QUOTE AND NEWS
Benzinga  2 hrs ago  Comment 
Deckers Outdoor Corp (NYSE: DECK) shares suffered Friday on a disappointing earnings outlook for the holiday period but analysts mostly looked on the bright side. Deckers lost 7 percent in the afternoon session Friday, trading at $81.27 per...
TheStreet.com  7 hrs ago  Comment 
NEW YORK (TheStreet) -- Shares of Deckers Outdoor Corp. are down 2.33% to $86.05 in morning trading Thursday after the company issued an update of its third quarter earnings guidance earlier today. The company provided earnings per share...
Benzinga  10 hrs ago  Comment 
Deckers Outdoor Corp. (NYSE: DECK) posted fiscal second-quarter results Thursday that beat analysts expectations with sales and earnings growth of more than 20 percent. But the company's holiday-quarter forecast failed to meet expectations and...
newratings.com  Oct 23  Comment 
WASHINGTON (dpa-AFX) - Deckers Brands (DECK) reported second-quarter net income of $40.73 million or $1.17 per share, compared to $33.06 million or $0.95 per share, last year. On average, 21 analysts polled by Thomson Reuters expected the...
Benzinga  Oct 21  Comment 
Tigress Financial Partners reiterated its Strong Buy rating on Deckers Outdoor Corp (NYSE: DECK). According to analyst Ivan Feinseth, Deckers "continues to demonstrate its leadership in retail by embracing an Omni-Channel strategy and strong...
Market Intelligence Center  Oct 17  Comment 
Deckers Outdoor Corp (DECK) presents a trading opportunity that offers a 5.58% return in just 64 days. A covered call on Deckers Outdoor at the $85.00 level expiring on Dec. '14 offers an assigned return rate of 5.58% or 31.81% annualized. This...
Market Intelligence Center  Oct 16  Comment 
For a hedged play on Deckers Outdoor Corp (DECK) MarketIntelligenceCenter.com’s algorithms selected the Dec. '14 $82.50 covered call for a net debit in the $78.50 area. That is also the break-even stock price for the covered call. This trade...
Benzinga  Oct 15  Comment 
In a report published Wednesday, Wunderlich Securities analyst Danielle McCoy reiterated a Buy rating and $121.00 price target on Deckers Outdoor Corp (NYSE: DECK). In the report, Wunderlich Securities noted, “We are reiterating our Buy...




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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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