Core Viewpoint - Deckers Outdoor Corporation (DECK) has experienced a significant decline in stock price, dropping 49% over the past six months, which is substantially worse than the broader retail and market indices [1][4][9] Group 1: Stock Performance - DECK shares have underperformed compared to the Zacks Retail-Apparel and Shoes industry, which fell by 15.7%, and the Retail-Wholesale sector's decline of 3.4% [1][4] - The stock closed at $107.70, nearly 51.9% below its 52-week high of $223.98 reached on January 30, 2025, and is trading below its 50 and 200-day moving averages [6][9] - Compared to peers, Boot Barn's shares increased by 9.6%, while Adidas and Nike saw declines of 7.3% and 18.7%, respectively [5] Group 2: Growth Challenges - The decline in DECK's stock price is attributed to slowing growth and increased competition in the footwear and accessories market, alongside weaker direct-to-consumer (DTC) sales in the U.S. for HOKA [4][9] - Management anticipates up to $150 million in additional costs due to new tariffs, which will impact gross margins that reached a record 57.9% in fiscal 2025 but are expected to decline in fiscal 2026 [15][20] - The company has opted not to provide formal revenue or earnings guidance for fiscal 2026 due to uncertainties in global trade policies and consumer sentiment [19] Group 3: Strategic Initiatives - Deckers is focusing on sustainable growth through global expansion, innovation, and a balanced channel strategy, with HOKA and UGG deriving 34% and 39% of revenues from international markets in fiscal 2025 [21] - The company is investing in innovation, with five HOKA franchises generating over $100 million annually, and is adapting to consumer preferences through digital-first strategies [22] Group 4: Valuation Concerns - DECK is currently trading at a forward 12-month price-to-sales (P/S) ratio of 2.96, significantly higher than the industry average of 1.74 and the sector average of 1.61, raising concerns about its elevated valuation amid current challenges [10][11]

Group 1 - Urban Outfitters (URBN) has a Zacks Rank of 1 (Strong Buy), indicating a strong earnings estimate revision trend, while Boot Barn (BOOT) has a Zacks Rank of 4 (Sell) [3] - The Value category of the Style Scores system evaluates companies based on key metrics such as P/E ratio, P/S ratio, earnings yield, and cash flow per share to determine fair value [4] - URBN has a forward P/E ratio of 14.07 and a PEG ratio of 1.17, while BOOT has a forward P/E of 25.89 and a PEG ratio of 1.90, suggesting URBN is more undervalued [5] Group 2 - URBN's P/B ratio is 2.64 compared to BOOT's P/B of 4.38, further indicating URBN's superior valuation metrics [6] - URBN's improving earnings outlook enhances its attractiveness in the Zacks Rank model, positioning it as a better value option compared to BOOT [7]

Group 1 - Urban Outfitters (URBN) has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while Boot Barn (BOOT) has a Zacks Rank of 4 (Sell) [3] - Value investors utilize various metrics to identify undervalued companies, including P/E ratio, P/S ratio, earnings yield, and cash flow per share [4] - URBN has a forward P/E ratio of 14.85 and a PEG ratio of 1.24, while BOOT has a forward P/E of 25.22 and a PEG ratio of 1.94 [5] Group 2 - URBN's P/B ratio is 2.75, compared to BOOT's P/B of 4.25, indicating URBN is more favorably valued [6] - Based on the valuation metrics, URBN holds a Value grade of B, while BOOT has a Value grade of D [6] - URBN's improving earnings outlook and favorable valuation metrics suggest it is the superior value option at this time [7]

Core Viewpoint - Deckers Outdoor Corporation is set to announce its fourth-quarter fiscal 2025 earnings results on May 22, with investors closely monitoring the company's performance amid market challenges and opportunities [1]. Financial Performance - The Zacks Consensus Estimate for Deckers' revenues is $985.6 million, reflecting a 2.7% increase from the previous year's reported figure [2]. - The company is anticipated to experience a year-over-year decline in earnings, with the Zacks Consensus Estimate for earnings per share (EPS) at 56 cents, indicating a 32.5% decrease from the same period last year [3]. Earnings Estimates - The current EPS estimates for the upcoming quarters are as follows: Q4 2025 at 0.56, Q2 2025 at 0.79, and for the current year at 5.89 [4]. - Deckers has a trailing four-quarter earnings surprise of 36.3%, with the last reported quarter outperforming the Zacks Consensus Estimate by 15.4% [4]. Key Growth Drivers - Deckers' fourth-quarter performance is expected to be supported by innovation and brand expansion, particularly through new product launches for HOKA and UGG, with HOKA revenues projected to rise by 12.1% [6]. - The company's direct-to-consumer (DTC) channels are expanding, enhancing online and in-store experiences, which is expected to boost sales volumes and profit margins [7]. Challenges - Inventory availability, especially for UGG, is a significant concern, with a projected 13.2% decline in UGG sales for the fourth quarter due to earlier order fulfillment constraints [9]. - Increased markdowns and promotional efforts, particularly for HOKA, are likely to negatively impact margins, with gross margins expected to contract by 320 basis points [10]. Stock Performance - Deckers' stock has decreased by 13.1% over the past three months, underperforming the Retail-Apparel and Shoes industry, which has seen a 3.9% increase [11]. - Compared to peers, Deckers has lagged behind Boot Barn Holdings, which has risen by 25.4%, while Adidas and Skechers have seen slight declines [11]. Valuation Metrics - Deckers is currently trading at a forward 12-month price-to-earnings (P/E) multiple of 19.47, which is above the industry average of 17.96 but below its median P/E of 28.53 over the past year [12]. - The stock is trading at a discount to Boot Barn and Adidas, which have forward P/E multiples of 25.30 and 24.90, respectively, but at a premium to Skechers, which has a forward P/E of 16.71 [13]. Investment Outlook - The company faces a balance between growth momentum in key brands and operational pressures that may affect profitability, suggesting that investors may consider waiting for clearer signals from the upcoming earnings report before making investment decisions [15].

Valuation and Performance - Deckers Outdoor Corporation (DECK) is trading at a forward 12-month P/E ratio of 18.15, which is above the industry average of 15.39 [1][4] - The stock has decreased by 29.7% over the past three months, underperforming the industry drop of 17.5% [4][5] - DECK's stock price is currently 47.2% below its 52-week high of $223.98, and it is trading below its 100 and 200-day moving averages of $156.06 and $159.00, respectively [9][10] Growth Challenges - The decline in Deckers' stock price is attributed to slowing growth and increasing competition in the footwear and accessories market, with revenue slowdown linked to inventory issues affecting major brands like UGG [5][11] - UGG sales are projected to decline by 13.2% in the fourth quarter, contributing to an overall revenue growth deceleration from 21.2% to just 1% [12] - Increased markdowns and promotional efforts, particularly for HOKA, are expected to pressure margins, alongside external cost headwinds from higher freight expenses and unfavorable foreign exchange movements [13][16] Cost Pressures - Selling, general and administrative (SG&A) expenses rose by 24.9% year over year to $535.3 million, driven by increased marketing investments and workforce expansion [14][16] - Management anticipates SG&A expenses to account for 35% of revenues, with operating margins expected to contract by 610 basis points, leading to a projected bottom line decline of 43.8% [16] Long-term Growth Potential - Deckers is focusing on brand portfolio enhancement through innovative product launches and optimized distribution strategies, with projected revenue growth of 15% in fiscal 2025 [17] - UGG and HOKA are expected to grow by 10% and 24%, respectively, with international markets projected to increase revenues by 22.2% in fiscal 2025 [18] Investment Outlook - Despite strong brand presence, DECK faces headwinds that may limit near-term upside potential, making the current valuation less attractive for investors [19][20] - Existing investors may consider locking in gains or trimming positions, while prospective investors find limited margin of safety at current valuation levels [20]

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