Deckers' Sheepskin Sensation

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In recent months, we've taken a look at several "hot" footwear companies -- notably LaCrosse Footwear (Nasdaq: BOOT) and Rocky Shoes & Boots (Nasdaq: RCKY) -- but Deckers Outdoor (Nasdaq: DECK) was left largely out in the cold. However, things have been heating up for the manufacturer of winter and summerwear shoes.

Decker's shares took off in October after the company preannounced stronger-than-expected Q3 sales and profits - and growth in its UGG and Teva product lines. That trend continued yesterday, following Decker's positive sales and profit guidance for 2004, released Wednesday.

The UGG line appears to be the main driver of the windfall at Deckers. UGG makes and markets high-quality sheepskin footwear, usually in combinations of leather and puffy white fur that cost a heck of a lot more than Teva's outdoor sandals or Simple's (the company's other brand) casual/athletic goods. (Simple is similar to Vans (Nasdaq: VANS), which we covered yesterday.)

I've noticed a marked increase in sheepskin boots lately -- particularly on women -- and hope to see more. I have to admit I find them sexy as all-get-out. UGG's are the hot brand in the sheepskin subsegment, having found their way from the feet of Australian surfers to American starlets. Some retailers are reporting trouble keeping them in stock.

UGG advocates say they'll work in warm weather as well as cold. Sheepskin footwear is hardly new, but it's never been in vogue like this. For the time being, however, it's a welcome source of relatively big-ticket revenue for Deckers and its shareholders.

Ever worn sheepskin boots or purchased a sheepskin rug? Talk it over on our Deckers discussion board.

Dave Marino-Nachison can be reached at dmarnach@fool.com.