Group 1 - The core investment strategy focuses on long-only investment, evaluating companies from an operational and buy-and-hold perspective, rather than market-driven dynamics [1] - The articles emphasize understanding the long-term earnings power of companies and the competitive dynamics within their industries [1] - The majority of recommendations will be holds, indicating a cautious approach to investment opportunities, with only a small fraction of companies deemed suitable for buying at any given time [1] Group 2 - The articles aim to provide important information for future investors and introduce a healthy skepticism towards a generally bullish market [1] - There is a clear distinction made between the author's opinions and professional investment advice, highlighting the need for readers to conduct their own due diligence [2][3]

Core Insights - Deckers Outdoor (DECK) shares fell 19% despite reporting fiscal third-quarter sales of $1.83 billion, which exceeded analysts' expectations of $1.73 billion, reflecting a 17% year-over-year growth [1][2] - The company maintains a positive outlook on demand for its key brands, Hoka and Ugg, which saw year-over-year sales increases of approximately 16% and 24%, respectively [3][6] - UBS analysts view the recent stock decline as an opportunity, asserting that concerns regarding Hoka's demand and Ugg's performance are unfounded, and they have raised their price target for Deckers to $284, indicating a potential upside of about 57% [4][5] Financial Performance - Deckers reported earnings per share (EPS) of $3 for the quarter ended December 31, surpassing the consensus estimate of $2.60 [2] - The company has raised its full-year sales growth forecast from 12% to 15%, projecting total sales of $4.9 billion for the fiscal year [3] Market Reaction - Despite strong earnings and positive sales outlook, Deckers shares experienced a significant drop, leading declines in the S&P 500 [1][6] - The stock has still appreciated 45% over the past 12 months, outperforming the S&P 500 during that period [5]

Core Viewpoint - Deckers Outdoor's stock experienced a significant decline following the release of its fiscal Q3 2025 financial results, despite reporting strong sales and earnings growth, indicating that market expectations were overly high [1][2][4]. Financial Performance - Deckers reported Q3 net sales of over $1.8 billion, reflecting a 17% year-over-year increase, surpassing analysts' expectations [2]. - The company's Q3 earnings per share (EPS) reached $3, which is a 19% increase compared to the previous year and also exceeded estimates [2]. Guidance Updates - For fiscal 2025, Deckers raised its full-year net sales growth expectation from 12% to 15% and increased its gross margin guidance from a best-case scenario of 55.5% to a worst-case scenario of 57% [3]. - Despite these positive adjustments, analysts had anticipated even more substantial increases in guidance, contributing to the stock's decline [4]. Market Context - Prior to the Q3 report, Deckers' stock was trading at an all-time high and had increased over 70% in the past year, with a valuation of more than 7 times its trailing sales, marking it as one of the most expensive shoe stocks [5]. - The elevated expectations from analysts and investors likely led to the stock's cooling off, despite the strong financial results being encouraging for long-term shareholders [6].

Core Viewpoint - Deckers Outdoor Corporation's shares are experiencing a significant decline of over 18% despite reporting strong earnings and sales figures, raising questions about market reactions and potential concerns regarding inventory levels [1][2]. Financial Performance - Deckers reported third-quarter sales of $1.83 billion, surpassing analyst expectations of $1.73 billion [1]. - Earnings per share were $3, exceeding the anticipated $2.56 [2]. - The company revised its full-year earnings forecast to a range of $5.75 to $5.80, up from the previous outlook of $5.15 to $5.25 [2]. Inventory Concerns - The company's inventory increased from $474.31 million to $576.67 million, marking a growth of over 20% [2]. - Rising inventory levels can indicate potential issues for retailers, as unsold products may lead to price reductions or writedowns, which could signal bearish trends for the long term [3]. Technical Analysis - A support level for Deckers' shares is identified around $182.25, which has previously acted as a resistance point [1][4]. - If the stock price approaches this support level, it may attract buyers who previously sold at higher prices, potentially leading to a reversal and upward trend [6].

Core Viewpoint - Deckers Outdoor Corporation reported strong quarterly earnings, exceeding analyst expectations, but shares are trading lower due to concerns over future sales and inventory management [1][5]. Financial Performance - Quarterly earnings were $3 per share, surpassing the consensus estimate of $2.55 [1]. - Quarterly revenue reached $1.83 billion, beating the analyst consensus of $1.73 billion and increasing from $1.56 billion in the same period last year [1]. - For fiscal 2025, revenue growth is projected at 15%, with earnings expected between $5.75 and $5.80 per share [1]. Analyst Insights - Telsey Advisory Group noted strong results amid a challenging macro environment and praised the company's inventory management strategy [2]. - Piper Sandler indicated a potential slowdown in fourth-quarter sales and lower gross margins due to increased markdowns on UGG products [3]. - Truist Securities highlighted that the quarterly slowdown is attributed to inventory management and UGG shortages, but remains optimistic about growth [5]. - Needham emphasized Deckers as a high-quality company with strong brands and a solid management team, suggesting a favorable outlook for the next quarters [6]. - Stifel expressed concerns that HOKA growth projections for FY26 may be overly optimistic, despite confidence in the company's execution [7]. Price Forecasts and Ratings - Telsey Advisory Group maintained an Outperform rating with a price target of $240 [8]. - Piper Sandler reiterated a Neutral rating with a price target of $210 [8]. - Truist Securities maintained a Buy rating but lowered the price target to $225 from $235 [8]. - Needham reiterated a Buy rating with a price target of $246 [8]. - Stifel maintained a Hold rating, raising the price target to $185 from $181 [8]. - Guggenheim raised the gross margin estimate for FY25 to 57.2% from 55.5% [9]. Market Reaction - Deckers shares are trading lower by 18.8%, currently at $181.12 [9].

Core Insights - Deckers Outdoor Corporation (DECK) reported strong third-quarter results, exceeding expectations and raising its fiscal 2025 outlook, driven by the performance of HOKA and UGG brands [1][2] Financial Performance - Quarterly earnings reached $3.00 per share, surpassing the Zacks Consensus Estimate of $2.60 and up from $2.52 in the prior year [3] - Net sales increased 17.1% year over year to $1,827.2 million, exceeding the consensus estimate of $1,713 million; on a constant-currency basis, net sales grew 16.6% [4] - Gross margin expanded to 60.3% from 58.7% in the previous year, surpassing expectations of 55.5%, driven by higher-margin UGG products and increased full-price sales [5] - SG&A expenses rose 24.9% year over year to $535.3 million, representing 29.3% of net sales, an increase of 180 basis points from last year [6] - Operating income was $567.3 million, up from $487.9 million in the prior year, with an operating margin of 31% [6] Brand Performance - HOKA brand sales increased 23.7% year over year to $530.9 million, exceeding projections [7] - UGG brand net sales grew 16.1% to $1,244 million, surpassing estimates [7] - Teva brand sales declined 6% to $24.1 million, falling short of expectations [7] - Other brands, primarily Koolaburra, saw a 16.6% decline in net sales to $28 million [8] Sales Channels and Geography - Wholesale net sales increased 16.2% year over year to $815.8 million [9] - Direct-to-consumer (DTC) net sales advanced 17.9% to $1,011 million, with DTC comparable net sales surging 18.3% [9] - Domestic net sales rose 11.5% to $1,169 million, while international net sales increased 28.5% to $657.9 million [9] Future Outlook - The company anticipates a 15% increase in fiscal 2025 net sales, reaching $4.9 billion, with HOKA expected to grow by 24% and UGG by 10% [11] - Fiscal 2025 gross margin is projected to be at or slightly better than 57%, up from earlier estimates [11] - SG&A expenses as a percentage of net sales are expected to be 35%, indicating a deleverage of 100 basis points from last year [12] - The operating margin is projected to be approximately 22%, an increase from previous guidance [12] - Fiscal 2025 earnings are forecasted in the range of $5.75-$5.80 per share, up from $4.86 reported last year [13]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 increased by 17% year-over-year to $1.83 billion, with gross margins improving to 60.3% [11][35][38] - Diluted earnings per share rose by 19% to $3, compared to $2.52 in the previous year [11][40] - Fiscal year-to-date performance shows significant revenue growth, with HOKA increasing by 29% and UGG growing by 15% [13][36] Business Line Data and Key Metrics Changes - UGG's global revenue in Q3 increased by 16% to $1.24 billion, with balanced growth across direct-to-consumer and wholesale channels [15][36] - HOKA's global revenue rose by 24% to $531 million, with DTC increasing by 27% and wholesale growing by 21% [26][36] - UGG experienced strong growth in both acquisition and retention of customers, with a 25% increase in UGG Reward members [16] Market Data and Key Metrics Changes - International markets for UGG rose by 28%, while the DTC and wholesale channels saw a balance increase of 19% [13] - HOKA's growth was particularly strong in the APAC region, with China contributing the largest incremental dollar revenue [26] Company Strategy and Development Direction - The company plans to phase out the Koolaburra brand to focus on more significant organic opportunities [24] - The strategy for HOKA includes building awareness and consideration while managing the marketplace for long-term growth [59][60] - The company aims to maintain a flexible operating model to support long-term brand health and profitability [34][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 15% revenue growth for fiscal 2025, marking the fifth consecutive year of mid-teens growth [14][42] - The company anticipates challenges in Q4 due to inventory limitations and a more promotional environment compared to the previous year [44][49] - Management remains committed to maintaining financial discipline and delivering top-tier profitability [52][50] Other Important Information - The company repurchased approximately $45 million worth of shares during the third quarter [41] - The updated guidance for diluted earnings per share is now in the range of $5.75 to $5.80 [48] Q&A Session Summary Question: Can you discuss the management of the HOKA brand and growth expectations? - Management emphasized the importance of building HOKA as a transformational brand with a focus on long-term sustainable growth, not just chasing numbers [59][63] Question: What is the reception of upcoming product launches like Clifton 10 and Arahi 8? - The reception has been positive, with both models booked well and meeting expectations [68][70] Question: How did the U.S. growth compare to expectations and what are the international growth prospects? - U.S. growth met expectations, and international growth is expected to outpace the U.S. in the future [86][90] Question: What are the opportunities to maintain or improve operating margins? - Management acknowledged that while maintaining high margins is challenging, the scarcity model and brand strength support margin levels [91][92] Question: Can you elaborate on the Clifton 10 launch and its impact on sales and margins? - The Clifton 10 will have a staggered launch, with some sales recognized in Q4 and some in Q1, and margin impacts from the closeout of Clifton 9 are anticipated [140][141]

Core Insights - Deckers (DECK) reported revenue of $1.83 billion for the quarter ended December 2024, marking a year-over-year increase of 17.1% and exceeding the Zacks Consensus Estimate of $1.71 billion by 6.70% [1] - The company's EPS for the same period was $3.00, up from $2.52 a year ago, surpassing the consensus EPS estimate of $2.60 by 15.38% [1] Financial Performance - International net sales reached $657.90 million, exceeding the average estimate of $543.46 million by two analysts, representing a year-over-year increase of 28.5% [4] - Domestic net sales totaled $1.17 billion, surpassing the average estimate of $1.11 billion, with a year-over-year change of 11.6% [4] - HOKA brand net sales amounted to $530.90 million, exceeding the average estimate of $516.30 million, reflecting a year-over-year increase of 23.7% [4] - UGG brand net sales were reported at $1.24 billion, above the average estimate of $1.13 billion, indicating a 16% year-over-year increase [4] - Other brands generated net sales of $28 million, slightly below the average estimate of $29.80 million, showing a year-over-year decline of 5.4% [4] - Teva brands reported net sales of $24.10 million, which was below the average estimate of $24.89 million, reflecting a year-over-year decrease of 5.9% [4] Market Performance - Deckers shares have returned +7.8% over the past month, outperforming the Zacks S&P 500 composite's +1.2% change [3] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential for outperformance in the near term [3]

Group 1: Earnings Performance - Deckers reported quarterly earnings of $3 per share, exceeding the Zacks Consensus Estimate of $2.60 per share, and up from $2.52 per share a year ago, representing an earnings surprise of 15.38% [1] - The company posted revenues of $1.83 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 6.70%, compared to year-ago revenues of $1.56 billion [2] - Deckers has surpassed consensus EPS estimates for four consecutive quarters [2] Group 2: Stock Performance and Outlook - Deckers shares have increased approximately 7.8% since the beginning of the year, outperforming the S&P 500's gain of 2.7% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the upcoming quarter is $0.71 on revenues of $1.05 billion, and for the current fiscal year, it is $5.62 on revenues of $4.9 billion [7] Group 3: Industry Context - The Retail - Apparel and Shoes industry, to which Deckers belongs, is currently ranked in the top 24% of over 250 Zacks industries, indicating a favorable outlook for stocks in this sector [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that investors can benefit from tracking these revisions [5][6]

Financial Performance - Revenue for the quarter increased by 15% compared to the same period last year [1]. - Net profit margin improved to 12%, up from 10% in the previous quarter [2]. - Operating expenses rose by 8% due to increased marketing and R&D investments [3]. Market Expansion - The company successfully entered two new international markets, contributing to a 20% increase in global sales [4]. - A new distribution partnership was established in Europe, expected to boost market share by 5% in the next fiscal year [5]. Product Development - Launched three new products, which accounted for 25% of total sales this quarter [6]. - R&D expenditure increased by 10% to support ongoing innovation and product enhancements [7]. Operational Efficiency - Implemented new cost-saving measures that reduced production costs by 5% [8]. - Streamlined supply chain operations, resulting in a 15% reduction in delivery times [9]. Customer Engagement - Customer satisfaction scores improved by 10% due to enhanced service and support initiatives [10]. - Launched a new loyalty program, which has already attracted 50,000 new members [11]. Strategic Partnerships - Formed a strategic alliance with a leading tech company to co-develop next-generation products [12]. - Signed a long-term agreement with a major supplier to secure better pricing and ensure supply chain stability [13]. Regulatory Compliance - Successfully passed all regulatory audits with no major findings [14]. - Invested in new compliance training programs for employees to ensure adherence to industry standards [15]. Sustainability Initiatives - Reduced carbon emissions by 12% through the implementation of green manufacturing practices [16]. - Committed to achieving net-zero emissions by 2030, with a detailed roadmap in place [17]. Employee Development - Increased employee training hours by 20% to enhance skills and productivity [18]. - Introduced a new performance-based incentive program to motivate and retain top talent [19]. Technology Investments - Allocated $50 million to upgrade IT infrastructure, improving system reliability and security [20]. - Adopted advanced data analytics tools to enhance decision-making and operational insights [21]. Risk Management - Established a new risk management framework to better identify and mitigate potential threats [22]. - Conducted regular stress tests to ensure financial resilience in volatile market conditions [23]. Shareholder Value - Increased dividend payouts by 10%, reflecting strong financial performance and confidence in future growth [24]. - Repurchased 2 million shares as part of the ongoing share buyback program [25].