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How Is Deckers (DECK) Poised Ahead of Q1 Earnings Release?

Zacks Equity Research
·3 min read

Deckers Outdoor Corporation DECK is likely to register a decline in the top and bottom lines when it reports first-quarter fiscal 2021 results. In fact, the Zacks Consensus Estimate for fiscal first quarter is pegged at a loss of $1.11, wider than the loss of 67 cents registered in the same quarter a year ago.

However, the loss estimate was narrowed by 7 cents over the past 30 days. Moreover, the consensus estimate of $264.5 million as quarterly revenues suggests a decline of 4.5% from the prior-year quarter’s tally.

This Goleta, CA-based company’s bottom line has outperformed the Zacks Consensus Estimate in the trailing four quarters.

Key Factors to Note

We note that Deckers has been grappling with falling sales from the Sanuk brand, which is likely to have weighed on first-quarter performance. Management at its fourth-quarter fiscal 2020 earnings call said that Sanuk was down in the mid-30% range in first-quarter fiscal 2021 through May 21. We note that UGG was down mid-single-digits in the aforementioned period due to lower wholesale shipments as well as retail store closures in the period. 

Meanwhile, any deleverage in SG&A expenses might have shown on the company’s bottom-line performance in the to-be-reported quarter. Moreover, headwinds related to currency, freight expenses and higher promotional environment cannot be ignored.
 
Nevertheless, Deckers remains focused on expanding brand assortments, introducing more innovative line of products, targeting consumers digitally through marketing and sturdy e-commerce, and optimizing omni-channel distribution. In keeping with the changing scenario, the company has been strengthening its e-commerce capabilities to drive higher traffic. At its fourth-quarter earnings call, the company notified that its direct-to-consumer business is trending up in the high 40% range during first-quarter fiscal 2021 through May 21.

What the Zacks Model Unveils

Our proven model does not conclusively predict a beat for Deckers this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Deckers Outdoor Corporation Price and EPS Surprise

Deckers Outdoor Corporation Price and EPS Surprise
Deckers Outdoor Corporation Price and EPS Surprise

Deckers Outdoor Corporation price-eps-surprise | Deckers Outdoor Corporation Quote

Although Deckers presently flaunts a Zacks Rank #2, its negative Earnings ESP of -6.50% makes surprise prediction difficult.

Stocks with a Favorable Combination

Here are three companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Hanesbrands HBI has an Earnings ESP of +962.46% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks heree.

Skechers SKX has an Earnings ESP of +28.83% and a Zacks Rank #3.

Rent-A-Center RCII has an Earnings ESP of +3.39% and a Zacks Rank #3.

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RentACenter, Inc. (RCII) : Free Stock Analysis Report
 
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Zacks Investment Research