Upgraded Research Report on Deckers - Analyst Blog

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On May 9, 2014, we issued an updated research report on Deckers Outdoor Corp. ( DECK ), following its transition period results for the three-months ended Mar 31, 2014.

Deckers changed its fiscal year from Dec 31 to Mar 31. As part of the process, the company has referred to the 3-month period ended Mar 31, 2014 as the transition period. The results of the transition period are compared with the results for the first quarter of fiscal 2013 ended Mar 31, 2013.

For the transition period, Deckers posted a narrower-than-expected loss of 8 cents a share, compared with the Zacks Consensus Estimate of a loss of 16 cents. However, it came below the earnings of 3 cents reported in first-quarter 2013. Further, aided by robust sales of the UGG and HOKA ONE ONEâ brands coupled with stellar comps and E-commerce growth, the company's top line soared 11.7%, surpassing the Zacks Consensus Estimate of $285 million.

Deckers now projects total revenue growth of 13% for fiscal 2015, anticipating sales growth across all its brands. Also, management now envisions a 13.5% rise in 2015 earnings per share. For the first quarter of fiscal 2015, Deckers forecasts 12.0% revenue growth, although it anticipates a loss of $1.33 a share, owing to the fixed costs of the company which are spread evenly over all quarters.

Deckers is targeting profitable markets, and remains focused on product innovations and store augmentation, which is well evident from the surge in its transition period retail store sales, attributable to the opening of 42 new stores year over year. Also, management is eyeing opportunities for store expansion in Asia, and to enhance its presence in countries like South Korea, Taiwan, Mongolia, Singapore and Australia.

The company has also made substantial investments to strengthen its online presence and improve the shopping experience for its customers by developing its E-commerce portal to capture incremental sales.

We believe growing direct-to-consumer operations, expansion initiatives, omni-channel strategies, effective inventory management and optimum capital allocation augur well for Deckers to sustain its growth momentum.

However, the company's excessive reliance on the UGG brand, sluggish macroeconomic factors and unfavorable foreign exchange fluctuations compel us to be on the sidelines.

Deckers currently has a Zacks Rank #3 (Hold).

Key Picks from the Sector

Other better-ranked retail stocks worth investment include Skechers USA Inc. ( SKX ), Carter's, Inc. ( CRI ) and Wolverine World Wide Inc. ( WWW ). While Skechers carries a Zacks Rank #1 (Strong Buy), Carter's and Wolverine carry a Zacks Rank #2 (Buy) each.


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CARTERS INC (CRI): Free Stock Analysis Report

DECKERS OUTDOOR (DECK): Free Stock Analysis Report

SKECHERS USA-A (SKX): Free Stock Analysis Report

WOLVERINE WORLD (WWW): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CRI , DECK , SKX , WWW

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