Deckers's (DECK) UGG Brand Could be in Trouble this Season - Analyst

December 11, 2012 8:50 AM EST
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Price: $59.68 --0%

Rating Summary:
    16 Buy, 16 Hold, 3 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 7 | Down: 9 | New: 1
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For the second straight day analysts are cautious on sales trends of Deckers Outdoor's (NASDAQ: DECK) popular UGG brand.

Today, analysts at Goldman Sachs noted weekly NPD season-to-date sell-through dated showed declines of 25% for the cold-weather footwear category. Goldman said it is "fair" to extrapolate this data as a read-across to UGG sales, which comprises 50-60% of the category.

"With 50% of the fall/winter season now complete, the next three weeks will be critical for UGG to make up for a seemingly slow start to the season," the analyst notes. "We estimate the next three weeks alone will account for 30% of the cold weather casual footwear category's fall/winter season."

Commenting the non-disclosed but important UGG core classic business, Goldman estimates this represent 15% of 3Q sales and 20% of 4Q sales.

While the weather has been blamed for some weakness, Goldman said while temperatures may not be arctic, they are more 'normal' than they were last winter. "We attribute widespread cold weather footwear weakness to a lack of novelty and product durability."

Goldman maintained a Neutral rating and price target of $33 on DECK.

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 $39.42 yesterday.

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