Deckers Outdoors (DECK) reported a surprise first-quarter profit late Thursday after rival Crocs (CROX) warned on the supply chain earlier this month. DECK stock eked out a gain.
Estimates: Wall Street expects Deckers to narrow net loss to 9 cents per share from 28 cents a year ago. Revenue is seen jumping 44% to $407.5 million, as the Ugg boot and Hoka One sneaker maker laps a pandemic-challenged year-ago quarter, according to FactSet.
Results: EPS of $1.71 on revenue of $504.7 million. UGG sales jumped 70.8% to $213.0 million. Hoka sales nearly doubled to $213.1 million. Teva sales surged 65.9% to $58.5 million. Sanuk sales increased 13.7% to $15.0 million.
Outlook: Deckers now sees full-year EPS of $14.45-$15.10, up from a prior view of $14.05-$14.65 but still largely below consensus for $15.01. Full-year revenue is now seen at $3.01 billion-$3.06 billion, up from a prior view of $2.95 billion-$3 billion and largely better than consensus for $3.018 billion.
“While macro-economic headwinds persist throughout the supply chain, we are confident in the consumer demand for our brands and the resilience of our global omni-channel organization, and we remain dedicated to the foundational, long-term strategies driving Deckers’ success,” said CEO Dave Powers.
In May, the apparel, footwear and accessories company revealed 77% of its global retail stores were open. But it warned of temporary closures for parts of Q1 due to the pandemic. It also warned of supply-chain challenges and increased costs tied to employee safety and payrolls.
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Shares closed up 0.55% at 406.69 in stock market trading Thursday. DECK stock cleared a 353.81 flat-base buy point in bullish volume in June and is now extended, meaning shares are not in buy range, according to MarketSmith chart analysis. Crocs, which belongs to both the IBD 50 and IBD Leaderboard, rose 3.7% to peg a new high.
Crocs stock gapped up on an earnings beat and higher guidance July 21, hitting its 20% profit-taking goal after topping a 110.01 buy point.
While delivering its beat-and-raise, Crocs CEO Andrew Rees cautioned on short-term impacts from Covid-19 on its supply chain, including temporary factory closures in Vietnam, a significant manufacturing site.
The relative strength line for both Deckers stock and Crocs stock are making highs. The RS line is the blue line in the chart shown. A rising RS line means a stock is outperforming the S&P 500 index.
The California-based company faced negative impact from the coronavirus early on. China, where the pandemic originated around late 2019 and parts of which are seeing a resurgence in cases now, accounts for 7% of Deckers’s revenue.
But as lockdowns dragged on, Deckers Outdoors’s trendy and premium Hoka One sneakers resonated with global consumers seeking out the outdoors. Its Ugg slippers also benefited from the work-at-home trend, but more modestly.
Last fiscal year, Hoka sales jumped 62% while sales at Ugg rose 13%. Despite the pandemic, overall sales grew 19% last year while earnings climbed 40%.
Deckers continues to accelerate its e-commerce and omnichannel strategy. Last year, direct-to-consumer sales increased 45%.
Peers, including Crocs, Nike (NKE) and Skechers (SKX), also gained from similar trends. The group as a whole ranks No. 8 out of 197 industry groups tracked by IBD. Crocs stocks is rated No. 1 in this group. Nike, Skechers and Deckers round out the top five stocks.
Deckers’ rising margins — 54% last year — are among the best in the business. Out of nine analysts on Wall Street, eight rate Deckers stock a buy, one has a hold and no one has sell, according to TipRanks.com.
Find Aparna Narayanan on Twitter at @IBD_Aparna.
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