What: Shares of UGG maker Deckers Outdoor Corp (NYSE:DECK) jumped 14.5% in July, according to data provided by S&P Global Market Intelligence, after investors gained some confidence in the company's turnaround.
So what: Second quarter results released during the month helped ease fear that profit estimates wouldn't be hit in fiscal 2017. Sales did fall 18.4% in the quarter to $174.4 million and net loss ballooned to $52.3 million, but management still expects to hit its own guidance for the year. That includes net sales being flat to down 3% versus a year ago, and earnings of $4.05 to $4.40 per share. If management can hit those numbers after this quarter, the stock could be set up for a good year.
Now what: The reaction in July was relief that operations weren't even worse rather than a ringing endorsement of the company's falling sales and growing losses. But Deckers Outdoor is trying to stabilize the business and return to growth long-term. Maybe we're seeing signs of that happening -- but before jumping in, I'd like to see clear evidence that Deckers is going to hit its profit numbers, because falling sales in the shoe business is a big concern for investors.