 while share prices dropped 62%. In 2012, UGG boots accounted for 87% of the company's revenue with some analysts expressing concern that UGG was losing its appeal.[5][6][7]

Corporate structure[edit]

Deckers corporate subsidiaries include:[8]

  • Deckers Consumer Direct Corporation, an e-commerce corporation located in Flagstaff, Arizona
  • Deckers Europe Limited and Deckers UK LTD, located in the United Kingdom
  • Deckers Macau Limited
  • Deckers Asia Pacific Limited and StellaDeck Fashion Limited, located in Hong Kong
  • Deckers International Limited, located in Bermuda
  • Deckers Japan G.K.
  • Deckers (Beijing) Trading Co., Ltd and Deckers Outdoor (Guangzhou) Consulting Co., Ltd, located in China
  • Deckers Dutch Coöperatie U.A. and Deckers Benelux B.V., located in the Netherlands
  • Deckers France SAS and Deckers France II, located in France
  • Deckers Outdoor Canada ULC
  • Deckers Cabrillo, LLC and Deckers Retail, LLC, located in California

Teva[edit]

Teva
Founded 1984
Founder(s) Mark Thatcher
Products Footwear and accessories
Parent Deckers Outdoor Corporation
Website teva.com
A pair of Teva sport sandals

Geophysicist Mark Thatcher was the inventor of Teva (pronounced "teh-vah" not "tee-vah"[9][10] from the Hebrew word for "nature"). 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 sold the "amphibious utility sandals" as their salesman, selling 200 pairs the first year. Although it was effective watersports footwear, it proved less effective for regular sports as the first Teva users often complained of blisters between the first and second toe 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 now claimed rights over the Teva name and patent, stating that Thatcher was merely an employee of their company. Thatcher took California Pacific to court and won his case the following year, severing links with California Pacific. Tevas were originated in Flagstaff.[11]

In late 1985 Thatcher set up an exclusive licensing agreement with Deckers Corporation to manufacture and distribute Teva sandals. Deckers eventually got 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 was called "Hurricane" and 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[edit]

The basic model consists of a 2-layer sole: The inner sole is softer and serves as the footbed, most of the models come with arch support and Microban Zinc, a technology that prevents odor and kills bacteria.

The outer sole is harder and is formulated to have a good grip on wet surfaces.

The Universal strapping system consists of 3 parts:

  • The toe post: a strap that goes on the frontal part of the sandal, across the toes and in between the inner and outer sole.
  • The heel strap: Goes around the ankle to prevent the sandal from sliding off.
  • The side strap: Connects the toes post and the heel strap on the outer side of the sandal, this prevents the sandal from stretching in awkward positions where injury could occur.

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

Simple Shoes[edit]

Simple Shoes
Founded Morro Bay, United States (1993)
Founder(s) Eric Meyer
Defunct 2011
Headquarters United States
Products Footwear and accessories
Parent Deckers Outdoor Corporation

Simple Shoes, also known as Simple, was an American footwear brand originally founded by Eric Meyer, a native of Morro Bay, CA. Simple Shoes was known for its use of "green" sustainable materials [12] such as bamboo, jute, hemp, recycled PETE, used tires and cork. Deckers purchased a 50% share of Simple Shoes Inc. for $10,000 in 1993. The following year Deckers acquired the remaining 50% interest in Simple for $1.5 million.[13]

As of 2011, Simple Shoes announced that it would "cease distribution."[14]

UGG Australia[edit]

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.[15] 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.[16][17]

Trademark dispute[edit]

UGG is a registered trademark in the US, Europe and many other countries. There have been various disputes within Australia, the United States and Europe about the validity of Ugh/ugg trademark. Deckers trades as Ugg Holdings, Inc. in Australia,[18] where it is known for a trademark dispute over the use of the term Ugg boot.[19]

In 1971, Australian surfer Shane Steadman, began selling ugg boots and registered the name Ugh-boots as a trademark in Australia.[20] 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.[21] 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.[20] 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.[20]

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.[22] 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."[22] 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.[22] A similar challenge was also rejected by a Dutch court.[23]

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,[20] 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.[20] 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.[20]

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.[20][24] 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."[20] 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.[20]

Counterfeit products[edit]

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 on to 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."[25]

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.[26][27] 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.[26]

Sanuk[edit]

Sanuk is a novelty sandal brand based in Southern California acquired by Deckers in 2011. Sanuk, the Thai word for fun,[28] was founded by Southern California in 1997 native Jeff Kelley when he started making sandals out of indoor-outdoor carpet.[29] Sanuk centers itself around a positive lifestyle by advocating the slogan, "Smile,Pass it on!". Sanuk is distributed across the United States and in over 50 countries throughout Europe, Asia, South America and Australia.

References[edit]

  1. ^ Deckers Corporate Website
  2. ^ Deckers.com
  3. ^ "Company History". Deckers Outdoor Corporation. Retrieved 14 April 2014. 
  4. ^ a b Deckers Outdoor 10-K 2010 U.S. Securities and Exchange Commission Deckers Outdoor Form 10-K
  5. ^ For Deckers, it's Ugg or Bust! Leo Sun March 3, 2013
  6. ^ Deckers Rallies on New Takeover Buzz investorguide.com November 27, 2012
  7. ^ Deckers Collapses 11% on Weak Guidance investorguide.com February 27, 2012
  8. ^ Deckers SEC filings, 2013
  9. ^ "Teva History". Teva.com. teva.com. 
  10. ^ "Deckers > Teva > History". Deakers > Teva. Deckers.com. 
  11. ^ "Inventor of the Week: Archive". MIT. August 1998. Retrieved 2007-03-28. 
  12. ^ MSNBC, Fall Head Over Feet For Eco-Friendly Shoes, NBC 11, November 21, 2007
  13. ^ "Deckers Outdoor Corporation". Company-Histories.com. 2009. Retrieved 3 December 2013. 
  14. ^ http://www.simpleshoes.com/
  15. ^ Marks, Kathy (17 February 2004). "There's no business like shoe business". The Independent (London, United Kingdom). Retrieved 17 November 2009. 
  16. ^ Brown, Suzanne S. (21 December 2003). "Ooh, so comfy, but ugh! so hard to find". Chicago Tribune. p. 7B. 
  17. ^ Grant, Sarah (28 February 2007). "Pammy puts the boot into her uggs". Daily Telegraph (Sydney, Australia). p. 3. 
  18. ^ Samantha Joseph, "When an Ugg Boot is No Longer an Ugg Boot...", ART+law, Arts Law Centre of Australia, June 2004
  19. ^ A Jumping Dog Productions, The Good, The Bad and The Ugg Boot, Australian Broadcasting Corporation, 2006
  20. ^ a b c d e f g h i Kathy Marks (18 January 2006). "Ugg: How a minnow put the boot into a fashion giant". The Independent. Retrieved 21 May 2010. 
  21. ^ Julie Neigher (20 December 2009). "It looks like Ugg love". Los Angeles Times. Retrieved 19 June 2010. 
  22. ^ a b c Koolaburra Decision
  23. ^ "Dutch Decision, December 2008". 1 April 2010.  (PDF)
  24. ^ Decision of a delegate of the Registrar of Trade Marks with reasons published by IP Australia 16 January 2006
  25. ^ Leask, David. " 'Fuggs' flood the city's market in fake goods." Glasgow Evening Times, July 31, 2010, p. 9.
  26. ^ a b Clifford, Stephanie. "Economic Indicator: Even Cheaper Knockoffs." The New York Times, July 31, 2010.
  27. ^ http://www.brandchannel.com/home/post/2010/08/03/New-Counterfeit-Gambit-Knock-Off-Cheaper-Brands.aspx
  28. ^ Thai Culture in Language
  29. ^ Happy Pursuits: Sanuk In Manila - INQUIRER.net

External links[edit]