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Can Deckers' (DECK) Efforts Help Regain Stock Momentum?

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Deckers Outdoor Corporation (DECK - Free Report) targets profitable as well as underpenetrated markets, along with focus on store augmentation. In addition, the company is transitioning to a direct subsidiary model from a distributor model outside the U.S., alongside making substantial investments, to fortify its online presence and improve customers’ shopping experience.

Additionally, Deckers remains focused on opening smaller concept omni-channel outlets and expanding programs like Retail Inventory Online, Infinite UGG, Buy Online, Return In Store, and Click and Collect. Further, the company has been making additions to its portfolio and adopting strategies in order to enhance value of its customers.

Moreover, Deckers’ restructuring plan – focused on realignment of its brands into two groups, consolidating its brand offices for Sanuk and Ahnu brands and optimizing its store fleet – is boding well. We believe that these actions are likely to capture incremental sales, boost profitability and enhance shareholder returns, going forward.

DECKERS OUTDOOR Price and Consensus

Driven by these factors, Deckers’ bottom line has outperformed estimates for the sixth straight quarter, as it reported second-quarter fiscal 2017 results. However, the company’s sales fell short of the Zacks Consensus Estimate, after surpassing the same in the preceding two quarters.

Moreover, management trimmed its fiscal 2017 outlook amid a tough retail landscape. Deckers, now, expects net sales to decline in the band of 1.5–3% and projects earnings between $4.05 and $4.25 per share for fiscal 2017. Earlier, the company had estimated net sales to be flat to down 3% and earnings in the range of $4.05–$4.40. Further, net sales are likely to be flat to down 2%, for the third quarter. Also, third-quarter earnings per share are anticipated in the band of $4.16–$4.28 versus $4.78 delivered in the prior-year period.

Consequently, the Zacks Consensus Estimate for fiscal 2017 and fiscal 2018 has declined 16 cents to $4.16 and 25 cents to $4.50, respectively, in the past 60 days. Also, the Zacks Consensus Estimate for the third quarter decreased 41 cents to $4.22 over the same time frame.

Further, over-reliance on its UGG brand, along with currency headwinds and competition, remain major concerns for the company.

Consequently, we noted that Deckers’ shares have declined 14.2% in the past three months, as against the Zacks categorized Shoes & Retail Apparel industry that fell 6.2%. However, we believe that the aforementioned strategies will take time to reap benefits.



Zacks Rank & Key Picks

Deckers currently has a Zacks Rank #3 (Hold). Some better-ranked stocks include Francesca's Holdings Corporation , Weyco Group, Inc. (WEYS - Free Report) and Caleres, Inc. (CAL - Free Report) .

Francesca's Holdings, with a long-term earnings growth rate of 13.8%, has jumped 87.7% in the past six months. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Weyco Group, which carries a Zacks Rank #2 (Buy), has gained roughly 15.2% year to date.

Caleres, a Zacks Rank #2 stock, has a long-term earnings growth rate of 11%. The stock has surged 42.7% in the past six months.

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