Market Overview

Deckers Channel Checkers Bring Good Tidings For Key Season

Share:
Deckers Channel Checkers Bring Good Tidings For Key Season
Related DECK
The Week Ahead: The Year's Biggest Biotech Conference, Host Of IPO Quiet Period Expirations, And Other Coming Catalysts
Apparel Stocks Q3 Earnings On Tap: Deckers Outdoor, Columbia, Carter's

Deckers Outdoor Corp (NYSE: DECK) will deck the halls with cash this year, according to Stifel Nicolaus.

Limited product availability on Nordstromrack.com and Zappos.com suggests Deckers will start the holiday season in a better off-price inventory position than it did last year.

“Better aligned inventories in the U.S. market support a healthy supply/demand dynamic compared to last year, when we believe UGG off-price proliferation undermined full-price selling through DTC, and limited reorders with key wholesale accounts,” Stifel analyst Jim Duffy wrote in a Friday note.

Management’s progress in clearing low-quality platforms sets the stage for margin improvement, inspiring Stifel to raise its price target from $74 to $80 and reiterated a Buy rating on the stock.

What The Research Says

Stifel’s channel checks revealed a 20-percent year-over-year drop in off-price styles, with a 38-percent dip in the core boots subcategory offsetting a 12-percent increase in non-boot offerings. Deckers’ “Classic I” style sold out of off-price channels by August this year, while last year’s lingering clearance cache cut into full-price sales of other products.

The popular “Classic I” is now unavailable through wholesale distributors, whose off-price selection is largely composed of lower-demand styles.

“Cleaner inventory supports favorable supply/demand dynamics and potentially sets the stage for high margin in-season reorders,” Duffy wrote. “We view tighter distribution as emblematic of a stabilizing foundation.”

Pivotal Research shared similar sentiments. The research firm initiated coverage on Deckers with a Buy rating and $80 price target Thursday.

At the time of publication, Deckers was trading at $70.22.

Related Links:

Deckers Responds To Marcato Letter Calling For Board Changes

Why Canada Goose Shares Fell After A Big Q1 Beat

Latest Ratings for DECK

DateFirmActionFromTo
Oct 2017Morgan StanleyMaintainsEqual-Weight
Oct 2017BuckinghamMaintainsNeutral
Oct 2017CitigroupMaintainsNeutral

View More Analyst Ratings for DECK
View the Latest Analyst Ratings

Posted-In: Jim Duffy Stifel NicolausAnalyst Color Long Ideas Price Target Reiteration Analyst Ratings Trading Ideas Best of Benzinga

 

Related Articles (DECK)

View Comments and Join the Discussion!