With enhanced focus on developing innovative products and eCommerce capabilities coupled with better-than-expected fourth-quarter fiscal 2017 results, Deckers Outdoor Corporation DECK hit a 52-week high of $71.75 on Jun 2, before closing at $71.10.
This Zacks Rank #2 (Buy) returned 31.2% in the last three months, outperforming the Zacks categorized Shoes & Retail Apparel industry’s decline of 5.3%. Deckers exhibits a VGM Score of “A” and has a long-term earnings growth rate of 9.8%, making us confident of the company’s inherent strength.
This footwear and apparel retailer surprised investors by posting profit in the final quarter. Earnings for the quarter came in at 11 cents per share that surpassed the Zacks Consensus Estimate of a loss of 6 cents and also management’s earlier projection of a break-even to a loss of 10 cents. The company’s cost containment efforts improved its bottom-line performance. Influenced by these factors, the Zacks Consensus Estimate for the first quarter and fiscal 2018 has been trending upward.
The top line also came ahead of our estimates, after missing the same in the preceding two quarters. Management anticipates total sales of about $2 billion with operating margin of 13% by fiscal 2020, on the back of expanding its brand assortments, targeting consumers digitally via marketing and sturdy eCommerce, and optimizing omni-channel distribution. Management also expects cost savings of about $150 million supported by improvement in cost of goods sold and SG&A savings.
Further, the company’s store fleet optimization plan focuses on striking the right balance between digital and physical stores. To do this, Deckers plans to close approximately 30 to 40 outlets over the next two years. By fiscal 2020, Deckers expects a company-owned fleet of approximately 125 stores worldwide. We believe that the company’s strategic initiatives will help propel the stock in the coming days.
Other Key Picks
Investors may consider other favorably ranked stocks such as Best Buy Co., Inc. BBY, The Children's Place, Inc. PLCE and Big 5 Sporting Goods Corporation BGFV, each of them flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Best Buy has an average positive earnings surprise of 33.8% over the trailing four quarters and has a long-term earnings growth rate of 11.8%.
Children's Place has an average positive earnings surprise of 36.6% % over the trailing four quarters and has a long-term earnings growth rate of 8%.
Big 5 Sporting Goods has an average positive earnings surprise of 94.5% over the trailing four quarters and has a long-term earnings growth rate of 12%.
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