Deckers Calms Fears About Ugg Reorders

Deckers Calms Fears About Ugg Reorders
Angel Martinez and Connie Rishwain, photographed at Deckers Outdoor Corp.’s Goleta, Calif.-based headquarters

Deckers Outdoor Corp. fought back Wednesday against suggestions that unseasonably warm weather significantly dampened fourth-quarter sales for Ugg Australia, which comprises 84 percent of the company’s revenue.

Company Chairman, President and CEO Angel Martinez, speaking at the 14th Annual ICR Xchange conference in Miami, told attendees, “The Ugg brand is a lifestyle brand. One of our categories is cold weather, but we are not a cold-weather brand. [To] compare us to Sorel, for example, is ludicrous.”

Camilo Lyon, analyst at Canaccord Genuity, said, “Coming into ICR, the sentiment around Deckers was extremely negative due to concerns around the effect warmer weather has had on the Ugg reorder business, specifically in the independent retail channel. Some were even anticipating a negative preannouncement, which never materialized.”

Nervous investors started selling off the Goleta, Calif.-based company’s stock last month after Sterne Agee analyst Sam Poser downgraded it to “underperform” from “buy;” lowered its price target to $72 from $130; and eventually caused it to close the year at $75.57, lower than where it started.

After Wednesday’s presentation, Deckers’ stock climbed 4.1 percent to $88.47.

Ugg, now $1 billion brand, will forge ahead through accelerating international growth and ongoing store expansion, Martinez said, suggesting there was potential to grow to $2 billion.

“Where does the next $1.1 billion come from? We will be expanding our cold-weather and Ugg collection, and it’s important to understand that the cold-weather product for us gives us another conversation to have with the consumer. It’s the technical side of the brand. … Waterproof technologies, insulating technologies, traction technologies all come into play, and we have some things up our sleeve that you’ll see beginning in fall ’12,” added Martinez.

The exec also said there are opportunities for the Teva and Sanuk brands to stop playing second fiddle to Ugg in the group’s portfolio.

He called Teva “a legitimate four-season product line now that has been significantly well received with weather technology and cold-weather technology.”

As for Sanuk, he said, “there will be line expansion and the new product introductions, and it will become a year-round brand. There will also be category expansion in accessories [and] very simple, surf-oriented apparel.”

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