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Here's What Makes Deckers (DECK) a Promising Investment Bet

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Deckers Outdoor Corporation DECK appears to be a solid bet, given its sturdy efforts to remain on growth trajectory. We expect the company to continue gaining from its 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. Also, it is on track with its restructuring plan.

For fiscal 2020, management anticipates net sales of $2.150-$2.160 billion, which indicates growth of 6-7% from the year-ago reported figure. The company had earlier projected net sales of $2.115-$2.140 billion. It also forecasts adjusted earnings of $9.40-$9.50 per share. It reported adjusted earnings of $8.84 in fiscal 2019. Management had previously anticipated earnings of $8.90-$9.05 per share.

Driven by these upsides, shares of this Goleta, CA-based company have increased approximately 22% in the past six months, outperforming the industry’s growth of 3.3%. Also, the stock has comfortably outperformed the Consumer Discretionary sector that declined 4% and the S&P 500 Index that advanced 1% in the said time frame. Let’s delve deeper into the major factors that have been driving the company’s performance.


Factors Narrating Deckers’ Growth Story

Deckers has been constantly developing its e-commerce portal to capture incremental sales. The company has made substantial investments to strengthen its online presence and improve shopping experience for customers. It is focused on opening smaller concept omni-channel outlets and expanding programs such as Retail Inventory Online; Infinite UGG; Buy Online, Return In Store; and Click and Collect to enhance customers’ shopping experience. Moreover, the company is making marketing investments to build brand awareness of HOKA ONE ONE and UGG Men’s and UGG Women’s non-core category.

Also, the company is focused on product and marketing strategies that are more inclined toward customers. In this respect, it is implementing customer relationship management (CRM) software and concentrating on loyalty program. Moreover, the company is working toward the expansion of its product categories on consumers’ changing trends. In order to capture incremental sales and margins, it is selling directly to wholesale customers.

Apart from these, the company boasts strong product portfolio — including Koolaburra, HOKA ONE ONE and UGG brands. Sturdy performances in these brands are likely to strengthen its position in the near term as well. Management expects fourth-quarter sales from HOKA ONE ONE brand to increase in the high 40% range. Sales at Teva brand is anticipated to rise in the mid to high teens, while at Koolaburra brand the metric is expected to increase in high teens.

All said, we are optimistic that Deckers’ growth plans will help it to sustain its run. This is also supported by the stock’s Zacks Rank #1 (Strong Buy).

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