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Here's Why Deckers (DECK) Looks Promising Post Q3 Earnings

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Deckers Outdoor Corporation (DECK - Free Report) appears to be a solid bet, given the company’s focus on expanding brand assortments, introducing innovative line of products, targeting consumers digitally and optimizing omni-channel distribution.

Backed by all these factors, the company delivered robust third-quarter fiscal 2019 results, wherein both the top and bottom line surpassed the Zacks Consensus Estimate for the eighth straight time. Both the metrics also grew on a year-over-year basis. This impressive show prompted management to raise its fiscal 2019 view. Markedly, the stock has gained approximately 14% since the announcement of its third-quarter results. (Read: Deckers Tops Q3 Earnings & Sales Estimates, Raises View)

In the past month, shares of this Goleta, CA-based company have rallied 23% compared with the industry’s 7.3% growth.



All said, let’s take a closer look at the aspects driving this Zacks Rank #1 (Strong Buy) stock, which also flaunts a VGM Score of A.

Omni Channel Expansion Bodes Well

In sync with the changing trends, Deckers has been constantly developing its e-commerce portal to capture incremental sales. Also, the company has made substantial investments to strengthen online presence and open smaller concept omni-channel outlets. This apart, the company’s focus on expanding programs — Retail Inventory Online; Infinite UGG; Buy Online, Return In Store; and Click and Collect — to enhance customers’ shopping experience is encouraging. Moreover, Deckers is making efforts to bolster its portfolio.

Other Strategic Endeavors

Deckers is focusing on product and marketing strategies that are more skewed toward customers. In this regard, it is imperative to mention that the company is implementing customer relationship management (CRM) software and concentrating on loyalty program. Also, the company is emphasizing on expansion of its product categories according to the customer purchasing trends. In order to capture incremental sales and margins the company is selling directly to wholesale customers.

Meanwhile, Deckers is on track with endeavors to drive long-term growth. Its store-fleet optimization plan emphasizes on striking the right balance between digital and physical stores. To do this, Deckers had earlier unveiled plans to close approximately 30 to 40 outlets over the next two years. By fiscal 2020, Deckers expects company-owned fleet of approximately 125 stores worldwide. These actions are likely to boost profitability and shareholder returns as well as enhance brand and store performances. Clearly, Deckers is likely to continue with its stellar show in the upcoming quarters, which is quite evident from management’s encouraging outlook.

For fiscal 2019, management anticipates net sales to be in the band of $1.986-$2.0 billion, up from its prior projection of $1,935-$1,960 million. Adjusted earnings per share are projected to be $7.85-$7.95 compared with $6.65-$6.85 anticipated earlier. Gross margin for the fiscal year is anticipated to be above 50.5%. Further, operating margin is envisioned to be in the range of 14.5-14.7%.

Other Key Picks

Rocky Brands, Inc. (RCKY - Free Report) delivered average positive earnings surprise of 53.3% in the trailing four quarters. The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Wolverine World Wide, Inc. (WWW - Free Report) delivered average positive earnings surprise of 16.5% in the trailing four quarters. It has a long-term earnings growth rate of 10% and a Zacks Rank #2.

Steven Madden, Ltd. (SHOO - Free Report) has a long-term earnings growth rate of 10.7% and a Zacks Rank #2.

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