Deckers (DECK) Up 19% in 3 Months: What's Driving the Stock?
Deckers Outdoor Corporation DECK clearly appears to be a preferred pick, given its efforts to remain on growth trajectory. Notably, the company is benefiting from its focus on expanding brand assortments, introducing innovative line of products, targeting consumers digitally through marketing and sturdy e-commerce along with optimizing omni-channel distribution.
Notably, shares of this Goleta, CA-based company have surged 19% in the past three months outperforming the industry’s growth of 1%.
Let’s take a closer look at the aspects driving this Zacks Rank #2 (Buy) stock.
Factors Narrating Deckers’ Growth Story
Deckers is focusing on product and marketing strategies that are more skewed toward customers and in this respect it is implementing customer relationship management software and concentrating on loyalty program. Moreover, the company is focusing on expanding its product categories according to the customer purchasing trends. In order to capture incremental sales and margins, it is selling directly to wholesale customers.
The company is constantly developing its e-commerce portal to capture incremental sales. Deckers has made substantial investments to strengthen its online presence and improve shopping experience for its customers. Its focus on expanding programs — Retail Inventory Online; Infinite UGG; Buy Online, Return In Store; and Click and Collect — is an added positive.
Deckers is making efforts to bolster its portfolio. 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.
Impressive performance across HOKA ONE ONE and Koolaburra brands aided fourth-quarter fiscal 2019 results. Improved margins, additional cost savings, early shipment of spring wholesale order, and higher sales related to domestic e-commerce in the UGG brand facilitated the bottom line. Earlier than expected wholesale shipments in the UGG brand led to better-than-anticipated net sales, which also benefited from delivery of spring summer product into the marketplace before time and higher domestic e-commerce sales for the same brand.
Encouraging Sales View
Deckers now anticipates fiscal 2020 net sales to be in the band of $2.095-$2.120 billion, which reflects year-over-year increase of 4-5%. Management guided revenues from UGG brand to be up low-single digit and sales from Teva brand to be roughly flat. Sanuk brand sales are also expected to be roughly flat.
Meanwhile, sales at HOKA ONE ONE brand are projected to be up in mid-20% range, fueled by both the U.S. and international expansion. Koolaburra is expected to post mid-40% to upper-50% growth, benefiting from continued domestic wholesale expansion in the family value chain.
We expect all aforementioned factors to continue bolstering the company’s performance, and help it remain in investors’ good books.
Other Key Picks
The Children's Place, Inc. PLCE has a long-term earnings growth rate of 8% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Zumiez Inc. ZUMZ has a long-term earnings growth rate of 13.5% and a Zacks Rank #2.
L Brands, Inc. LB delivered average positive earnings surprise of 7.6% in the trailing four quarters. It has a long-term earnings growth rate of 11% and a Zacks Rank #2.
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