QUOTE AND NEWS
Market Intelligence Center  6 hrs ago  Comment 
After closing Monday at $85.37, Deckers Outdoor Corp (DECK) presents an attractive opportunity to get a 6.49% return in just 67 days, which is an annualized return of 35.37% (for comparison purposes only). To enter this trade, sell one Dec. '14...
The Market Financial  Oct 6  Comment 
Talk about some wild drops for Deckers Outdoor Corp (NYSE:DECK) shares recently. Today the stock is tanking by more than 7% as holders of the equity are dumping it on higher than average volume. This is coming just a few days after Deckers Outdoor...
Clusterstock  Oct 2  Comment 
Since the early days of the internet, retail banks have feared the day when customers would turn away from traditional brick-and-mortar bank branches. With the rise of mobile banking, it's definitely starting to happen.  BI Intelligence finds...
Market Intelligence Center  Oct 1  Comment 
Tuesday’s trading in Deckers Outdoor Corp (DECK) gives options traders an opportunity for a 3.96% return. By selling the Nov. '14 $92.50 call and buying the Jan. '16 call at the $40.00 level for a net debit of $50.50, traders will book a profit...
Benzinga  Oct 1  Comment 
Analysts at Wunderlich initiated coverage on Deckers Outdoor (NASDAQ: DECK) with a Buy rating. The target price for Deckers Outdoor is set to $121. Deckers Outdoor shares have jumped 44.16% over the past 52 weeks, while the S&P 500 index has...
SeekingAlpha  Sep 26  Comment 
By InvestAlike: Deckers Outdoor Corp. (NYSE:DECK) designs, markets and distributes innovative footwear, apparel and accessories that are developed both for everyday casual lifestyle and high-performance activities. The company is best known for...
SeekingAlpha  Sep 20  Comment 
By Zacks Investment Research: Deckers Outdoor Corporation (NYSE:DECK) is bucking the negative retail trends as its strong brands powered it to record sales in the 2015 fiscal first quarter. This Zacks Rank #1 (Strong Buy) also raised...
Market Intelligence Center  Sep 19  Comment 
MarketIntelligenceCenter.com's patented algorithms have selected a trade on Deckers Outdoor Corp (DECK) that returns 6.57% in 64 days for an annualized return rate of 37%. This diagonal spread pairs a short position in the Nov. '14 $95.00 call,...
TheStreet.com  Sep 11  Comment 
NEW YORK (TheStreet) -- TheStreet's Jim Cramer talks aboutaLululemon'sa earnings and says he learned during his time on the hedge fund desk that if a stock moves up double-digit percentage after it beats trimmed estimates, then investors missed...
Capital Essence's Investment Blog- 錢途集團 » Page not found  Sep 11  Comment 
based upon recent trading action, the S&P could be in a process of establishing an important near-term low where the next upswing will be based and launched. However, a close above the lower edge of the pink band is required before there is any...




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Deckers Outdoor Corporation (NASDAQ:DECK) makes niche footwear, such as sport sandals and luxury sheepskins. Like most clothing manufacturers, Decker's is subject to both the fickle fashion tastes of its consumers and general economic conditions. These vulnerabilities take on new dimensions for Deckers, however, due to the unique nature of its business. The company's main product is its UGG boot, a trendy sheepskin boot that accounts for three-quarters of its sales. The company's reliance on a single product, however, means that any shift consumer fashion preferences away from sheepskin boots will have a dramatic impact on its business. Moreover, a large part of the company's customer base consists of young middle income women, and this increases the company's sensitivity to economic conditions. The UGG boot can cost up to $300 and as such is considered a luxury by the company's customers. As a result, during downturns, UGG will be the first thing to get the boot. The company earned $265 million in revenue and $31 million i net income in 2009.[1]

Company Overview

The company seeks to offer footwear that is distinctive and appeals broadly to men, women and children. Its products are sold through domestic retailers, international distributors, and directly to end-user consumers through its websites and catalogs. Business for Deckers Outdoor is seasonal, with the highest percentage of Teva brand net sales occurring in the first and second quarters of each year and the highest percentage of UGG brand net sales occurring in the third and fourth quarters. To date, the Simple brand has not had a seasonal impact on the Company.

Products[2]

The company's products are sold under Teva, Simple, and UGG brand names. T

  • UGG - is the company's luxury comfort brand and the category creator for luxury sheepskin footwear.
  • Teva - is the company's outdoor performance and lifestyle brand and pioneer of the sport sandal market.
  • Simple - as a response to the massive amount of waste produced by the footwear industry, the Simple brand launched a new collection of sustainable footwear called Green Toe®. Green Toe represents a revolutionary shift in thinking about footwear by building a shoe from the inside out using sustainable materials and processes.

Business Growth

FY 2009 (ended December 31, 2009)[1]

  • Net sales fell 13% to $265 million.
  • Net income increased 2% to $31 million.

Trends and Forces

Consumer preferences for sheepskin determine DECK's success

The retail business depends on a company's ability to react to the rapidly changing fashion tastes of consumers and to provide appealing merchandise in a timely and cost effective manner. Specifically for Deckers Outdoor, the continued strength of Teva, UGG and Simple brands is paramount. The success of Deckers depends on UGG boots remaining fashionable. If UGG boots were ever to go out of style, as is often the case with fashion trends, Deckers could potentially lose up to 80% of its revenue. However, some features of the UGG boot that have allowed it to persist longer than most fashion trends of this kind, is that it comfortable, and, due to the sheepskin, allows a "breathability" that keeps the foot warm in cold temperatures and cool in the summer.

DECK has greater exposure to U.S. economic cycles than other retailers

A depressed economy hurts businesses that appeal to niche markets and rely on a consumer’s disposable income. Deckers is a niche market because their UGG boots, their primary source of revenue, at upwards of $200 are a luxury brand of shoe. Consumers can find cheaper shoes, even cheaper UGGs (albeit it knock-offs) if need be. Furthermore, because a significant portion of Deckers' consumers are in the middle class, Deckers will face a difficult 2008 if the economy goes through a recession as predicted.

Limited resources for supply of sheepskin

Sheepskin, which is in high demand and limited supply, is the principal raw material for most of Deckers' UGG brand products. These skins are available only during the Spring lambing season. Several problems that sheep tend to suffer from are having about a 10% natural fatality rate and many births which are still born. Two suppliers provided all of the sheepskin purchased by Deckers' independent manufacturers.[3] Furthermore, sheep are susceptible to hoof and mouth disease, which can result in the extermination of an infected herd. Additionally, the supply of sheepskin can be adversely impacted by weather conditions and harvesting decisions.

DECK is almost completely reliant the UGG boot

The success of Deckers Outdoor is linked with the success of the UGG boot, which represents 77% of their net sales. In 1998 the UGG boot began to be marketed as a high fashion luxury item with price tags of up to several hundred dollars. The success of UGGs took off as more celebrities bought into the comfortable lifestyle and were pictured in more and more magazines. However, aside from being a trendy boot, the UGG is generally recognized as comfortable and, as a result of 100% sheepskin, breathable. Deckers believes that the luxury and comfort features of UGG brand products will continue to drive long-term consumer demand, however, as a result of the significant fashion element to UGG brand they seek to prolong its longevity by offering a broader product line suitable for wear in a variety of climates and occasions and by limiting distribution to selected higher-end retailers. As part of this strategy, They have increased their product offering to approximately 150 styles for men, women and children.

Competition

A number of Deckers' competitors have significantly greater financial resources, as well as greater brand awareness in the footwear market. Competitors include athletic and footwear companies, branded apparel companies and retailers with their own private labels. Two of note are Nike (NKE) and The Timberland Company (TBL).

References

  1. 1.0 1.1 DECK 2009 10-K "Selected Financial Data" pg. 24
  2. DECK 2009 10-K "Products" pg. 3-4
  3. DECK 2009 10-K pg. 14
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