Shares of Deckers Outdoor Corporation DECK touched a 52-week high of $149.80, before closing the session a tad lower at $147.96 on Feb 25. Notably, the company’s focus on expanding brand assortments, introducing more innovative line of products, targeting consumers digitally through marketing and sturdy e-commerce along with optimizing omni-channel distribution is commendable.
Backed by all these factors, the company delivered robust third-quarter fiscal 2019 results, wherein both the top and bottom line improved year over year and surpassed the respective estimates. This impressive show prompted management to issue an upbeat view for fiscal 2019. Markedly, the stock has gained approximately 15.2% since the announcement of its third-quarter results. (Read: Deckers Tops Q3 Earnings & Sales Estimates, Raises View)
Currently, Deckers carries a Zacks Rank #1 (Strong Buy) and also flaunts a VGM Score of A. Let’s see the factors driving Deckers’ performance. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Narrating Deckers’ Growth Story
Deckers is focusing on product and marketing strategies that are more skewed toward customers. In this regard, it is imperative to mention that the company is emphasizing on the expansion of its product categories according to the customer purchasing trends. In order to capture incremental sales and margins, the company is selling directly to wholesale customers.
These apart, the company has been constantly developing its e-commerce portal to capture incremental sales in order to keep up with the changing trends. Also, Deckers has made substantial investments to strengthen online presence and open smaller concept omni-channel outlets. Its focus on expanding programs — Retail Inventory Online; Infinite UGG; Buy Online, Return In Store; and Click and Collect — to enhance customers’ shopping experience is an added positive. Moreover, Deckers is making efforts to bolster its portfolio.
Additionally, Deckers is on track with endeavors to drive long-term growth. Its store-fleet optimization plan emphasizes on striking the right balance between digital and physical stores. These actions are likely to boost profitability and shareholder returns as well as enhance brand and store performances.
Thanks to these growth drivers, management now anticipates net sales to be in the band of $1.986-$2.0 billion and adjusted earnings per share in the range of $7.85-$7.95 for fiscal 2019. Gross margin for the fiscal year is anticipated to be above 50.5%. Further, the operating margin is envisioned to be in the range of 14.5-14.7%.
Other Key Picks
Zumiez Inc. ZUMZ delivered average positive earnings surprise of 13.3% in the trailing four quarters. It has a long-term earnings growth rate of 12.5% and a Zacks Rank #1.
NIKE, Inc. NKE has a long-term earnings growth rate of 12.3% and a Zacks Rank #2 (Buy).
Skechers U.S.A., Inc. SKX has a long-term earnings growth rate of 7% and a Zacks Rank #2.
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