Deckers (DECK) Q3 Earnings Likely To Increase Y/Y: Here's Why
Zacks Investment Research | Jan 25, 2019 07:47AM ET
Deckers Outdoor Corporation (NYSE:DECK) is slated to report third-quarter fiscal 2019 results on Jan 31, after the market closes. In the last four quarters, this Goleta, CA-based footwear and apparel retailer outperformed the Zacks Consensus Estimate by an average of 69.1%. Investors are counting on another beat by Deckers in the to-be-reported quarter.
The Zacks Consensus Estimate for third-quarter earnings is pegged at $5.31 compared with $4.97 in the year-ago quarter. We note that the Zacks Consensus Estimate has improved by 7 cents in the past 30 days. The consensus estimate for revenues currently is pegged at $826.9 million, showing an improvement of approximately 2% from the year-ago quarter. If all goes well, this will be the eighth straight quarter of positive earnings and sales surprises.
Key Factors Influencing Q3
Deckers is targeting profitable markets. The company is focused on product innovation and store augmentation plan. Further, the company’s focus on expanding brand assortments, bringing more innovative line of products, targeting consumers through marketing and optimizing omni-channel distribution bodes well. These are likely to have a favorable impact on the to-be-reported quarter.
In keeping with the changing trends, Deckers has made substantial investments to strengthen online presence and open smaller concept omni-channel outlets. Additionally, the company has undertaken strategic initiatives to drive growth.
Management had earlier guided third-quarter net sales in the range of $805-$825 million compared with $810.5 million a year ago. The company had projected earnings in the band of $5.10-$5.25.
However, industry experts are concerned about Deckers' over-reliance on the UGG brand. In the event of stagnation or decline in UGG sales growth, the company's overall results will be affected. This is because the percentage of contribution from the company’s other brands are too minimal to offset any slowdown in UGG sales.
The Zacks Consensus Estimate of revenues for Sanuk brand is $13.3 million, reflecting a year-over-year decrease of about 4.7%, while the same for Teva brand is $18.9 million, indicating a decline of approximately 3.1% year over year. Sales from UGG brand are expected at $726 million, down 1.2% from the prior-year period.
Deckers Outdoor Corporation Price, Consensus and EPS Surprise
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