Deckers (DECK) Shares Slammed as Analyst Says UGG-Mania is Gone
Tweet
Share
E-mail
Get Alerts DECK Hot Sheet
Price: $91.68 +3.17%
Rating Summary:
23 Buy, 21 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
23 Buy, 21 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Join SI Premium – FREE
Shares of Deckers Outdoor (Nasdaq: DECK) are under heavy pressure early Thursday after a long-time bull on the stock turned bearish.
Sterne Agee's Sam Poser downgraded the UGG maker from Buy to Underperform citing warm weather, higher prices, and increased distribution. Put bluntly, he said "the mania appears to be gone."
The analyst's channel checks have shown while the UGG business is still extremely important to retailers, it has been disappointing this fall in the U.S. This will lead to first-quarter 2012 cancellations as inventory is at an adequate level. Retailers will likely be more conservative with fall 2012 orders as well.
Changes to consumer-buying patterns will impact the cadence and nature of second-half 2012 order, the analyst predicts.
"We are hearing of unadvertised discounting at a number of independent retail accounts and we have noticed that Nordstrom (NYSE: JWN) is no longer limiting the number of pairs that can be purchased online," Poser said.
While 2012 still looks promising, it will be less than previously thought as price increases come to light. Poser is now forecasting '12 GM to be down 108 basis points.
Fall 2011 prices increases are impacting sales, Poser contends. Specifically, he cites disappointing sales of the Triplet as the price went from $180 to $200. The Classic Tall is reportedly going from $180 to $200 next year. "We fear that UGG is stretching the pricing limits too far," he said.
The firm is reducing 2012 sales/EPS estimates from $1.6B/$6.47 to $1.56B/$5.81, respectively.
Poser slashed his price target from $130 to $72, which is 25 percent below Wednesday's closing price.
The analyst is not predicting the death of UGG, just a a decelerating US wholesale business. In fact, he is confident the UGG business will continue to grow globally, and expects the brand to still be a major part of many domestic retailers fall '12 business.
Shares of Decker's are down nearly 8 percent in pre-open trading following the downgrade.
Sterne Agee's Sam Poser downgraded the UGG maker from Buy to Underperform citing warm weather, higher prices, and increased distribution. Put bluntly, he said "the mania appears to be gone."
The analyst's channel checks have shown while the UGG business is still extremely important to retailers, it has been disappointing this fall in the U.S. This will lead to first-quarter 2012 cancellations as inventory is at an adequate level. Retailers will likely be more conservative with fall 2012 orders as well.
Changes to consumer-buying patterns will impact the cadence and nature of second-half 2012 order, the analyst predicts.
"We are hearing of unadvertised discounting at a number of independent retail accounts and we have noticed that Nordstrom (NYSE: JWN) is no longer limiting the number of pairs that can be purchased online," Poser said.
While 2012 still looks promising, it will be less than previously thought as price increases come to light. Poser is now forecasting '12 GM to be down 108 basis points.
Fall 2011 prices increases are impacting sales, Poser contends. Specifically, he cites disappointing sales of the Triplet as the price went from $180 to $200. The Classic Tall is reportedly going from $180 to $200 next year. "We fear that UGG is stretching the pricing limits too far," he said.
The firm is reducing 2012 sales/EPS estimates from $1.6B/$6.47 to $1.56B/$5.81, respectively.
Poser slashed his price target from $130 to $72, which is 25 percent below Wednesday's closing price.
The analyst is not predicting the death of UGG, just a a decelerating US wholesale business. In fact, he is confident the UGG business will continue to grow globally, and expects the brand to still be a major part of many domestic retailers fall '12 business.
Shares of Decker's are down nearly 8 percent in pre-open trading following the downgrade.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- HSBC Downgrades Gerdau S.A. (GGBR4:BZ) (GGB) to Hold
- UBS Downgrades Alkane Resources (ALK:AU) to Neutral
- Citi cuts TJX Companies rating to Neutral, lowers price target
Create E-mail Alert Related Categories
Downgrades, Hot DowngradesRelated Entities
Sterne Agee, Raising PricesSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
