Why Deckers Shares Soared

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 Deckers Outdoor (NASDAQ: DECK  ) were stepping up to the next level today, climbing as much as 14% on a better-than-expected earnings report.

So what: The maker of Ugg boots and other footwear and accessories said that net income actually fell 23%, to $2.77 a share, but beat estimates of $2.57 a share. The formerly high-flying stock also raised investor confidence by saying that retail trends would improve this year, and it expected Ugg sales, which contributes the vast majority of revenue, to grow after a slight decline in 2012. For the quarter, revenue increased just 2%, to $617.3 million.

Now what: Sales in Q4 were boosted by the holiday shopping season and the seasonality of the wintry Ugg boots. For the first quarter, the company is actually forecasting a loss of $0.12 a share, and revenue below analyst estimates. Price increases for sheepskin and other raw materials have crunched margins, causing profits to fall even as sales remain flat. Investors clearly believe in a turnaround, but I'd like to see earnings moving in the right direction first.

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  • Report this Comment On March 01, 2013, at 5:20 PM, johaba wrote:

    I have to say that these kind of articles are really useless. I took the plunge back in late October when shares where trading at 29. Since then deckers has raised 55%. The author here says he would first like to see earnings moving in the right direction first. By then this stock will already have increased substantially. He could have at least mentioned the run up this stock has had since 4-5 months back. A useful article would have been written back in October when shares were hitting all time lows.

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