Deckers(DECK) The Motley Fool·2025-03-06 19:01Core Viewpoint - Deckers Outdoor's stock experienced a significant decline of 21.4% in February following the release of its fiscal third-quarter results, despite beating estimates and raising guidance [1][2]. Financial Performance - Deckers reported fiscal third-quarter results on January 30, 2025, exceeding expectations and raising its guidance, yet the stock price fell sharply [2]. - For the upcoming fiscal fourth quarter, Deckers anticipates net sales of approximately 960 million in the same quarter of fiscal 2024 [3]. - The company expects a gross margin of about 52% for Q4, a decrease from over 56% in the prior-year period, indicating potential challenges in growth and margins [4]. Market Context - Deckers has been publicly traded for 30 years and is guiding for a record-high gross margin of 57% for fiscal 2025, attributed to high average selling prices and lower wholesale sales [5]. - The CFO of Deckers cautioned that the current high levels of full-price selling and low wholesale closeouts are not sustainable, suggesting a potential normalization in future performance [6]. Industry Trends - Shoe retailers, including Foot Locker, have noted a shift in consumer behavior towards seeking discounted shoes, which poses challenges for the entire footwear sector, including Deckers [7]. - Despite current challenges, Deckers projects a 15% growth in net sales for fiscal 2025 and aims for a record gross margin of over 57%, indicating a robust business outlook [7]. Future Outlook - The key question for Deckers is the potential for growth in fiscal 2026 and beyond, where even moderate growth could lead to favorable stock performance given the company's financial strength and reduced valuation [8].