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Deckers' (DECK) Strategic Endeavors Remain Well on Track

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Deckers Outdoor Corporation’s (DECK - Free Report) focus on expanding brand assortments, introducing more innovative line of products, targeting consumers digitally through marketing and sturdy e-commerce along with optimizing omni-channel distribution bode well.

All these strategic efforts helped the company to deliver robust performance in second-quarter fiscal 2019, wherein the top and bottom lines outpaced the respective expectations.  Both the metrics also improved on a year-over-year basis. This outperformance prompted management to lift sales and earnings view for the fiscal year.(Read: Deckers Beats on Q2 Earnings & Revenues, Guides Up)

Additionally, Deckers has made substantial investments to strengthen online presence and open smaller concept omni-channel outlets in a bid to keep with the changing trends. This apart, the company’s focus 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 to enhance customers’ shopping experience are encouraging. Deckers is making new additions to its portfolio as well.

The company is on track with its strategic endeavours to drive long-term growth. Its store-fleet optimization plan emphasizes on striking the right balance between digital and physical stores. These actions are likely to boost profitability and shareholder returns as well as enhance brand and store performances. Clearly, Decker that shares its space with Rocky Brands (RCKY - Free Report) , NIKE (NKE - Free Report) , Skechers (SKX - Free Report) 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 now anticipates net sales in the band of $1,935-$1,960 million, up from its prior projection of $1,930-$1,955 million. Adjusted earnings are projected in the range of $6.65-$6.85 per share, which portrays an improvement over $5.74 reported in fiscal 2018. The company had earlier forecasted adjusted earnings in the $6.25-$6.45 per share range.

Also, gross margin for the fiscal year is anticipated to be about 50%, with operating margin in the band of 13-13.2%. The company forecasts sales at HOKA ONE ONE brand to be up in the mid to high 30% range. However, management expects revenues from both the UGG and Teva brands to be down in low-single digits, while the same from Sanuk brand is projected to be down in mid-single digit.

Nevertheless, we expect the aforementioned tailwinds to continue strengthening the company’s performance and help it sustain in investors’ good books.

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