Will UGG Lift Deckers Outdoor Earnings?

Deckers Outdoor Corp DECK Consumer Discretionary - Textiles, Apparel & Luxury Goods| Reports February 4, After Market Closes

Key Takeaways

• The Estimize community is expecting EPS of $4.88 and revenue of $839.30 million significantly higher than Wall Street's EPS and revenue estimates of $4.72 and $835.52, respectively.
• Deckers Outdoor is best known for its UGG boots which is currently undergoing a makeover to make it less weather sensitive
• The company's growth strategy consists of new product lines and expansion domestically and internationally

Best known for UGG boots, Deckers Outdoor (DECK) is scheduled to report FQ3 2016 earnings February 4th, after the market closes. The rise of athletic apparel for all purpose use have put companies like Nike and Under Armour in a strong position to infringe on Deckers' market share. For Deckers the fourth quarter and holiday season is important to the company which relies heavily on sales of its cold weather UGG boots. The unusually warm weather and the overall lack of snow have made investors nervous about the retailer's quarterly earnings.

The Estimize community is expecting EPS of $4.88 and revenue of $839.30 million, significantly higher than Wall Street's estimates. On the other hand corporate is guiding third quarter earnings of $5.00 per share with a 9% rise in revenue. Compared to FQ3 2015, Estimize is projecting YoY growth in EPS and revenue of 9% and 7%, respectively.
The biggest question facing investors is whether Deckers will be able to beat expectations for another quarter this fiscal year. After a generally weaker holiday season, the company is expected to see a modest contraction in sales and operating margins of its core brands. Tha said, sales of its weather sensitive UGG brand are still expected to be strong despite unusually warm weather. Deeper discounts have helped Deckers' move key products and avoid an inventory hangover. Moreover, Deckers recently released a new line of weather universal UGGs with a slimmer fit. Besides new product lines, Deckers' growth strategy consists of improving its direct to consumer channels and domestic and international expansion. Like other multinationals, currency headwinds have constrained revenue growth in global operations. As Deckers' continue to innovate products and distribution channels, it should emerge from the holiday season strong.

Photo Credit:Joeri van Veen