Deckers (DECK) Cutting Prices on Classic UGGs, Margin Pressure Appears Inevitable - Analyst
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Price: $91.68 +3.17%
Rating Summary:
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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
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Things appear to be getting worse for Deckers Outdoor's (NASDAQ: DECK) UGGs brand.
According to Sterne Agee's Sam Poser: Retailers just received a letter from DECK saying that based visibility into '13 sheepskin prices they are "happy to report" that effective last Saturday, September 15th they are lowering prices on the following UGG Classics: 1) The Classic Tall going a cost/retail of $105/$210 to $97.50/$195. 2) The Classic Short from $82.50/$165 to $77.50/$155. 3) The Bailey Button from $87.50/$175 to $82.50/$165. Similar price reductions are being taken on the kid's Classics as well. No price reduction is occurring on the Bailey Triplet which will remain at a retail of $230.
Further margin pressure appears inevitable, Poser said.
"Not only are the prices being reduced, but DECK is adjusting prices for all of the aforementioned Classic styles that have been invoiced so far this season," the analyst comments. "It appears to us that DECK may finally be reading the writing on the wall, and realizing that given the extremely high level of inventory and the price resistance occurring at retail, that they had to finally act to address this problem."
The firm is maintaining its Underperform rating and price target of $38.00 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 $43.95 yesterday.
According to Sterne Agee's Sam Poser: Retailers just received a letter from DECK saying that based visibility into '13 sheepskin prices they are "happy to report" that effective last Saturday, September 15th they are lowering prices on the following UGG Classics: 1) The Classic Tall going a cost/retail of $105/$210 to $97.50/$195. 2) The Classic Short from $82.50/$165 to $77.50/$155. 3) The Bailey Button from $87.50/$175 to $82.50/$165. Similar price reductions are being taken on the kid's Classics as well. No price reduction is occurring on the Bailey Triplet which will remain at a retail of $230.
Further margin pressure appears inevitable, Poser said.
"Not only are the prices being reduced, but DECK is adjusting prices for all of the aforementioned Classic styles that have been invoiced so far this season," the analyst comments. "It appears to us that DECK may finally be reading the writing on the wall, and realizing that given the extremely high level of inventory and the price resistance occurring at retail, that they had to finally act to address this problem."
The firm is maintaining its Underperform rating and price target of $38.00 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 $43.95 yesterday.
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