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$77.04 -6.15 (-7.39%)
1/7/2009 4:00 PM

Deckers Outdoor Corp (DECK)

CAPS Rating:
**

The Company is a designer, producer and brand manager of innovative, high-quality footwear and the category creator in the sport sandal, luxury sheepskin and sustainable footwear segments.

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Avatar NetscribeConsGds (94.43) Submitted: 1/31/07 6:32 AM : Outperform Start Price: $58.31 DECK Score: 68.55

Deckers Outdoor is in the business of designing, producing and brand managing of innovative, high-quality footwear and the category creator in the sport sandal and luxury sheepskin footwear segments. The company’s footwear is distinctive and appeals broadly to men, women and children. The company markets its product under the brand name Teva, UGG and Simple and sells these products through retailers and distributors and directly to end-user consumers through websites, catalogs and retail outlet stores.

Teva markets high performance sports sandals and rugged outdoor footwear. Its revenue has suffered since fiscal 2005 due to lack new products and increased competition. Taking a cue from the same, the management is now focusing on product planning, design and development, which enabled Teva to grow by 2.7% in third quarter of 2006. Further, for mid of 2007, 70% of product line will comprise of new and innovative technical performance styles. Moreover, significant investment in advertising targeting young population should enable the company to become a trendsetter.

Increased media attention and continued geographic expansion across U.S. has amplified the demand for UGG footwear and forced its management to double its product line to 100 styles from 50 styles since 2002. Simple shoes repositioned itself as a leader in sustainable footwear by launching Green Toe. Increased print media campaign and improved distribution initiatives have doubled the sale of Simple’s business. The management’s focus on all the three brands and increased efforts towards Spring 2007 collection should enhance revenues of the company and thereby boosting its bottom-line and maximizing shareholders’ value.

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Avatar NetscribeConsGds (94.43) Submitted: 5/08/07 8:18 AM

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Innovation under existing brands, expansion of domestic and international distribution seems to be the perfect recipe for strengthening the brand image of a company. This is what Deckers Outdoor is doing and in the process of enhancing shareholder value through capital gains with the stock price almost doubled since a year ago. It seems that Deckers should be able to continue this surge in stock price, especially when it has products like UGG in its portfolio. The well-known brand in California, UGG has provided new definition to fashion with comfort for its footwear.

Deckers began the year with a bang, highlighted by double-digit sales increases across its entire product category. The company’s ability to exceed expectations was substantiated with the help of strong full price selling for the UGG brand coupled with positive consumer reaction to its reengineered Teva product line. At the same time, Simple continued to gain important shelf space at retail while further building its leadership position in sustainable footwear.

The management believes it will be able to capitalize on future growth opportunities and are confident to achieve a sale growth of 25% for fiscal 2007, while a rise of 15% for diluted earnings per share. It seems that the trendsetter is giving a serious thought to its innovation spree, with the company has already loaded its product portfolio with 125 styles of UGG for its Fall 2007 collection. Deckers with its uncanny ability to innovate fashion-oriented footwear should rock the market in the coming years ahead.

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