Deckers (DECK) Collapses 11% on Weak Guidance
21.05.12
A flurry of analyst downgrades followed the dire announcement. Credit Suisse’s Christian Buss lowered Deckers from “Outperform” to “Neutral”, cutting its price target from $127 to $91. Buss cited shrinking margins due to rising commodity costs and limited growth opportunities for its UGG brand as near-term bottlenecks. Jeffries & Co.’s Toposh Bari reaffirmed its “Buy” rating but cut its target price from $125 to $120. Bari stated that warmer-than-expected winter weather was an unforeseen variable that cut into the company’s UGG sales, but that the segment’s growth remains intact.
Deckers’ sobering guidance for 2012 distracted many investors from the company’s strong fourth quarter results. Adjusted earnings per share increased 40.1% to $3.18 and revenue increased 40.4% to $603.9 million over the prior year quarter. This topped analyst EPS estimates by 4 cents.
The company’s UGG brand posted a 37.7% revenue increase to $568.5 million, while its Teva brand reported a 45.9% increase to $19.4 million. Teva’ strength was boosted by a shift to a wholesale business model in the United Kingdom. The company is also in the midst of an aggressive UGG marketing campaign in the United Kingdom, and has recently launched the brand’s UK website.
Source: InvestorGuide