Please ensure Javascript is enabled for purposes of website accessibility

Why Deckers Outdoor Stock Jumped 15.7% in June

By Steve Symington - Jul 6, 2019 at 10:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The footwear leader jumped as trade tensions eased.

What happened

Shares of Decker's Outdoor (DECK -3.58%) climbed 15.7% in June, according to data from S&P Global Market Intelligence, extending the company's momentum from late May and rising along with the broader market (including a 7% rise in the S&P 500) as U.S.-China trade tensions began to ease.

To be clear, there were no new press releases, SEC filings, or analyst upgrades last month that might otherwise have spurred Decker's rise. But the parent company of brands including UGG, Hoka, Teva, and Sanuk was one of more than 170 footwear companies that banded together in May to issue an open letter to President Trump urging him not to impose crippling tariffs on their industry. In it, they argued a proposed 25% tariff would be "catastrophic for our consumers, our companies, and the American economy as a whole."

So, when relations started to warm in June, followed by an agreement between China and the U.S. at last weekend's G-20 summit to restart trade talks, it was hardly surprising to see Decker's climb in response.

Two women running while wearing colorful Deckers shoes.

IMAGE SOURCE: DECKERS.

So what

There's no guarantee those trade talks will be favorable for the footwear industry -- though on Friday, Chinese officials insisted there would be no trade deal unless all imposed tariffs are removed. 

But investors should also know Decker's, in particular, is preparing to make tariffs a moot concern. During the latest quarterly conference call in May, Decker's CFO Steve Fasching said the company is working with its supply chain operations on mitigation strategies, including potentially shifting shipment timing and actively moving its production outside of China. And even if the proposed incremental tariffs are implemented, he said under 20% of Decker's global total would be subject to them.

Now what

However prepared the company might be, I suspect Decker's shares will continue to ebb and flow along with its industry peers in the near term -- at least as long as uncertainty remains in the global trade environment. In the meantime, I think the stock might be worth adding on any pullbacks as long as they're disconnected to the fundamentals underlying Decker's reasonably strong business.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Deckers Outdoor Corporation Stock Quote
Deckers Outdoor Corporation
DECK
$308.69 (-3.58%) $-11.47

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
379%
 
S&P 500 Returns
123%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/09/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.