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Deckers Outdoor Plummets, Analysts Divided

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Deckers Outdoor Corp (NYSE: DECK) shares tumbled Friday a day after the maker of Ugg boots missed expectations for its fiscal third quarter and cut its outlook.

The company traded recently down more than 18 percent to $67.26 a share.

With about a quarter of the company's revenue coming from its chain of retail outlets, same-store sales fell more than 7 percent in the recent period in a continuing trend.

The retail division is a key element of the the company's plans, according to Credit Suisse Christian Buss, who maintained a Neutral rating Friday, cutting his target nearly 10 percent to $90.

The "primary growth strategy of a maturing brand is now called into question," according to Buss, with the company is slowing its retail expansion and potentially closing under-performing stores.

Decker, which also owns Teva sandals and several other brands, remains heavily dependent on sales of Uggs, which increased 6.5 percent in the recent quarter to $736 million.

Twelve of 22 analysts following Decker rate the shares at Buy, with 10 at hold. Decker's shares are down more than 13 percent from a year ago.

"The long-term fundamentals are on track" Citi's Corinna Van der Ghinst said Friday, trimming her target 2 percent to $93.

The company will post double-digit earnings growth in the next three years on "strong momentum behind its global expansion plans," according to Van Der Ghinst.

Jefferies' Randal J. Konik said the fierce winter of 2014 spurred high sales of fur-lined boots and left Decker with "a tough act to follow" in the recent third quarter.

Moreover, a portion of the company's recent sales miss stemmed from unavailable inventory, "demonstrating that demand is there," said Konik, who maintained a Buy rating, cutting his price target more than 15 percent to $110.

Despite a continued decline in same-store sales at the company's retail segment, Wunderlich's Danielle McCoy noted that profitability per store rose by 40 basis points in the recent period, on tight-fisted promotions.

The strategy "maintains the integrity" of the Ugg brand, according to McCoy, who maintained a Buy rating but slashed her target 26 percent to $89.

Decker on Thursday said unfavorable foreign exchange rates will result in a break-even fourth quarter, compared with its previous forecast for profits of $0.15 a share. It reiterated a forecast that revenue will increase 10 percent.

Latest Ratings for DECK

DateFirmActionFromTo
Feb 2021Cowen & Co.MaintainsOutperform
Feb 2021JefferiesMaintainsBuy
Feb 2021BairdMaintainsOutperform

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