Ahead of Bell: Deckers hurt by Ugg-ly outlook
NEW YORK (AP) — Shares of Deckers Outdoor are falling in Friday premarket trading after the maker of Ugg footwear surprised Wall Street by forecasting a quarterly loss.
On Thursday Deckers said that it anticipates a first-quarter loss of about 16 cents per share. Analysts that follow the company had been expecting a per-share profit of 11 cents, according to a poll by FactSet.
Deckers said that a significant amount of its expenses are fixed and distributed evenly over its quarters, including the costs of 28 new stores that weren't opened until the second half of last year. Citing those late openings, Deckers expects earnings in the first half of this year to be lower than the first half of 2013. The company believes that earnings in the second half of 2014, however, will exceed last year's.
For 2014, Deckers said that it foresees an approximately 9 percent increase in Ugg revenue.
Sam Poser of Sterne Agee & Leach said he doesn't understand how anticipated double-digit increases in online and retail sales and a mid-single digit rise in wholesale will lead only to a 9 percent rise in Ugg revenue for the year.
Poser said that even though he was disappointed with Deckers guidance, he views it as an improving company and remains upbeat on the Ugg brand.
"The value proposition of Uggs has improved due to better distribution and much better product offerings across many categories," the analyst wrote.
Poser kept a "Buy" rating and lowered Deckers' price target to $95 from $110.
Corinna Freedman of Wedbush said that Deckers' guidance is likely conservative, in step with the company's historical approach.
Freedman reiterated an "Outperform" rating and $94 price target.
Shares of Deckers Outdoor Corp. dropped $9.97, or 11.8 percent, to $74.70 before the market open.