Yesterday, we asked if cold-weather demand for Ugg boots would boost Deckers Outdoor (DECK) financial results during the fourth quarter. We asked the wrong question.
EPA Deckers fourth-quarter results were warm and fuzzy. The footwear company said it earned $4.04 a share, beating the Street’s consensus for $3.80. The guidance for 2014 was well below analyst forecasts, however, so down goes the stock.
Canaccord Genuity’s Camilo Lyon and Patrick O’Brien call the guidance “highly conservative.” They explain:
2014 guidance underwhelmed (implied EPS of $4.54 vs. our/consensus estimates of $5.22/$4.70), leaving us (and others) speculating about the level of conservatism embedded in it. Most notably, backlogs are up 24% at Dec. 31 (consistent with our channel/industry checks), yet it is less than 50% complete. Given that all retailers had a solid season with UGG, we have no reason to believe the remaining orders will change dramatically from those already in the book; thus making the 10% sales growth guide (and implied 4% wholesale growth), highly conservative we believe.
Lyon and O’Brien did, however, lower their price target on Deckers Outdoor to $103 from $111 to account for the lower forecast and higher expenses.
Shares of Deckers Outdoor have dropped 13% to $73.90, while Crocs (CROX) has gained 0.8% to $15.24, Steve Madden (SHOO) has dropped 0.1% to $36.52, Wolverine World Wide (WWW) has fallen 1.2% to $126.36 and Skechers (SKX) has fallen 1.6% to $33.82.
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