2024-07-26 18:38:33 ET
Summary
- Since I last covered Deckers Outdoor Corporation stock and rated it a “sell,” the stock is down more than 17%, underperforming the indices, even after the stock rallied post its earnings report.
- The company saw its revenue and operating income grow 22% and 87% YoY respectively, with strength in its HOKA brand, which grew 30% YoY from full-price selling.
- Although the company continues to gain market share from increasing customer loyalty across its domestic and international markets, it didn’t raise its revenue guidance for the full year.
- I believe that the post earnings gain is likely short-lived as it will face tougher comps moving forward, along with a change in leadership in effect from August 2024, making the stock a “hold.”.
Introduction & Investment Thesis
I last covered Deckers Outdoor Corporation ( DECK ) on June 6th, where I believed that the stock was overvalued with excessive investor optimism baked into its valuation, making it prone to a sharp pullback, especially as revenue growth rates slow from their prior levels. I did emphasize, however, that the company had been operating resiliently, as it saw its HOKA and UGG brands continuing to outperform as it leveraged a robust product portfolio. It is also making compelling marketing efforts to acquire and retain customers both in its domestic and international markets. Since then, the stock has declined close to 18%, underperforming the S&P 500 (SP500) and Nasdaq 100 (NDX)....
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For further details see:
Deckers Outdoor Earnings Review: The Post-Earnings Rally Will Be Short Lived