BB&T Capital Cuts Deckers Outdoor (DECK) to 'Underweight' as Nordstrom Weakness Adds to Concerns

(Updated - May 13, 2016 8:40 AM EDT)

BB&T Capital downgraded Deckers Outdoor (NYSE: DECK) from Hold to Underweight. The downgraded follows disappointing Q1 results and guidance at Nordstrom's (NYSE: JWN), which adds to concerns about the difficult wholesale environment.

Analyst Corinna L. Freedman explained, "Macy's noted a soft Women's footwear business, while Nordstrom noted weakness with some of its higher volume brands, and that it intends to bring in newer brands and will continue to manage down its inventory, which likely does not bode well for UGG. UGG heritage classic boots have remained on sale YTD in both the DTC and wholesale channels and with planned markdowns baked into the assortment going forward, we believe retailers may be less likely to chase UGG in-season, despite any potential favorable weather."

Freedman concluded, "We are downgrading shares of DECK to Underweight from Hold given bleak wholesale channel commentary from footwear, apparel, and accessories companies, coupled with Macy's and Nordstrom's dismal Q1'16 reports and outlooks. Wholesale sell-ins remain tough, with many accounts opting instead to chase in season demand, and as such, we continue to believe consensus expectations for FY'17 remain too bullish. We expect the company to guide below current consensus numbers and we proactively lowered our estimate in early April. YTD, shares of DECK have risen ~13%, outperforming the overall footwear manufacturing sector, which we believe has been due partly to the possibility of M&A activity."

For an analyst ratings summary and ratings history on Deckers Outdoor click here. For more ratings news on Deckers Outdoor click here.

Shares of Deckers Outdoor closed at $53.27 yesterday.

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