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Deckers Outdoor Up 20% in Three Months: More Room to Run?

Shares of Deckers Outdoor Corporation DECK are riding high on eCommerce capabilities, innovative line of products and focus on expanding brand assortments. Moreover, all these factors have not only helped the company to report better-than-expected results in the final quarter of fiscal 2017 but also encouraged management to provide upbeat fiscal 2018 earnings projection.

This Zacks Rank #2 (Buy) company has gained 20.2% in the past three months, outperforming the Zacks categorized Shoe & Apparel industry’s increase of only 7.3%. Deckers exhibits a VGM Score of “B” and has a long-term earnings growth rate of 9.8%, making us confident of its inherent strength. Let’s delve deeper.

Growth Driver

Deckers is targeting profitable markets and remains focused on product innovations along with store augmentation. Management is also enhancing eCommerce capabilities and is transitioning to a direct subsidiary model from a distributor model outside the U.S. The company’s focus on expanding brand assortments, bringing more innovative line of products, targeting consumers through marketing and optimizing omni-channel distribution bode well.

In keeping with the changing trends, Deckers has made substantial investments to strengthen online presence and improve shopping experience for customers. Further, it is focused on opening smaller concept omni-channel outlets and expanding programs such as Retail Inventory Online, Infinite UGG; Buy Online, Return In Store; and Click and Collect to enhance shopping experience.

Moreover, in an effort to drive long-term growth the company has taken strategic initiatives. Its store fleet optimization plan focuses on striking the right balance between digital and physical stores. Additionally, Deckers plans to close approximately 30 to 40 outlets over the next two years. By fiscal 2020, it expects a company-owned fleet of approximately 125 stores worldwide.

Further, management expects cost savings of about $150 million on the back of improvement in cost of goods sold and SG&A savings, which includes consolidation of retail outlets and process improvement efficiencies. This will help realize $100 million operating profit improvement by fiscal 2020. Management anticipates total sales of about $2 billion with operating margin of 13% by fiscal 2020.

Other Stock to Consider

Other top-ranked stocks which also warrant a look in the retail space include G-III Apparel Group, Ltd. GIII, Big 5 Sporting Goods Corporation BGFV and The Children's Place, Inc. PLCE. All the three stocks sport a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

G-III Apparel Group has an impressive long-term earnings growth rate of 15%.

Big 5 Sporting Goods has long-term earnings growth rate of 9% and also surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average earnings beat of 94.5%.

The Children's Place has reported earnings beat in the trailing four quarters, with an average of 36.6%.

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Children's Place, Inc. (The) (PLCE): Free Stock Analysis Report
 
Big 5 Sporting Goods Corporation (BGFV): Free Stock Analysis Report
 
Deckers Outdoor Corporation (DECK): Free Stock Analysis Report
 
G-III Apparel Group, LTD. (GIII): Free Stock Analysis Report
 
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