On May 9, 2014, we issued an updated research report on
Deckers Outdoor Corp.
), 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
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
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.
Wolverine World Wide Inc.
). While Skechers carries a Zacks Rank #1 (Strong Buy), Carter's
and Wolverine carry a Zacks Rank #2 (Buy) each.
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