Why Deckers Outdoor Corp (NYSE: DECK) stock is rising

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Deckers Outdoor Corp (NYSE: DECK) stock rose over 7.2% on 22nd May, 2020 (as of 12:24 pm GMT-4 ; Source: Google finance) after the company posted better than expected results for the fourth quarter of FY 20. DECK in the fourth quarter of FY 20 has reported the adjusted earnings per share of 57 cents, beating the analysts’ estimates for the adjusted earnings per share of 3 cents, according to the Zacks Consensus Estimate.

Overall, the company’s business is trending down single-digits quarter-to-date as compared to last year, with wholesale trending down in the mid-30% range and direct-to-consumer trending up in the high-40% range. Wholesale trends are driven on the back of store closures as many wholesalers are not taking new shipments of product, while stores remain closed. For HOKA, the company has already made adjustments to the product launches and inventory purchasing to better allow the wholesale partners to capture consumer demand with existing inventory as they’re able to reopen stores and work to best leverage the online presence.

Furthermore, as the COVID-19 pandemic spread to Europe, the company experienced a significant deterioration of the quarter-to-date growth rate trend in the region shifting from more than 20% over last year at the end of February to just 6% over last year at the end of March. As the United States shut down in mid-March, the company is trending at around 3% over last year through March 15. The company saw this decline to 8% below last year by the end of March with the combined impacts of retail store closures as well as reduced wholesale shipments.

The company had reported 5 percent fall in the adjusted revenue to $374.91 million in the fourth quarter of FY 20, beating the analysts’ estimates for revenue by 8.19%. The HOKA brand has contributed the majority of the year-over-year increase, which was up $129 million with Koolaburra contributing an incremental $26 million over last year with Sanuk and UGG revenue offsetting some of the gains.

Additionally, the company has ended fiscal 2020 with $649 million in cash, compared to $590 million cash last year, with additional availability of $469 million to borrow on existing lines of credit. Inventories rose up 11.8% at $312 million compared to last year at $279 million.

Meanwhile, during the fiscal year 2020, the company had repurchased $190 million worth of shares, but did not repurchase any stock in the fourth quarter. The company still has $160 million remaining authorized for repurchase as of March 31, 2020.

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