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Deckers (DECK) Gains 89% in Past Year: Right Time to Buy the Stock?
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Deckers Outdoor Corporation (DECK - Free Report) has experienced a remarkable jump in its stock price over the past year. The stock has surged 88.8%, comfortably outpacing the Zacks Retail-Apparel and Shoes industry’s rise of 30.5%. This strong growth can be attributed to the company's efforts to expand its brand presence and enhance its direct-to-consumer (DTC) channels.
Additionally, Deckers’ emphasis on product innovation and international market expansion has enabled it to outshine the broader Retail-Wholesale sector and the S&P 500 index, which posted growth of 21.9% and 27%, respectively, in the same period.
Technical indicators also support Deckers' robust performance, as the stock is trading above its 50-day and 200-day moving averages, indicating strong upward momentum and price stability. This technical strength reflects positive market sentiment and confidence in DECK's financial health and prospects. The stock currently has a Value Score of A, further validating its appeal.
Image Source: Zacks Investment Research
Decoding the Growth Drivers Behind Deckers
Deckers has thrived by concentrating on profitable markets, driving product innovation, expanding its store footprint and enhancing e-commerce capabilities. The company has broadened its brand offerings, launched innovative products and optimized distribution channels, thereby boosting the popularity of its UGG and HOKA brands, and strengthening its international presence. Deckers aims to elevate HOKA into a multibillion-dollar brand, establish UGG as a global lifestyle brand and further develop its DTC business.
The company’s DTC and omnichannel expansion strategies have been robust, with DTC net sales rising 24% year over year in the first quarter of fiscal 2025. Deckers' success is driven by aligning product development, marketing and distribution with consumer needs, leading to substantial growth. Strategic initiatives, including store openings and targeted market expansions, are increasing brand accessibility and enhancing consumer experiences.
Product innovation remains central to Deckers' strategy, as seen in the launch of the latest styles and collections. The company engages with consumers through brand activations, collaborations and social listening, fostering brand loyalty. Products like the Cielo X1 and Skyward X demonstrate Deckers' commitment to performance and technological advancement.
The wholesale channel continues to be vital, with fiscal first-quarter revenues increasing 21% year over year, particularly strong in the United States and Europe. Deckers' international expansion has also been effective, with international sales rising 20.8% year over year, driven by strong DTC growth and wholesale partnerships, especially in China and the EMEA region. This approach has solidified Deckers' position as a leader in the global footwear market.
DECK’s Strong Financial Position & Shareholder Confidence
Deckers demonstrates strong liquidity, supported by a robust cash position. As of Jun 30, 2024, the company held $1.44 billion in cash and cash equivalents, bolstering its financial flexibility. Notably, it had no outstanding borrowings during this period, underscoring a healthy balance sheet. The net cash flow from operating activities stood at $112.7 million as of Jun 30, 2024.
In the fiscal first quarter, DECK also showed confidence in its financial stability by repurchasing approximately 177,000 shares, totaling $152 million. This move reflects management's commitment to enhancing shareholder value and their confidence in the company’s prospects. As of Jun 30, 2024, DECK had $789.7 million remaining under its share repurchase authorization.
Deckers’ Strong Outlook for Fiscal 2025
The company anticipates a 10% year-over-year increase in net sales for fiscal 2025, reaching $4.7 billion. The HOKA brand is expected to grow 20%, fueled by consumer gains in the DTC channel, expansion with strategic partners, and growth in the international markets. UGG is projected to see mid-single-digit growth, supported by international expansion and a strong U.S. market. Earnings for fiscal 2025 are forecast between $29.75 and $30.65 per share, suggesting growth from the $29.16 reported in the previous year.
Estimate Revision Favoring DECK Stock
The Zacks Consensus Estimate for earnings per share has seen upward revisions, reflecting positive sentiments around Deckers. Over the past 30 days, analysts have increased their estimates for the current and next fiscal years by 2.5% to $31.58 and 2.4% to $35.25 per share, respectively, indicating year-over-year growth rates of 8.3% and 11.6%.
Conclusion
Despite a positive outlook, Deckers anticipates some pressure on the gross margin due to rising freight costs and a return to more typical promotional activities. However, the company has adeptly leveraged its strategic initiatives to achieve substantial growth. By concentrating on expanding its brand presence, enhancing direct-to-consumer channels and driving product innovation, Deckers has significantly strengthened its market position.
Supported by a solid financial foundation and robust shareholder confidence, the company is well-positioned for success. Looking ahead, Deckers expects continued growth for both HOKA and UGG brands. Recent upward revisions in earnings estimates reflect optimism for Deckers. The company currently has a Zacks Rank #2 (Buy), further reinforcing its strong prospects.
Other Key Picks
Some other top-ranked stocks in the retail space are Boot Barn Holdings, Inc. (BOOT - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Steven Madden, Ltd. (SHOO - Free Report) .
The Zacks Consensus Estimate for Boot Barn’s fiscal 2025 earnings and sales indicates growth of 8.9% and 10.7%, respectively, from the fiscal 2023 reported figures. BOOT has a trailing four-quarter average earnings surprise of 7.1%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It has a Zacks Rank of 2 at present. ANF delivered a 28.9% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2024 earnings and sales indicates growth of 52.4% and 11.3%, respectively, from the fiscal 2023 reported levels. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Steven Madden designs, sources, markets and sells fashion-forward name-brand and private-label footwear. It currently has a Zacks Rank of 2.
The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 6.9% and 12.4%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.5%.
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Deckers (DECK) Gains 89% in Past Year: Right Time to Buy the Stock?
Deckers Outdoor Corporation (DECK - Free Report) has experienced a remarkable jump in its stock price over the past year. The stock has surged 88.8%, comfortably outpacing the Zacks Retail-Apparel and Shoes industry’s rise of 30.5%. This strong growth can be attributed to the company's efforts to expand its brand presence and enhance its direct-to-consumer (DTC) channels.
Additionally, Deckers’ emphasis on product innovation and international market expansion has enabled it to outshine the broader Retail-Wholesale sector and the S&P 500 index, which posted growth of 21.9% and 27%, respectively, in the same period.
Technical indicators also support Deckers' robust performance, as the stock is trading above its 50-day and 200-day moving averages, indicating strong upward momentum and price stability. This technical strength reflects positive market sentiment and confidence in DECK's financial health and prospects. The stock currently has a Value Score of A, further validating its appeal.
Image Source: Zacks Investment Research
Decoding the Growth Drivers Behind Deckers
Deckers has thrived by concentrating on profitable markets, driving product innovation, expanding its store footprint and enhancing e-commerce capabilities. The company has broadened its brand offerings, launched innovative products and optimized distribution channels, thereby boosting the popularity of its UGG and HOKA brands, and strengthening its international presence. Deckers aims to elevate HOKA into a multibillion-dollar brand, establish UGG as a global lifestyle brand and further develop its DTC business.
The company’s DTC and omnichannel expansion strategies have been robust, with DTC net sales rising 24% year over year in the first quarter of fiscal 2025. Deckers' success is driven by aligning product development, marketing and distribution with consumer needs, leading to substantial growth. Strategic initiatives, including store openings and targeted market expansions, are increasing brand accessibility and enhancing consumer experiences.
Product innovation remains central to Deckers' strategy, as seen in the launch of the latest styles and collections. The company engages with consumers through brand activations, collaborations and social listening, fostering brand loyalty. Products like the Cielo X1 and Skyward X demonstrate Deckers' commitment to performance and technological advancement.
The wholesale channel continues to be vital, with fiscal first-quarter revenues increasing 21% year over year, particularly strong in the United States and Europe. Deckers' international expansion has also been effective, with international sales rising 20.8% year over year, driven by strong DTC growth and wholesale partnerships, especially in China and the EMEA region. This approach has solidified Deckers' position as a leader in the global footwear market.
DECK’s Strong Financial Position & Shareholder Confidence
Deckers demonstrates strong liquidity, supported by a robust cash position. As of Jun 30, 2024, the company held $1.44 billion in cash and cash equivalents, bolstering its financial flexibility. Notably, it had no outstanding borrowings during this period, underscoring a healthy balance sheet. The net cash flow from operating activities stood at $112.7 million as of Jun 30, 2024.
In the fiscal first quarter, DECK also showed confidence in its financial stability by repurchasing approximately 177,000 shares, totaling $152 million. This move reflects management's commitment to enhancing shareholder value and their confidence in the company’s prospects. As of Jun 30, 2024, DECK had $789.7 million remaining under its share repurchase authorization.
Deckers’ Strong Outlook for Fiscal 2025
The company anticipates a 10% year-over-year increase in net sales for fiscal 2025, reaching $4.7 billion. The HOKA brand is expected to grow 20%, fueled by consumer gains in the DTC channel, expansion with strategic partners, and growth in the international markets. UGG is projected to see mid-single-digit growth, supported by international expansion and a strong U.S. market. Earnings for fiscal 2025 are forecast between $29.75 and $30.65 per share, suggesting growth from the $29.16 reported in the previous year.
Estimate Revision Favoring DECK Stock
The Zacks Consensus Estimate for earnings per share has seen upward revisions, reflecting positive sentiments around Deckers. Over the past 30 days, analysts have increased their estimates for the current and next fiscal years by 2.5% to $31.58 and 2.4% to $35.25 per share, respectively, indicating year-over-year growth rates of 8.3% and 11.6%.
Conclusion
Despite a positive outlook, Deckers anticipates some pressure on the gross margin due to rising freight costs and a return to more typical promotional activities. However, the company has adeptly leveraged its strategic initiatives to achieve substantial growth. By concentrating on expanding its brand presence, enhancing direct-to-consumer channels and driving product innovation, Deckers has significantly strengthened its market position.
Supported by a solid financial foundation and robust shareholder confidence, the company is well-positioned for success. Looking ahead, Deckers expects continued growth for both HOKA and UGG brands. Recent upward revisions in earnings estimates reflect optimism for Deckers. The company currently has a Zacks Rank #2 (Buy), further reinforcing its strong prospects.
Other Key Picks
Some other top-ranked stocks in the retail space are Boot Barn Holdings, Inc. (BOOT - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Steven Madden, Ltd. (SHOO - Free Report) .
Boot Barn operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. It currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Boot Barn’s fiscal 2025 earnings and sales indicates growth of 8.9% and 10.7%, respectively, from the fiscal 2023 reported figures. BOOT has a trailing four-quarter average earnings surprise of 7.1%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It has a Zacks Rank of 2 at present. ANF delivered a 28.9% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2024 earnings and sales indicates growth of 52.4% and 11.3%, respectively, from the fiscal 2023 reported levels. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Steven Madden designs, sources, markets and sells fashion-forward name-brand and private-label footwear. It currently has a Zacks Rank of 2.
The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 6.9% and 12.4%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.5%.