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Things You Need to Know Before Deckers' (DECK) Q3 Earnings

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Deckers Outdoor Corporation (DECK - Free Report) is slated to report third-quarter fiscal 2020 results on Jan 30, after the closing bell. In the trailing four quarters, this Goleta, CA-based footwear and apparel retailer’s bottom-line has outperformed the Zacks Consensus Estimate by a wide margin. Investors are counting on another beat by Deckers in the to-be-reported quarter. If all goes well, this will be the 12th straight quarter of positive earnings and sales surprise.

In the last earnings call, the company projected third-quarter net sales of $885-$900 million and earnings of $6.30-$6.40 per share.

Key Factors to Note

Deckers has been benefiting from focus on expanding brand assortments, introducing more innovative line of products, targeting consumers digitally through marketing and sturdy e-commerce, and optimizing omni-channel distribution. Further, in keeping with the changing scenario, the company has been making substantial investments to strengthen online presence and open smaller concept omni-channel outlets. The company also has been making marketing investments to build brand awareness of HOKA ONE ONE and UGG Men’s and UGG Women’s non-core category.

Notably, the Zacks Consensus Estimate for sales for HOKA ONE ONE brand is pegged at $111 million, which indicates a substantial improvement from $56.9 million reported in the year-ago period. Meanwhile, the consensus estimate for sales for UGG brand stands at $761 million, which is flat year over year. Evidently, the consensus estimate for total revenues suggests year-over-year growth of 2.8% to $898.6 million.

However, we note that the company has been grappling with falling sales from the Sanuk Brand, which is likely to weigh on third-quarter performance. Management expects reductions in the Sanuk domestic wholesale business on account of the decision to exit the warehouse channel. Moreover, headwinds related to currency, freight expense and higher promotional environment cannot be ignored. These might show on margins and in turn the bottom line.

The consensus estimates for sales for Sanuk and Teva brands are pegged at $8.8 million and $21.9 million, respectively, compared with $12.9 million and $22.9 million reported in the year-ago period. The consensus estimate for earnings is pegged at $6.50, which indicates a decline of 1.4% from the year-ago quarter.

Deckers Outdoor Corporation Price, Consensus and EPS Surprise
 

Deckers Outdoor Corporation Price, Consensus and EPS Surprise

Deckers Outdoor Corporation price-consensus-eps-surprise-chart | Deckers Outdoor Corporation Quote

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Deckers this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Deckers has a Zacks Rank #1 and an Earnings ESP of +3.14%.

3 More Stocks With a Favorable Combination

Here are three other companies you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:

Zumiez Inc. (ZUMZ - Free Report) has an Earnings ESP of +0.24% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

DICK'S Sporting Goods, Inc. (DKS - Free Report) has an Earnings ESP of +12.40% and a Zacks Rank #1.

Ross Stores, Inc. (ROST - Free Report) has an Earnings ESP of +2.84% and a Zacks Rank #2.

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