Yahoo Finance Deckers (DECK) Rises More Than 65% in a Year: Here's Why
Deckers Outdoor Corporation DECK has exhibited a decent run on the bourses in the past year. The stock has outpaced the Zacks Retail-Apparel and Shoes industry owing to its key strategic initiatives, including product innovation and brand assortment expansion, coupled with a robust focus on the Direct-to-Consumer (DTC) channel. In the said period, shares of this current Zacks Rank #3 (Hold) company have surged 65.4% compared with the industry’s 22.8% growth.
The Zacks Consensus Estimate for the current and next fiscal years’ earnings per share is pegged at $26.87 and $29.68, indicating 38.7% and 10.5% growth from the year-ago levels, respectively. The consensus estimate for the current and next fiscal years’ sales is pegged at $4.2 billion and $4.65 billion, suggesting a 15.9% and 10.6% increase from the prior-year figures, respectively.
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Let’s Dig Deeper
The company has demonstrated impressive expansion within its DTC segment, coupled with a bold strategy to broaden its market penetration through diverse channels. In the third quarter of fiscal 2024, the company experienced a noteworthy 22.7% year-over-year increase in DTC revenues, comprising a substantial 55% of total revenues. This significant uptick underscores Deckers' proficiency in engaging customers across multiple platforms.
Moreover, the company's dedication to tailoring product development, marketing strategies and omnichannel distribution to match consumer preferences has yielded tangible results, thus enhancing both immediate operational performance and the brand's long-term strategic goals.
By actively establishing new stores and venturing into untapped markets, DECK is actively working toward making its brand more accessible and enriching the consumer journey across various touchpoints. Through ongoing enhancements to its DTC capabilities and expansion of its omnichannel presence, the company is poised for growth and heightened market engagement.
Promising Wholesale Business
Deckers' wholesale segment has significantly contributed to its revenue growth and broader expansion initiatives. Despite challenges posed by evolving market dynamics, the wholesale division has shown remarkable resilience, particularly in key regions like the United States and Europe. In the fiscal third quarter, wholesale revenues witnessed an impressive 8.6% year-over-year increase, highlighting this channel's ability to drive additional sales.
This achievement underscores the enduring appeal of Deckers' brand portfolio and its adeptness at nurturing strong partnerships with retail collaborators. Additionally, the wholesale channel plays a pivotal role in amplifying the company's market presence and enhancing brand visibility on a global scale.
Positive Outlook
Deckers' commitment to disciplined brand management and adaptable operational strategies instills confidence in meeting full-year expectations.
For fiscal 2024, DECK anticipates net sales of $4,150 million, up from the previous forecast of $4,025 million, reflecting a 14% increase from fiscal 2023's $3,627 million. Management projects earnings for fiscal 2024 to range between $26.25 per share and $26.50 per share, up from the earlier estimate of $22.90-$23.25 per share. Notably, Deckers reported earnings of $19.37 per share in fiscal 2023.
The company also expects improved profitability in fiscal 2024, with a forecasted gross margin of 54.5%, up from the previously anticipated range of 52.5-53%, indicating a 420-basis points expansion from the previous year. The operating margin is projected to be 20%, representing an increase from the reported figure of 18% in the previous year.
Softness in Teva & Sanuk Brands
Deckers has been grappling with ongoing challenges within its Teva and Sanuk brands, largely due to a subdued demand environment. The third quarter of fiscal 2024 saw a significant decline in sales for Teva, which plummeted 16.2% following a notable 28.4% downturn in the preceding quarter. Similarly, Sanuk experienced a sharp decrease in sales, declining 28.9% during the third quarter.
However, Deckers is well positioned, driven by substantial growth in its DTC channel, particularly with its UGG and HOKA brands, and bolstered by effective e-commerce and omnichannel strategies. Coupled with a robust wholesale performance and an optimistic financial outlook featuring increased net sales and earnings, the company is well-poised for sustained success.
Key Picks
A few better-ranked stocks are American Eagle Outfitters Inc. AEO, Abercrombie & Fitch Co. ANF and The Gap, Inc. GPS.
American Eagle Outfitters is a specialty retailer of casual apparel, accessories and footwear. The company sports a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for American Eagle Outfitters’ current fiscal-year earnings and sales indicates growth of 12.5% and 3.3% from the year-ago period’s reported figures. AEO has a trailing four-quarter average earnings surprise of 22.7%.
Abercrombie & Fitch is a specialty retailer of premium, high-quality casual apparel. The company currently sports a Zacks Rank of 1. ANF has a trailing four-quarter average earnings surprise of 715.6%.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current fiscal-year earnings and sales indicates growth of 19.1% and 5.6% from the year-ago period’s reported figures.
The Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. The company sports a Zacks Rank of 1, at present.
The Zacks Consensus Estimate for The Gap’s current fiscal-year earnings and sales indicates declines of 0.3% and 4.9% from the year-ago period’s reported figures. GPS has a trailing four-quarter average earnings surprise of 180.9%.
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Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report
American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report
Deckers Outdoor Corporation (DECK) : Free Stock Analysis Report
The Gap, Inc. (GPS) : Free Stock Analysis Report
