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Shares of Deckers Gain Traction on Solid Results and Analyst Notes

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On Thursday, Deckers Outdoor Corp (NASDAQ: DECK) reported financial results for the three month transition period ending March 31, 2014.

Deckers changed its fiscal year from December 31 to March 31. The company refers to this three month period as the transition period.

Summary of Transition Period Results

  • The company reported EPS of $(0.08) versus the estimated $(0.15), beating by $0.07.
  • Revenue came in at $295.7 million versus the estimated $282.13 million.
  • Net sales were up 11.7 percent to $294.7 million compared with $263.8 million for the same period last year.
  • UGG brand sales increased 15.8 percent to $197.6 million. Teva and Sanuk brand sales decreased 9.2 percent and 0.8 percent, respectively.
  • Direct-to-Consumer comparable sales, including worldwide retail and e-commerce sales, increased 16.9 percent over the same period last year.

Transfer of Listing

  • Deckers announced that it will be transferring the listing of common stock from the NASDAQ Global Select Market to the New York Stock Exchange.
  • As stated in the press release, the Board of Directors “determined that the proposed transfer of Decker's common stock listing to the NYSE would be in the best interests of its stockholders, customers, and partners.
  • The company will continue to trade on NASDAQ under the symbol “DECK” until the tentative transfer date of May 5, 2014.

First Quarter 2015 Guidance

  • The company seed first quarter revenues to increase 12 percent over the three month period ending June 30, 2013 calendar year.
  • Deckers expects to report a diluted loss per share of $(1.33).

Full Year 2015 Guidance for the Twelve Months ending March 31, 2015

  • Deckers expects fiscal year 2015 revenues to increase approximately 13 percent.
  • Diluted EPS are expected to increase 13.5 percent.
  • The company expects SG&A expenses as a percentage of sales to be around 36.4 percent.
  • Deckers sees UGG, Teva, and Sanuk brand revenues to increase 11 percent, 11 percent, and 15 percent, respectively.

Analyst Respond

  • Canaccord Genuity analyst Camilo Lyon reiterated a Buy and $103.00 price target on Deckers. Lyon noted the anticipated strong sales of UGG boots and slippers due to the extended cold winter. The analyst remarked on the company's “healthy” position with inventory down 18 percent. Lyon wrote, “In no uncertain terms, this was a solid, clean quarter. In addition, the backlog ending March 31, was up a very strong +19% vs. our 10% estimate driven by strong demand for UGG, HOKA, loungewear, and I Heart UGG product.”
  • Randal Konik, a Jefferies analyst, maintained a Hold position and raised the price target from $75.00 to $78.00. The analyst commented, “Efforts to diversify the product offering & reduce dependence on the December period are already bearing results, as evidenced by strong performance in the past 3 months and increased diversification in Fall pre-bookings. This is likely to be a multi-year initiative but early reads are positive and we believe expanded footwear lines across brands in sneakers, sandals and wedges, coupled with elevated marketing, are resonating well.”
  • ISI Group analyst Omar Saad remains optimistic on Deckers. The analyst noted four main insights which suggests that the company will reap the benefits from its brand investments. He wrote, “1) management noted that the composition of the Fall backlog reflected a much higher mix of fashion boots, casual boots, shoes, slippers, and other non-core product following strong sell-through at wholesale partners this past winter, 2) the company's omni-channel initiatives are driving higher awareness, engagement and sell-through (e-commerce revenues accelerated to +45%, driving a +17% global DTC comp), 3) Deck's wholesale accounts have been responding favorably to sharper price points with improved styling, and 4) the HOKA brand (UGG's first foray into athletic footwear) continues to exceed expectations and appropriately garner significant investment dollars.” ISI has a Buy rating on Deckers with a $95.00 price target.

Stock Movement
Shares of Deckers closed at $78.53 on Thursday. The stock traded as high as $84.30 on Friday, up 7.348 percent, before closing at $83.16.

Latest Ratings for DECK

DateFirmActionFromTo
Oct 2014Morgan StanleyInitiates Coverage onOverweight
Oct 2014Piper JaffrayDowngradesOutweightNeutral
Oct 2014WunderlichInitiates Coverage onBuy

View More Analyst Ratings for DECK
View the Latest Analyst Ratings

Posted-In: Camilo Lyon Canaccord GenuityAnalyst Color Earnings News Guidance Management Analyst Ratings

 

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