Tuesday, August 05, 2008

Deckers (NASDAQ:DECK): We expect a strong 2Q - RBC Capital

- RBC Capital is out with a good call on Deckers (NASDAQ:DECK) saying that despite the the sell-off in shares over the last week, they continue to believe that momentum in the business remains strong and that there is modest upside to consensus estimates for 2Q. In addition, the firm does not view their estimates for the remainder of the year as being particularly risky.

While 2Q represents a relatively small quarter (12-13% of revenue and 3-4% of profits), sales trends, particularly at the Ugg brand, remained strong based on channel checks. In addition, the early feedback they have gotten on fall styles available at Nordstrom during the July Anniversary Sale has been equally positive and they believe bodes well for performance during the fall season, overall.

Last week, the firm attended the analyst event management hosted during the WSA Show in Las Vegas. The meeting was used as a venue to showcase the upcoming Spring 09 merchandise assortments for their three main brands (Ugg, Teva, and Simple). During the meeting, management's commentary was very upbeat. Pertaining to the Ugg brand in 2Q, management commented that they were happy with the early reads on new fall styles that were shipped to retailers in June and July and that their close-out business was very small and consistent with prior years.

RBC anticipates 2Q EPS of $0.25, up over 40% vs. last year's $0.17. Street consensus for the quarter is $0.24. Remains optimistic with regard to the DECK story and would continue to be buyers of the stock.

Reits Outperform and $154 tgt.

Notablecalls: I think DECK deserves to go higher from here based on RBC comments. The stock is a good mover so I think there is a trade to be had there.

Note that Lazard is also pos on the name this AM.

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