Sterne Agee CRT Sees Deckers Outdoor (DECK) 3Q Guidance as 'Best Case' Scenario; Maintains Neutral Rating

Sterne Agee CRT maintained a Neutral rating on Deckers Outdoor (NASDAQ: DECK) following the company's 2Q16 earnings results. The company said that inventory growth at the end of 3Q and 4Q will be below sales growth, which implies that receipts in 3Q would need to decline 24% Y/Y. Management said that the front-loading of inventory is intended to eliminate stock outs, which happened last year. 3Q16 EPS is expected to be roughly $5.00. Revenue is expected to be $855M or 9% growth.

Analyst Sam Poser commented, "We would not get involved as the guidance for the remainder of the year appears to reflect a best case scenario. The 2Q16 results were slightly better than expected, but the outlook for the balance of FY16 was a bit too rosy. DECK is taking the UGG brand down the right path, with major improvements in new casual & waterproof offerings, decreasing reliance on Classics, the November introduction of the Classic Slim, improved efficiencies in DTC, and more focused marketing initiatives. However, inventory levels are elevated (+23.5% with total sales up 1.4%), and the weather shows no signs of becoming seasonal. The new non-Classic styles are performing well as a % of total sales, but major acceleration is needed soon."

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 $79.80 yesterday.

You May Also Be Interested In

• Stifel Upgrades Barry Callebaut AG (BARN:SW) (BYCBF) to Buy
• Deutsche Bank: We continue to worry about the setup for TSLA earnings
• Charles Schwab Corp. (SCHW) PT Raised to $92 at TD Cowen