Deckers shares jump as distribution model boosts Q1 UGG demand
By Shivani Singh
BANGALORE, April 25 (Reuters) - Shares of shoe maker Deckers Outdoor Corp DECK.O rose 20 percent Friday, a day after the company's distribution model fueled strong quarterly sales of its premium UGG brand even as other footwear makers struggle to woo cash-strapped consumers.
The company's distribution model encourages scarcity to grow demand for its premium label of sheepskin footwear, while rival Crocs Inc's (CROX.O: Quotazione) footwear is easily available "everywhere," Susquehanna analyst Christopher Svezia said from New York.
Deckers' UGG line of shoes, boots and slippers are available mostly at upscale retailers such as Nordstrom Inc (JWN.N: Quotazione) and Neiman Marcus.
UGG sales rose 83.6 percent to $54.8 million in the first quarter, while total sales, which include sales from the Simple and Teva brands, rose 34 percent to $97.5 million.
Before Friday's gains, shares of Deckers had fallen about 24 percent as retailers have wrestled with slowing consumer spending in the face of rising fuel and food prices, a beaten down housing market and tighter lending conditions.
But analysts had earlier said the share slide was unwarranted as the strong performance of the UGG brand would help it weather the weak retail market.
Amidst the current turmoil in the industry, retailers are sticking with proven winners when it comes to placing orders and reorders and this will sustain UGG's momentum even during non-season periods.
Wedbush Morgan's Jeff Mintz said given UGG's momentum in the first quarter, the company's expectation of a 37 percent increase in UGG revenues in 2008 was "extremely conservative." Continua...