Factors Likely To Decide Deckers' (DECK) Fate In Q1 Earnings
Zacks Investment Research | Jul 21, 2019 10:00PM ET
Deckers Outdoor Corporation (NYSE:DECK) is slated to report first-quarter fiscal 2020 results on Jul 25, after the closing bell. In the last four quarters, this Goleta, CA-based footwear and apparel retailer’s bottom-line has outperformed the Zacks Consensus Estimate by a wide margin. Investors are counting on another beat by Deckers in the to-be-reported quarter. If all goes well, this will be the 10th straight quarter of positive earnings and sales surprise.
The Zacks Consensus Estimate for the quarter under review is pegged at a loss of $1.15. The company had reported loss of 98 cents in the year-ago quarter. We note that the Zacks Consensus Estimate has remained unchanged in the past 30 days. The consensus estimate for revenues stands at $259.9 million, suggesting an increase of approximately 3.7% from the year-ago quarter.
For first-quarter fiscal 2020, Deckers had earlier guided net sales in the range of $250-$260 million with bottom-line loss of $1.15-$1.25 per share.
Key Factors Influencing Q1
Deckers has been targeting profitable markets, and is focused on product innovation and store-augmentation plan. Further, the company’s commitment toward expanding brand assortments, bringing more innovative line of products, targeting consumers through marketing and optimizing omni-channel distribution bodes well. In keeping with the changing trends, Deckers has made substantial investments to strengthen online presence and open smaller concept omni-channel outlets. These are likely to have a favorable impact on the first-quarter’s performance.
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 minimal to offset any slowdown in UGG sales. We also note that the company has been grappling with falling sales from the Sanuk Brand. Moreover, headwinds related to currency, freight expense and higher promotional environment cannot be ignored. This might weigh on margins to an extent and in turn the bottom line.
The Zacks Consensus Estimate for sales for UGG brand stands at $135 million for the quarter under review, indicating a decline of roughly 1.5% year over year. The consensus estimates for sales for Sanuk and Teva brands are pegged at $24.40 million and $40 million, flat year over year.
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