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Deckers Outdoor Corp. Message Board

  • indian8788 indian8788 Apr 1, 2012 10:36 AM Flag

    my opinion on Frobes Article

    I believe the author nails exactly what happened after the fact, but he is none-the-less correct on why the stock is sitting in the low 60's.

    Deckers was at 118 less than 6 months ago. Company reported record profits and record net income. Great earnings report. The earnigns report and the raised outlook for 2015 would justify buying at any price under 118 as based on revenue estimates and Deckers profit margin, net income should be around 348M if not higher in 2015.

    But for hedgefunds(they target GROWTH, especially short term), they made their money from the stock roaring from 20 to 118 in 2.5 years. Now with ANGEL Martinez and Deckers saying that Earnings growth would not be so great for this year a sa result of Sheepskin costs but will resume the following year, the hedge funds use that as a cue to exit and park their moneyy elsewhere for the next 20 months. The reason 20 months is that the hedge funds will probably resume getting back into Deckers in 20 months from now because they know the numbers as well as anyone of us on the board, but they are using the next 12 months(of which their supposedly will be no change in net income YOY) as an excuse to dump the stock heavily and go elsewhere for the next 12 months for companies whose net income will move in the next 12 months. Hedge funds(of which DECK's huge volume is a result of) are all about getting that nice 20% return off the top of anything they bring back home(world's biggest scam, 20% is insane for an industry where more than 66% don'e even beat the market, so they get 20% of your money for doing what you could have done). With Deckers not increasing net income YOY for the next 24 months they will park their money elsewhere, and then come back later.

    Those who are smart are buying in now and at lower levels(I myself am averaging down with a purchase every week) as I believe that in 2015/2016, this stock should be worth between 140/160 a share if not higher. It's all about patience.

    Is the Deckers dump justified? To average investors like you and me, the answer is a fast no. We see a company who is sitting on record revenues, income, international sales, etc.

    But it pays to ask yourself why then did we actually sell-off? I believe the Forbes Article author elaborates very well on why we sold off and I concur. Now it is just a matter of 750 days passing and me getting 140/160 share for a stock that I paid what will hopefully be an average in the 60's when all is siad and done. It would come out to a return of roughly 30%+ per year. I don;t think Buffett would sneeze at that. Patience. Go watch some movies, go read some good books, go date some chicks, and then in 750 days, come back and this stock should be at 150/share minimum.

    If it isn't, you watched some good movies, read some good books, and hopefully got laid ;)

    Z

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    • Poser was right about SKX all along, and management was wrong, so he probably has a lot of credibility.

    • verypure,

      Window has it correct. Your arguement that Deckers isn't sold out on the same channels that you tracked last year is nonsense. If management hadn;t learned to create more product to make sure they don;t sell out this year, that would be worrisome. There is more of an oppurtunity cost from NOT selling than from having extra inventory. Management has clearly provided extra supply to meet all demand. Inventories will never be perfect. Never as it isn;t possible.

      Bottom line, the arguement that you used of not selling out is really faulty. As the revenue number for UGGS(1B+, higher than ever) says it all. Not the fact that you tracked some websites and the brand was available on them. Hmmm.. which one really matters, hard numbers or "sold out" on websites? C'mon.

      Z

    • ii'm particularly pleased with the things they are doing with the classic boot style for spring using canvas. that is awesome stuff.

      i like where i sit with this stock and i have all the time in the world to wait for the manipulation to end

    • Windows:

      I saw the December photo you posted, and had seen it before you posted it. Lines outside an UGG store have little significance just before Christmas, given that UGGs are an extremely popular Christmas gift (slippers as well as boots).

      I greatly hope you are right about Classic sales. But literally all the signs I have studied every year indicate a loss of momentum in Classic sales. And I see no evidence that those sales have largely shifted to other styles, though of course some of the other styles have done well.

      Doug Otto, the previous CEO of DECK, used to like to say that people don't give up comfort. That was his answer to the fad argument. And he seemed right for a long time, and he may still be right. Hopefully the only reason Classic sales have weakened this year was the weather.

      I might add that slipper sales, which used to account for about one-quarter of all UGG sales, seemed very strong this year -- stronger than I've ever seen them. So some of the Classic sales may have shifted in that direction, including slippers that people wear out of doors. A significant amount of Classic sales are effectively slipper sales as well, given that many owners wear them only at home. I like to think that UGG Classics are the choice of those who wear flip flops in warmer weather, and that Classics will have the staying power of flip flops. I hope that is true.

      By the way, the leading flip flop on Amazon is a DECK product -- a Sanuk.

    • >> And this year Classics did not sell through or sell out as they have in past years.

      could that be because they have a zillion other uggs styles selling other than the classics? hmm...

      could it be that they made more of them and therefore didn't sell out? i don't see apple selling out of ipads (outside of the initial week) - does that mean they aren't selling well (don't answer that).

      all that i know is what i see. i live in the heart of what is going on in fashion and i saw new ones all over the place and this year i saw many different styles

      did you not see the article i posted showing LINES outside their soho store in december? LINES into a shoe store??!!

    • Windows: I have no hard numbers, but I follow UGG sales in a number of online locations, such as the major department store chains that carry UGGs (Nordstrom's, Saks, Neiman Marcus), several online shoe retailers, Amazon.com, and others (such as Plow and Hearth and Superlambfootwear). And this year Classics did not sell through or sell out as they have in past years. You can look for yourself, and you will see that Classics are now available in virtually all sizes and all major colors at all of these locations. Last year they were not available to this degree at this time of the year. In fact, rarely did anyone run out of stock in Classics this year. Internet traffic in the UGG brand also was flat this year for the first time ever.

      I have long monitored UGG sales as above, and this is the first year I have been concerned about sales. Of course I have heard the fad argument for years. But in the past I saw no reason to worry.

    • seriously, what's so hard about this for people?

      1. uggs were called a fad over 10 years ago now. a lot of money was lost waiting for the fad to end.

      2. uggs are now more popular than ever. anyone on a nyc street this "winter" would have seen roughly 10% of women wearing them at any time with over 80% of those being new and the revenues support this

      3. deck is broadening the line, successfully, to lessen reliance on the classic line

      4. international sales were up 40% and its just the beginning. people love the quality and styles. obviously this has legs.

      5. there is NO indication ANYWHERE that the "fad" is fading or even slowing. go ahead and show me a single number anywhere.

      6. uggs are now being worn in places that they haven't been and amongst age groups that they haven't been. this includes youngsters.

      those are facts. you can listen to people like pinkerton who have not a single number or link to offer you or you can dig up your own facts and use your own eyes. thus far, i no of no evidence to support that that fad is waning.

    • I live in New York City. Every chick had these on for the winter months. As for colleges, my sister who is in college said hers is swarming with them. Bearpaw will of course take some market share. Any time a competitor comes in with a lower priced version of your product, some will shift and some who could not afford the UGG will go to Bearpaw. But Bearpaw is not UGGs and it does not have cache that comes with owning a pair of UGGS. Much like owning Under Armour products for the younger generation has more appeal than owning Nike apparel. nike has been forced to cut its prices(margin compression) as a result to move inventory and sell product. But bearpaw is not a pair of UGG boots. It is not real sheepskin, it does not last as long....it's cheaper for a reason and the conusmer knows this.

      Even with all this aside, Deckers is still not being appropriately valued for what it is worth today based on the numbers of today irregardless of continued fast growth(which it still has). So either way, its a moot point as just based on the company's current fundamanetals, stock should be at minimum worth 100/share.

      Z

    • Indian: Thank you very much for taking the time to answer. But unfortunately the revenue increase you mention (as Pinkerton long ago pointed out on this board) resulted primarily from sales to retailers -- not retail sales. Classic boot sales were weaker this year than in recent years.

      And as for your observation of Classic UGGs on the street, I can only say that I am curious to know where you live. In my part of the world it has been far less common to see UGGs on the street this year. I am particularly aware that the Classics have been greatly less visible on the college students at two colleges with which I am familiar. This was also the first year in quite a few that the Classic short did not lead sales for most of the winter on Amazon.com. Bearpaw took a huge amount of sales away from UGG on Amazon and at Macy's, among other places -- which I'm hoping will decline after the legal settlement that was recently concluded.

      I still own DECK shares (and have owned shares for a very long time), but I am worried about Classic sales. I am NOT worried about anything else. Style expansion is still impressive, the men's line is growing, international growth is continuing, Teva is doing very well, Sanuk is growing fast, etc. I wish someone could provide some hard facts about Classics sales, however.

    • verypure, its very simple; I leave my house, its cold out, I go to work in the city, and literally every woman has one of these on. That is evidence #1.

      Evidence #2. Revenues for UGGS just hit over 1B for a new record this past quarter with management calling for 1.8B in the next year. There is no product that I have seen gaining on UGGS as of yet.


      They said the same thing about Apple when it came out with the ipod and iphone...ok, whats next? Whats to keep people buying the products from these companies when they have competitors? Well, Apple has shown to have the best innovation and best of breed product, so WHY shop anywhere else?

      Apple and Deck are not as different as some may believe. Apple has less than a handful of products; ipod, iphone, ipad, macs. Thats it. 4 products. Yet this is the most valuable company in the world because all that matters is that Apple prints money(profit). So does Deckers. We will know when Deckers is dead but I assure you, you will only know when your eyes and the numbers tell you do. Not CNBC making stuff up or some analysts making things up.

      What I've learned about analysts is that it is one of the most bogus careers on wall street. These guys don;t understand the products the way other people do. It is this idea they KNOW better because they have ANALYST next to their name. They claimed "warm weather" would hurt sales. We hit a record of over 1B in sales. Nothing more needs to be said. IMO, you're overthinking this "fad" thing. CROCS were a fad because they were ugly, didn;t go with styles, and were made of plastic. Cheap &&&&. UGGS represents a style, comfortability, and a status. Every girl in school MUST have one. Thats what you want in a company. That the kids MUST have one.


      Z

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