We upgraded our recommendation on
Deckers Outdoor Corporation
), the designer and producer of footwear and accessories, to
Outperform from Neutral.
Why the Upgrade?
The challenging macroeconomic environment compelled Deckers to
resort to various means for repositioning itself and keep afloat.
Such measures include focusing on new product introductions,
effective cost management and new store openings. This is well
reflected through Deckers' better-than-expected second-quarter
2013 bottom-line results.
The company posted a quarterly loss of 85 cents a share that
fared better than the Zacks Consensus Estimate and management's
guidance due to lower operational expenses. The high note in the
quarter was the 34.2% rise in eCommerce sales.
On the back of robust eCommerce sales trends, Deckers
provided an improved outlook for 2013 with both revenue and
earnings per share projected to increase 8%.
Following sturdy results, the analysts become more
constructive on the stock's future performance. Consequently, the
Zacks Consensus Estimate for 2013 increased 2.4% to $3.80, while
for 2014 it rose 2% to $4.52 per share in the last 60 days.
The earnings surprise history of this Zacks Rank #1 (Strong
Buy) stock also sparks optimism about its future upbeat
performance. Deckers has outperformed the Zacks Consensus
Estimate in the last four quarters by an average of 44.1%.
Deckers is also expanding its footprint by targeting
profitable markets. This is well evident from the company's
retail store sales that rose 29.1%, propelled by the opening of
36 new stores during the second quarter of 2013. Management is
eyeing opportunities for store expansion in Asia, mainly Japan
and China, and seeks to enhance the company's presence in South
Korea, Taiwan, Mongolia, Singapore and Australia.
Other Stocks that Warrant a Look
Not all retail stocks are performing as disappointingly as
Staples. Other stocks worth considering in the retail sector
Brown Shoe Co. Inc.
Skechers USA Inc.
) both carrying a Zacks Rank #1 (Strong Buy), and
) holding a Zacks Rank #2 (Buy).
BROWN SHOE CO (BWS): Free Stock Analysis
CARTERS INC (CRI): Free Stock Analysis Report
DECKERS OUTDOOR (DECK): Free Stock Analysis
SKECHERS USA-A (SKX): Free Stock Analysis
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