DECK
Deckers Outdoor Corp.
Consumer
10/02/2024
Presented
| Date | 09/26/2024 |
| Price | $157.26 |
| Market Cap | $23.98B |
| Ent Value | $23.59B |
| P/E Ratio | 30.06x |
| Book Value | $13.60 |
| Div Yield | 0% |
| Shares O/S | 152.46M |
| Ave Daily Vol | 2,050,818 |
| Short Int | 6.01% |
Current
| Price | $161.85 |
| Market Cap | $24.68B |
| Deckers Outdoor Corp. engages in the business of designing, marketing, and distributing footwear, apparel, and accessories developed for both everyday casual lifestyle use and high performance activities. It operates through the following segments: UGG Brand, HOKA Brand, Teva Brand, Sanuk Brand, Other Brands, and Direct-to-Consumer. The UGG Brand segment offers a line of premium footwear, apparel, and accessories. The HOKA Brand segment sells footwear and apparel that offers enhanced cushioning and inherent stability with minimal weight, originally designed for ultra-runners. The Teva Brand segment focuses on the sport sandal and modern outdoor lifestyle category, such as sandals, shoes, and boots. The Sanuk Brand segment originated in Southern California surf culture and has emerged into a lifestyle brand with a presence in the relaxed casual shoe and sandal categories. The Other Brands segment includes the Koolaburra by UGG brand. The Direct-to-Consumer segment consists of retail stores and e-commerce websites. The company was founded by Douglas B. Otto in 1973 and is headquartered in Goleta, CA. |
Publicly traded companies mentioned herein: Adidas AG (ADS GR), Asics Corp (7936 JP), Costco Wholesale Corp (COST), Deckers Outdoor Corp (DECK), Nike Inc (NKE), On Holding AG (ONON), Skechers USA Inc (SKX), VF Corp (VFC)
Highlights
The presenter is short shares of Deckers Outdoor Corp (DECK) based on the belief that its Hoka brand is set to decelerate meaningfully over the next two years. Hoka is at the epicenter of the high stack running shoe trend (i.e., more cushioning), and has grown from a small fraction of DECK’s wholesale profitability a few years ago to the majority of wholesale profitability as of the most recent fiscal year. He believes that despite Hoka’s success and category leadership, competition is ramping rapidly in the form of ONON, NKE, SKX, and even COST. Fashion trends are fickle and newness drives sales, as evidenced by NKE’s post-COVID stumbles resulting from a lack of innovation. As the favorable trend around high stack running shoes stagnates, the brand should decelerate, leading him to FY2026 EPS of $5.40 (vs. consensus $6.03), especially since Hoka’s high-end target market is narrow, saturated, and discerning. Based on this analysis, he believes that DECK should trade at a normalized multiple of 18x on his FY2026 EPS, which equates to a $97 price target and 38% downside from the current $156 share price.
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