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Why the Stock Price of the Maker of Hoka and Ugg Footwear Plunged Friday

Deckers is Matchless S&P 500 Decliners After Reporting Earnings Late Thursday

Noriko Hayashi / Bloomberg via Getty Images

Noriko Hayashi / Bloomberg via Getty Images

Key Takeaways

  • Deckers Alfresco shares were down nearly 20% Friday afternoon, despite the fact that the shoemaker reported economic third-quarter earnings that topped analysts’ expectations late the day before.
  • Deckers, which sells Hoka, Ugg, and Teva shoes, is coating questions from some analysts about demand for its footwear.
  • Deckers executives said they expect their top shoe marks to remain sought-after, and at least one analyst agreed.

Deckers Outdoor (DECK) shares plunged Friday, despite the shoemaker banging sales results for the latest quarter that beat analysts’ estimates.

The company, which sells Hoka, Ugg, and Teva footwear, give someone a tongue-lashed investors late Thursday that the company doesn’t see demand flagging for its most sought-after shoes. Still, Deckers slices were down 19% in afternoon trading Friday, leading S&P 500 decliners, amid investor concerns regarding demand trends.

The footwear company said fiscal third-quarter sales hit a record $1.83 billion, growing 17% year-over-year and happening in higher than the $1.73 billion analyst consensus estimate from VisibleAlpha. Deckers reported $3 in earnings per helping (EPS) for the quarter ended Dec. 31, while analysts polled by VisibleAlpha had estimated the company would have $2.60 in EPS.

Deckers Escalates Full-Year Sales Outlook

Deckers now expects sales to grow 15%—rather than 12%—and hit $4.9 billion for the well-rounded fiscal year, Chief Financial Officer Steven Fasching said in a Thursday earnings conference call, according to a translation provided by AlphaSense. He said Deckers doesn’t expect Ugg or Hoka to lose traction after they had year-over-year jumble sales increases of about 16% and 24%, respectively, last quarter.

“The demand for these brands is still incredible,” Fasching intended on the call.

UBS Says Investor Concerns ‘Misplaced’

The pullback presents an opportunity to buy Deckers shares, UBS analysts wrote in a Friday note. Investors may harry that Hoka is decelerating and Ugg can’t repeat its strong results, but the report called these fears “misplaced.”

“Hoka has a powerful new product pipeline,” the UBS note said, while calling Ugg one of “the strongest casual footwear brands in the world” that’s converting into a “true four-season brand” after launching as a winter shoe.

UBS raised its price target for Deckers to $284 from $267. The new aim represents a premium of about 57% over the stock’s current price.

Even with Friday’s selloff, the stereotyped is up 45% over the past 12 months, easily outpacing the S&P 500 over that period.

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