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Why Deckers' Shares Plunged

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Uggs boot maker Deckers Outdoor (Nasdaq: DECK  ) were looking unfashionable to investors today, as shares fell as much as 10% in intraday trading.

So what: Sam Poser, a stock analyst at Sterne Agee, has been a scourge for Deckers investors this week, and he was back again today, reiterating his dour view of the company. The central issue for Deckers in Poser's view can be boiled down to one word: sales. No, that's not sales as in how much the company is selling, but sales as in discounting the price of its furry boots. The company has marked down its core styles between 5% and 8%. While that may not sound like much, for investors that's a nice chunk of lost profitability. It's also rarely a good sign when a premium brand thinks it has to cut prices.

Now what: In addition to Uggs, Deckers also owns the Simple, Teva, and Tsubo brands, but none of those has driven the business the way Uggs have in recent years. Perhaps this is just a bump in the road for Uggs and Deckers. However, the fashion world can be pretty unforgiving when it moves on from a certain look, and it's also very possible that this is a sign that the Ugg era is winding down.

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Fool contributor Matt Koppenheffer has no financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter, @KoppTheFool, or on Facebook. The Fool’s disclosure policy prefers dividends over a sharp stick in the eye.

Read/Post Comments (2) | Recommend This Article (2)

Comments from our Foolish Readers

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  • Report this Comment On September 19, 2012, at 6:44 PM, aupti wrote:

    Well, you got it wrong.

    Deckers reduced prices because input costs plunged.

    Sheep skin costs are down 70% from the peak in 2011!!!!

    This means the margin increased dramatically, and they wanted to use the new input prices of new merchandise in order to increase sales by some decrease in price in advance. It is a brilliant act.

    As for Sam Poser, I will not go into his timing. Let's say some things are more than suspicious.

    I actually wanted to buy a pair of UGGs in the discount he mentioned in his note (he gave a name of a website that has a 24-hour 15% discount on UGGs). You had to register to see the deal, and I could not order.

    Conspiracy theories aside, interesting this "sale" that could not be bought came out just at the critical technical point of the stock.

  • Report this Comment On September 19, 2012, at 6:56 PM, aupti wrote:

    Also interesting that mister Poser could have come with one note on monday which contained all the info he had.

    He put one note on monday about the sale in the website.

    Then he put another note on wednesday about Deckers reducing prices (which is effective since sept 15 already). This reduction in prices might be the reason for the sale on the website, but why publish both data points together if you're trying to knock the stock down?

    Again, I am not accusing anyone of anything, I'm just saying that looking at the chart and the time of the notes, I find it very interesting, to say the least.

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10/24/2016 4:02 PM
DECK $53.49 Down -0.66 -1.22%
Deckers Outdoor CAPS Rating: ****