Deckers Outdoor (DECK), a Zacks Rank #1 (Strong Buy), is a footwear and apparel company recognized for its premium lifestyle and performance brands. The company designs, manufactures, and sells shoes, sandals, and boots, emphasizing comfort and innovation.
The stock has taken a major hit since reporting earnings in late January. Down over 30% from the recent highs, the stock is coming into a big support level that investors should be eyeing.
About the Company
Deckers is valued at $23 billion and employs close to 5,000 people.
The company, founded in 1973 and headquartered in Goleta, California, operates a diverse portfolio of footwear and apparel brands catering to both casual and high-performance consumers.
In addition to its well-known UGG, HOKA, and Teva brands, the company also offers relaxed casual footwear through Sanuk, fashion-focused casual shoes under Koolaburra, and previously marketed footwear under the AHNU brand.
Deckers distributes its products globally through a mix of domestic and international retailers, distributors, and its direct-to-consumer channels, which include e-commerce platforms and company-owned retail stores.
The stock has a Zacks Style Score of “A” in Growth, but “D” in Value and Momentum.
Q3 Earnings Beat
Deckers delivered a strong Q3, beating EPS by 15% and revenue estimates. The company raised full-year guidance across the board, projecting FY25 EPS between $5.75-$5.80 (above the $5.62 consensus) and improving its gross margin outlook to 57% or better.
UGG continued to be a standout performer, generating $1.24 billion in revenue (+16.1% YoY), with exceptional holiday sales, strong international demand, and impressive full-price sell-through.
HOKA also posted another quarter of rapid expansion, with sales up 23.7% YoY, reinforcing its position as a high-growth performance brand.
Management reiterated its commitment to disciplined brand management, avoiding excessive promotions to sustain long-term profitability.
Despite the strong report, the stock traded lower due to revenue guidance falling slightly short of estimates ($4.90B vs. $4.93B expected), potential future margin pressure from inflation and FX headwinds, and some weakness in Teva (-6% YoY).
Additionally, inventory levels increased to $577 million from $539 million a year ago, which could raise concerns about demand normalization.
Estimates Headed Higher
Analysts have lowered their earnings estimates for the upcoming quarter, but continue to raise estimates longer-term.
For the current quarter, earnings estimates went from $0.71 to $0.56 after the earnings report. This is a drop of 21% and a major reason why the stock was sold.
However, for the current year estimates have improved 6%, going from $5.56 to $5.89.
For the next year, analysts now see $6.60, which is up 7% from the $6.14 expected 90 days ago.
Deckers Outdoor Corporation Price and Consensus
Deckers Outdoor Corporation price-consensus-chart | Deckers Outdoor Corporation Quote
While Deckers remains on track for its fifth consecutive year of mid-teens revenue growth, the market may be reacting to some short-term headwinds.
However, with its premium brand positioning, strong direct-to-consumer momentum, and disciplined pricing strategy, Deckers appears well-positioned for continued long-term success.
The Technical Take
The stock reached a high of $224 just before earnings but has since dropped 33%, recently trading around $150. It has now returned to a price range where it moved sideways for much of 2024, with the $140-$160 zone acting as former resistance that could now serve as strong long-term support—making it an attractive entry point for new investors looking to buy the dip.
With the 200-day moving average sitting at $170, a relief bounce could test that level in the near term. However, if the stock falls below $135, it may signal deeper underlying issues that could lead to further downside.
In Summary
Deckers Outdoor has faced a sharp pullback despite delivering strong Q3 results and raising full-year guidance. While near-term concerns around revenue guidance, margin pressures, and inventory buildup have weighed on the stock, the company remains well-positioned for long-term growth.
With UGG and HOKA driving strong sales and analysts raising longer-term earnings estimates, the recent selloff could present a compelling buying opportunity at key technical support levels.
Investors with a long-term perspective may find the current dip an attractive entry point into a high-quality, growth-focused footwear leader.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
