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Outdoor (VFC), Boots (DECK) and Athletic (NKE/UA/FL) Shine, Janney Capital Comments

December 1, 2014 8:33 AM EST
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Price: $941.26 +0.36%

Rating Summary:
    25 Buy, 15 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 13 | Down: 11 | New: 11
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Janney Capital Footwear and Apparel analyst Eric Tracy weighed in following the Thanksgiving weekend. The firm noted Outdoor (VFC), Boots (DECK) and Athletic (NKE/UA/FL) shined.

"We believe UGG and TNF are the standout winners, with strong demand/traffic aided by favorable seasonality, while FL, FINL, and DKS continue to benefit from the favorable product pipeline," Tracey said. "Online migration continues (comScore reporting Thanksgiving + BF up 28% y/y); however, believe athletic/outdoor continues to maintain superior mind/wallet share with the consumer."

  • Deckers (Nasdaq: DECK) (Buy, $100 FV). Our checks throughout BF show that UGG was a clear winner with strong traffic throughout their retail partners (Nordstrom, Bloomingdales) as well as their brand stores (including tech-concept store in Tysons Galleria). Despite offering limited promotions across any channels of distribution, traffic was strong throughout the weekend, aided by colder weather in key selling geographies. Bloomingdales and Nordstrom had prominent UGG displays (allocation at or above prior year levels), with core product assortments augmented by improving fashion offerings as well as additional men's fixtures relative to prior years. Additionally, inventory positions appeared healthy throughout the week (our checks indicated in-stock positions for key styles/sizes in store/online).
  • Under Armour (NYSE: UA) (Buy, $71 FV). Our checks indicate continued strong demand aided by favorable seasonality and continued innovation (including new footwear platform - Scorpio). UA ran one promotion in their Brand House for Black Friday, which was 25% off men’s and women’s logo tees and hoodies. We believe aforementioned factors helped support demand, however relatively limited promotions (particularly relative to rest of mall) tempered shopper traffic across the lease line at the company's flagship Brand House, in our view. We note the same 25% off promotion was also featured at key retail partners (including DKS and FINL).
  • VF Corp (NYSE: VFC) (Buy, $71 FV). The North Face was another standout winner during BF, with colder temperatures (US temps ~8 degrees below average in the week prior to Black Friday) and innovation (Thermoball, Fuseform) supporting demand. Despite TNF stores offering limited promotions (only Triclimate jackets at $170 vs. orig $240 and full zip fleeces at $69.99 vs. orig $99), traffic was strong in both KOP and Tysons Corner based on our checks. Vans offered select promotions on pants and denim, jackets, and flannel shirts (aided by the recent cold snap) which helped to drive traffic. The Timberland brand store offered a store wide promotion in KOP of 25% off your entire order, and we note increased allocation of Timberland footwear at Foot Locker over the weekend.
  • Foot Locker (NYSE: FL) (Buy, $61 FV). Our checks showed healthy traffic levels across concepts (particularly FL and Champs). No store wide promotions were offered, however we did observe slightly elevated promotions (particularly within running footwear). Similar to last year, management returned its "The Week of Greatness" promotion, which showcased several new product launches in the important basketball category (including J. Wall 1, KD7, LBJ12 'Six Meridians') in addition to a red tag shoe sale (and 2 for $25 socks). We believe the release of the Jordan 6 Black Infrared (occurred at 8 AM on BF) catalyzed traffic (Champs in Tysons sold out by late am), while House of Hoops locations drew strong traffic despite limited promotions. Footlocker.com was offering 15% on BF, moved to 20% off with no minimum by Sun. (same as last year).
  • Finish Line (Nasdaq: FINL) (Buy, $30 FV). FINL employed a relatively more promotional environment relative to last year based on our checks. Several "doorbusters" across men’s, women’s, and kid’s shoes, athletic shorts, and Garmin Vivofit bracelets were offered, and similar to last year, FINL returned its Weekend Warrior campaign (select footwear at 30% off lowest price). Beyond the BF event, however, we believe promotions extended to additional SKUs (particularly in running; however, believe aided in traffic levels).

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.



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