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Deckers (DECK) in Trouble: What's Behind the Dismal Show?
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Deckers Outdoor Corporation (DECK - Free Report) seems like a ‘touch-me-not’ stock for quite some time now. Shares of this Zacks Rank #5 (Strong Sell) company have underperformed both the Zacks categorized Shoes and Retail Apparel industry and the broader sector in the past six months. The stock declined nearly 11%, while the industry gained 2.4%. Moreover, the Zacks categorized Consumer Discretionary sector increased 12.1% over the same time frame. In addition, it has a Momentum Score of “D.”
What’s Hurting the Stock?
Deckers succumbed to a negative earnings surprise in third-quarter fiscal 2017, after witnessing six straight quarters of earnings beat. The company’s top line also struggled and came below the Zacks Consensus Estimate for the second quarter in row. Moreover, both the top and bottom lines fell year over year.
Analysts pointed that tough retail landscape, soft start to holiday season as well as sluggish sale of UGG boots and shoes hurt the company’s results. Moreover, management hinted that the company’s outlets are witnessing lower traffic.
In fact, this dismal quarterly performance compelled management to provide bleak sales and earnings outlook for fiscal 2017. Now, Deckers expects net sales to decline 5% and projects earnings to be between $3.45 and $3.55 per share. The company had earlier forecasted net sales to decline in the band of 1.5–3% and earnings in the range of $4.05−$4.25 for fiscal 2017.
For the fiscal fourth quarter, net sales are estimated to decline in the band of 5–6%. Also, management envisions bottom line in the band of break-even to a loss of 10 cents per share.
Consequently, estimates were also revised downward over the past 60 days. Currently, the Zacks Consensus Estimate for the fourth quarter and fiscal 2017 are pegged at a loss of 7 cents and earnings of $3.48, respectively, down from 43 cents and $4.16 guided previously.
In addition, Deckers’ over-reliance on the UGG brand remains a matter of concern. Moving ahead, in the event of stagnation or decline of UGG sales growth, Deckers’ overall results are also likely to be adversely affected. This is because, the percentage of contribution from the company’s other brands are too small to offset any slowdown in UGG sales. In third quarter of fiscal 2017, UGG brand net sales had declined 5.3%.
Furthermore, the company remains prone to currency fluctuations, alongside facing intense competition in the footwear industry from other big guns on attributes like style, price, quality, comfort and brand name. These factors might weigh upon the company’s financial performance in the future.
On the basis of the aforesaid factors, we believe it is advisable to stay away from Deckers for the time being until it sparks a turnaround in its performance.
Adidas, with a long-term earnings growth rate of 21.1% has surged a whopping 62.2% in the past one year. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Caleres, which carries a Zacks Rank #2 (Buy) rose nearly 14% over the past one year. Also, it has a long-term earnings growth rate of 11%.
Steven Madden, Ltd., a Zacks Rank #2 stock, has increased roughly 9% in the past six months. Also, it has a long-term earnings growth rate of 12%.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Deckers (DECK) in Trouble: What's Behind the Dismal Show?
Deckers Outdoor Corporation (DECK - Free Report) seems like a ‘touch-me-not’ stock for quite some time now. Shares of this Zacks Rank #5 (Strong Sell) company have underperformed both the Zacks categorized Shoes and Retail Apparel industry and the broader sector in the past six months. The stock declined nearly 11%, while the industry gained 2.4%. Moreover, the Zacks categorized Consumer Discretionary sector increased 12.1% over the same time frame. In addition, it has a Momentum Score of “D.”
What’s Hurting the Stock?
Deckers succumbed to a negative earnings surprise in third-quarter fiscal 2017, after witnessing six straight quarters of earnings beat. The company’s top line also struggled and came below the Zacks Consensus Estimate for the second quarter in row. Moreover, both the top and bottom lines fell year over year.
Analysts pointed that tough retail landscape, soft start to holiday season as well as sluggish sale of UGG boots and shoes hurt the company’s results. Moreover, management hinted that the company’s outlets are witnessing lower traffic.
In fact, this dismal quarterly performance compelled management to provide bleak sales and earnings outlook for fiscal 2017. Now, Deckers expects net sales to decline 5% and projects earnings to be between $3.45 and $3.55 per share. The company had earlier forecasted net sales to decline in the band of 1.5–3% and earnings in the range of $4.05−$4.25 for fiscal 2017.
For the fiscal fourth quarter, net sales are estimated to decline in the band of 5–6%. Also, management envisions bottom line in the band of break-even to a loss of 10 cents per share.
Consequently, estimates were also revised downward over the past 60 days. Currently, the Zacks Consensus Estimate for the fourth quarter and fiscal 2017 are pegged at a loss of 7 cents and earnings of $3.48, respectively, down from 43 cents and $4.16 guided previously.
In addition, Deckers’ over-reliance on the UGG brand remains a matter of concern. Moving ahead, in the event of stagnation or decline of UGG sales growth, Deckers’ overall results are also likely to be adversely affected. This is because, the percentage of contribution from the company’s other brands are too small to offset any slowdown in UGG sales. In third quarter of fiscal 2017, UGG brand net sales had declined 5.3%.
Furthermore, the company remains prone to currency fluctuations, alongside facing intense competition in the footwear industry from other big guns on attributes like style, price, quality, comfort and brand name. These factors might weigh upon the company’s financial performance in the future.
On the basis of the aforesaid factors, we believe it is advisable to stay away from Deckers for the time being until it sparks a turnaround in its performance.
Key Picks
Better-ranked stocks in the same industry include Adidas AG (ADDYY - Free Report) , Caleres, Inc. (CAL - Free Report) and Steven Madden, Ltd. (SHOO - Free Report) .
Adidas, with a long-term earnings growth rate of 21.1% has surged a whopping 62.2% in the past one year. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Caleres, which carries a Zacks Rank #2 (Buy) rose nearly 14% over the past one year. Also, it has a long-term earnings growth rate of 11%.
Steven Madden, Ltd., a Zacks Rank #2 stock, has increased roughly 9% in the past six months. Also, it has a long-term earnings growth rate of 12%.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>