Retail Sucks, But Shoppers Are Still Buying UGGs (DECK)

November 19, 2008 9:10 AM EST

Everything in retail sucks, but Deckers Outdoors' (Nasdaq: DECK) fluffy 'UGG' boots are still selling great, according to Piper Jaffray.

Today, the firm noted that the UGG brand is continuing to buck the trend, with sell through rates suggesting Q4 results will be solid. The firm is a little more cautious about the spring, saying orders are firming but volumes are clouded by the current environment.

Piper is still rating Deckers Outdoors a Buy, but said they expect the shares to remain volatile over the near-term as various data-points on department store performance, footwear category sales-trends and comments by adjacent brands in the affordable luxury space will create confusion surrounding Ugg sales.

Even with great performance from the UGG brand, shares of DECK have not been immune to the downturn in stocks. Shares of DECK are down nearly 50% in the last month. If DECK can still perform in this tough-tough environment, shouldn't its stock have held up a little better? Well it didn't. But maybe that is where opportunity arises.

Piper still has a $126 price target on Deckers Outdoor, which seems a little 'out-there' as it implies over 150% upside from the current $50 stock price. If Deckers can 'meet and beat' for Q4, then it could be 'off to the races', but 150% upside - I don't think so.

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