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Here’s Why Investors Should Bet on Deckers (DECK) Stock Now


Shares of Deckers Outdoor Corporation DECK have outperformed the industry in a year’s time. Evidently, the stock has surged roughly 57.8% in the said time frame compared with the Zacks Shoes and Retail Apparel industry, which grew 48.5%. Also, this Zacks Rank #1 (Strong Buy) stock has comfortably outpaced the broader Consumer Discretionary sector's growth of 7.7%.

Strategies such as enhancing omni-channel capabilities, innovative line of products and expanding brand assortments bode well for the company. Also, the company is on track with its restructuring plan to accelerate growth.

A Brief Introspection

Deckers is making efforts to strengthen its online presence and improve shopping experience for customers. The company plans 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. Also, the company is making new additions to its portfolio, evident from the acquisition of KOOLABURRA, a footwear brand.

Further, Deckers unveiled plans to close approximately 30 to 40 outlets over the next two years as part of its store fleet optimization plan. By fiscal 2020, Deckers expects company-owned fleet to be approximately 125 stores worldwide. These actions are likely to boost profitability and shareholder returns as well as enhance brand and store performances. Moreover, management expects cost savings of about $150 million on the back of improvement in cost of goods sold and SG&A savings, which include consolidation of retail outlets and process improvement efficiencies. This will help realize $100 million of operating profit improvement by fiscal 2020.

Additionally, Deckers is undertaking product and marketing strategies. In this regard, the company is implementing customer relationship management software and concentrating on loyalty program. Further, to keep up with customers’ changing preferences, the company is expanding some of its product categories like casual boots, winter and weather boots, and casual shoes.

Apart from these, Deckers boasts robust first-quarter fiscal 2019 results, wherein both bottom and top lines surpassed the Zacks Consensus Estimate for the sixth straight quarter and grew year over year. Moreover, management raised its earnings and net sales guidance for the year. Management now anticipates net sales to be $1,930-$1,955 million, up from its prior projection of $1,925-$1,950 million. Further, adjusted earnings are projected to be $6.25-$6.45 per share, which portrays an improvement of more than $5.74 reported in fiscal 2018. The company had earlier guided adjusted earnings to be $6.20-$6.40 per share.

All said, we believe that the above-mentioned initiatives will help the company continue with its growth story.

Looking for More Trending Picks?

Xtep International Holdings XTEPY has long-term earnings growth rate of 11% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Adidas AG ADDYY has long-term earnings growth rate of 15.9% and a Zacks Rank #2 (Buy).

Wolverine Worlwide, Inc. WWW has long-term earnings growth rate of 10% and a Zacks Rank #2.

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