Deckers Outdoor Corp (DECK)

IBDFool4U (97.72) Submitted: 1/10/08 1:31 PM : Start Price: $142.47 DECK Score: 11.55

There is a compelling case for DECK going the way of CROX. Ugg's account for almost 90% of sales, and have been selling at full price (and what a high price that is). Crox faded late in the summer season (for a summer shoe), and DECK should fade by late in the winter season if the cycle repeats. Look at a 2-year overlay chart of the two stocks and note how closely their prices have trended, at least until recently.


Potential downside momentum?


- P/E of 41 (recession OR uncertainty over next winters sales will cause to drop).


- At best, growth rate expected to slow, and one must remember that prices will drop as unit growth rate also slows, reducing revenue.


- Fashion trends only last 3-5 years, and Ugg's were the "in" shoe both last winter and this winter, so its days are numbered.


- They have no other "superstar" products on the horizon, and hard to predict anyway(Teva's should start to replace flip flops, but hard to predict how much benefit that will be). No moat that I can see.

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