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Deckers Stock Rises 72% in a Year: What's Next for Investors?
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Shares of Deckers Outdoor Corporation (DECK - Free Report) have experienced a remarkable surge over the past year. The stock has rallied 71.5%, comfortably outpacing the Zacks Retail-Apparel and Shoes industry’s modest 20.6% growth. The company’s impressive growth can be attributed to its strategic emphasis on expanding brand presence and strengthening direct-to-consumer (DTC) channels.
The company’s commitment to innovation in product development and a strong focus on international market expansion have enabled it to outperform both the broader Retail-Wholesale sector and the S&P 500 index, which grew 18.6% and 22.6%, respectively, during the same period.
Additionally, the Zacks Consensus Estimate for earnings per share has been revised upward, reflecting positive sentiments around Deckers. Over the past seven days, analysts have increased their estimates for the current and next fiscal quarter by 1 penny to $7.24 and $15.19 per share, respectively, indicating year-over-year growth of 6.2% and 0.5%. The stock currently has a Value Score of A, which further validates its appeal.
Deckers has achieved remarkable success by focusing on high-margin markets, fostering product innovation, expanding its retail footprint and enhancing e-commerce capabilities. The company has effectively broadened its brand offerings, launched innovative products and streamlined distribution channels.
This approach has significantly boosted the popularity of its UGG and HOKA brands while expanding its global reach. DECK is committed to making HOKA a multibillion-dollar brand and transforming UGG into a global lifestyle icon.
The DTC business and omnichannel growth strategy have shown impressive results, with DTC net sales increasing 24% in the first quarter of fiscal 2025. The company’s strategic alignment of product development, marketing and distribution with consumer preferences has driven substantial growth. Key initiatives, such as opening new stores and expanding into targeted markets, are enhancing brand accessibility. These efforts are also improving the overall customer experience.
Innovation remains at the heart of Deckers’ strategy, as evidenced by the successful introduction of new styles and collections. The company actively connects with consumers through brand activations, collaborations and social listening efforts. This approach has strengthened brand loyalty and engagement. The launch of performance-driven products like the Cielo X1 and Skyward X showcases its commitment to technological advancement.
The wholesale channel continues to play a crucial role in Deckers' growth, with first-quarter revenues growing 21% year over year, particularly driven by strong results in the United States and Europe. The company’s international expansion efforts have also been successful, with global sales increasing 20.8% year over year. This growth is fueled by robust DTC expansion and strategic wholesale partnerships, especially in China and the EMEA region. This comprehensive approach has reinforced Deckers’ position as a global leader in the footwear industry.
Deckers Reports Robust Liquidity & Strong Financial Position
Deckers showcases impressive liquidity, supported by a substantial cash reserve. As of June 30, 2024, the company held $1.44 billion in cash and cash equivalents, which bolstered its financial flexibility. Notably, it had no outstanding borrowings during this period, indicating a solid balance sheet. The net cash flow from operating activities was $112.7 million as of June 30, 2024.
In the first quarter, DECK demonstrated its financial strength by repurchasing approximately 177,000 shares, totaling $152 million. This move underscores the management's dedication to enhancing shareholder value and reflects confidence in the company's future. As of June 30, 2024, DECK had $789.7 million remaining under its share repurchase authorization.
DECK Projects Strong Fiscal 2025 Growth
Deckers anticipates net sales to increase 10% to reach $4.7 billion. The HOKA brand is expected to lead with 20% growth, fueled by gains in the DTC channel, expanded strategic partnerships and international market expansion. Meanwhile, UGG is forecasted to see mid-single-digit growth, supported by international expansion and a robust U.S. market. Earnings per share are projected to range between $29.75 and $30.65, up from $29.16 last year.
Conclusion
Although Deckers anticipates some gross margin challenges due to increased freight costs and a shift to more typical promotional activities, the company remains a strong investment prospect. Its solid financial position, underscored by a healthy cash reserve and absence of debt, makes it attractive to investors.
Deckers' impressive performance in both the DTC and wholesale sectors demonstrates its operational strength and broad market reach. Positive market sentiment and upward earnings revisions further underscore confidence in its growth prospects. Deckers currently carries a Zacks Rank #2 (Buy).
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 sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank 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 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 sports a Zacks Rank of 1 at present. ANF delivered a 16.8% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 60.5% and 12.5%, respectively, from the fiscal 2024 levels. ANF has a trailing four-quarter average earnings surprise of 28%.
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 12.6%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.5%.
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Deckers Stock Rises 72% in a Year: What's Next for Investors?
Shares of Deckers Outdoor Corporation (DECK - Free Report) have experienced a remarkable surge over the past year. The stock has rallied 71.5%, comfortably outpacing the Zacks Retail-Apparel and Shoes industry’s modest 20.6% growth. The company’s impressive growth can be attributed to its strategic emphasis on expanding brand presence and strengthening direct-to-consumer (DTC) channels.
The company’s commitment to innovation in product development and a strong focus on international market expansion have enabled it to outperform both the broader Retail-Wholesale sector and the S&P 500 index, which grew 18.6% and 22.6%, respectively, during the same period.
Additionally, the Zacks Consensus Estimate for earnings per share has been revised upward, reflecting positive sentiments around Deckers. Over the past seven days, analysts have increased their estimates for the current and next fiscal quarter by 1 penny to $7.24 and $15.19 per share, respectively, indicating year-over-year growth of 6.2% and 0.5%. The stock currently has a Value Score of A, which further validates its appeal.
Image Source: Zacks Investment Research
DECK’s Strategic Focus Drives Growth & Market Leadership
Deckers has achieved remarkable success by focusing on high-margin markets, fostering product innovation, expanding its retail footprint and enhancing e-commerce capabilities. The company has effectively broadened its brand offerings, launched innovative products and streamlined distribution channels.
This approach has significantly boosted the popularity of its UGG and HOKA brands while expanding its global reach. DECK is committed to making HOKA a multibillion-dollar brand and transforming UGG into a global lifestyle icon.
The DTC business and omnichannel growth strategy have shown impressive results, with DTC net sales increasing 24% in the first quarter of fiscal 2025. The company’s strategic alignment of product development, marketing and distribution with consumer preferences has driven substantial growth. Key initiatives, such as opening new stores and expanding into targeted markets, are enhancing brand accessibility. These efforts are also improving the overall customer experience.
Innovation remains at the heart of Deckers’ strategy, as evidenced by the successful introduction of new styles and collections. The company actively connects with consumers through brand activations, collaborations and social listening efforts. This approach has strengthened brand loyalty and engagement. The launch of performance-driven products like the Cielo X1 and Skyward X showcases its commitment to technological advancement.
The wholesale channel continues to play a crucial role in Deckers' growth, with first-quarter revenues growing 21% year over year, particularly driven by strong results in the United States and Europe. The company’s international expansion efforts have also been successful, with global sales increasing 20.8% year over year. This growth is fueled by robust DTC expansion and strategic wholesale partnerships, especially in China and the EMEA region. This comprehensive approach has reinforced Deckers’ position as a global leader in the footwear industry.
Deckers Reports Robust Liquidity & Strong Financial Position
Deckers showcases impressive liquidity, supported by a substantial cash reserve. As of June 30, 2024, the company held $1.44 billion in cash and cash equivalents, which bolstered its financial flexibility. Notably, it had no outstanding borrowings during this period, indicating a solid balance sheet. The net cash flow from operating activities was $112.7 million as of June 30, 2024.
In the first quarter, DECK demonstrated its financial strength by repurchasing approximately 177,000 shares, totaling $152 million. This move underscores the management's dedication to enhancing shareholder value and reflects confidence in the company's future. As of June 30, 2024, DECK had $789.7 million remaining under its share repurchase authorization.
DECK Projects Strong Fiscal 2025 Growth
Deckers anticipates net sales to increase 10% to reach $4.7 billion. The HOKA brand is expected to lead with 20% growth, fueled by gains in the DTC channel, expanded strategic partnerships and international market expansion. Meanwhile, UGG is forecasted to see mid-single-digit growth, supported by international expansion and a robust U.S. market. Earnings per share are projected to range between $29.75 and $30.65, up from $29.16 last year.
Conclusion
Although Deckers anticipates some gross margin challenges due to increased freight costs and a shift to more typical promotional activities, the company remains a strong investment prospect. Its solid financial position, underscored by a healthy cash reserve and absence of debt, makes it attractive to investors.
Deckers' impressive performance in both the DTC and wholesale sectors demonstrates its operational strength and broad market reach. Positive market sentiment and upward earnings revisions further underscore confidence in its growth prospects. Deckers currently carries a Zacks Rank #2 (Buy).
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 sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank 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 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 sports a Zacks Rank of 1 at present. ANF delivered a 16.8% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 60.5% and 12.5%, respectively, from the fiscal 2024 levels. ANF has a trailing four-quarter average earnings surprise of 28%.
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 12.6%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.5%.