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Deckers eases fears that Ugg boots might just be a fad
October 25, 2013, 11:34 AM
By Andria Cheng
Actress Leighton Meester in Uggs in Sept. 2011
ugg Ugg boots’ parent Deckers Outdoor Corp.
, after seeing its stock drop to a low of $28.63 a year ago, jumped 17% to $67.71 on Friday.
kids ugg boots The company, which¬† also owns the Teva and Sanuk sandals brands, reported its third-quarter profit topped consensus estimate tracked by FactSet by 23 cents a share. Management also raised its full-year profit outlook even as it lowered this quarter’s forecast because it moved marketing spending to the critical holiday fourth quarter from last quarter.
uggs sale men Deckers shares had fallen after the company’s results the past two holidays were hurt by warmer weather that dented demand for the sheepskin lined Ugg boot that represented more than four-fifths of the company’s total sales and majority of its profit. That raised worries that Deckers is heavily dependent on the cold weather in the fourth quarter. Meanwhile, rising competition from the likes of Tory Burch and Michael Kors
, also caused worry that Ugg, once a celebrity favorite, may have lost its cachet.
cheap uggs for women To evolve Ugg as a more year-round business, Chief Executive Angel Martinez has added colors and styles to Ugg’s classic boot while expanded the label into categories including sandals and casual shoes. Shoppers also can customize their own boots now. Deckers also unveiled an Ugg Pure line of shoes using wool to combat rising sheepskin costs, which had hurt profits between 2010 and 2012. This quarter, profit will benefit from lower sheepskin costs Deckers negotiated last year.
cheap uggs Martinez also has been opening more of the company’s own stores, with a focus on Asia, to ease its dependence on wholesale orders, which have declined in the U.S. market — its largest.
uggs boots on sale “The innovation engine that fueled the UGG brand’s evolution from a regional domestic women’s wholesale brand into a global multi-channel, luxurious comfort brand over its 35-year history is stronger than ever,” Martinez said on a call, adding Deckers is expected to top $1.5 billion in sales this year. “With a warm start to the past two fall seasons, it became clear that we needed a more robust footwear offering to better bridge the gap between late summer and the start of the holiday season.”
Still, some analysts worry Deckers’ profit may be hurt as it spends aggressively to build its own stores. There’s also concern a high-single-digit decline in U.S. wholesale orders may indicate waning demand.
The key question is “are the department stores, independent footwear retailers, and international distributors who helped build the UGG brand into a $1B brand correct in ordering substantially less product,” Credit Suisse analyst Christian Buss said, adding those channels have a “closer understanding” of consumers’ shifting taste.
– Andria Cheng
– Follow her on Twitter @AndriaCheng
deckers , Michael Kors , Sheepskin , Tory Burch , ugg , Ugg Pure
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