Industry Overview - The Retail – Apparel and Shoes industry includes companies that design, source, and market clothing, footwear, and accessories for all demographics, benefiting from strong consumer demand for activewear and athleisure [1] - Industry players are focusing on product innovations, active promotions, store expansion, and enhancing e-commerce capabilities to capture market share [4][5] Positive Catalysts - The increasing focus on fashion is driving demand for innovative apparel and footwear in the U.S. [3] - E-commerce is crucial for the growth of the athleisure market, with companies leveraging digital channels to build customer bases [5][6] - Investments in supply chains and order fulfillment are expected to provide competitive advantages [7] Recommended Stocks - Five stocks with strong revenue and earnings growth potential for 2025 are highlighted: Deckers Outdoor Corp. (DECK), Tapestry Inc. (TPR), Urban Outfitters Inc. (URBN), Stitch Fix Inc. (SFIX), and On Holding AG (ONON) [2][8] Company Highlights Deckers Outdoor Corp. (DECK) - DECK has a diverse brand portfolio and strategic growth initiatives, with a focus on innovation and expanding consumer reach [10][11] - Expected revenue and earnings growth rates are 10.1% and 12.2%, respectively, for the next year [12] - The average short-term price target indicates a potential upside of 127.8% from the last closing price of $124.68 [13] Tapestry Inc. (TPR) - TPR has seen robust revenue growth driven by Coach's performance and international expansion [14] - The company expects revenues of $6.85 billion in fiscal 2025, reflecting a 3% year-over-year growth [15] - The average short-term price target suggests a maximum upside of 45.3% from the last closing price of $75.72 [16][17] Urban Outfitters Inc. (URBN) - URBN has experienced strong growth across its segments, with significant contributions from Anthropologie and Free People [18] - The company is pursuing aggressive store expansion and has improved gross margins [19] - Expected revenue and earnings growth rates are 6.6% and 14.5%, respectively, for the current year [20] Stitch Fix Inc. (SFIX) - SFIX's transformation strategy has led to improvements in inventory management and client satisfaction [22] - The company has a debt-free balance sheet, providing financial flexibility for growth [23] - Expected revenue and earnings growth rates are -7.7% and 60.6%, respectively, for the current year [24] On Holding AG (ONON) - ONON develops and distributes sports products, focusing on high-performance footwear and apparel [26] - Expected revenue and earnings growth rates are 27.4% and 5.5%, respectively, for the current year [27] - The average short-term price target indicates a maximum upside of 51.1% from the last closing price of $48.32 [28]

Core Viewpoint - Consumers are reducing spending on discretionary items due to economic concerns, yet retail sales showed growth in February, indicating resilience in the retail sector and potential investment opportunities in retail stocks [1][3]. Retail Sales Performance - Retail sales increased by 0.2% in February, rebounding from a 1.2% decline in January, although it fell short of the 0.3% consensus estimate [3]. - Excluding autos, retail sales rose by 0.3%, with a year-over-year increase of 3.1% in February, driven by a 3.1% increase in online sales [4]. Economic Factors Impacting Retail - Consumer sentiment has been affected by economic uncertainty, higher prices, and tariff policies, but retail sales rebounded in the second half of 2024 after the Federal Reserve's interest rate cuts [5]. - Inflation showed signs of cooling in February, which is favorable for both the economy and the retail sector [6]. - The Federal Reserve is expected to resume rate cuts if inflation continues to decrease, which would benefit the retail sector [7]. Selected Retail Stocks - **JD.com, Inc. (JD)**: Expected earnings growth rate of 7.5% for the current year, with a Zacks Consensus Estimate improvement of 4.6% over the past 60 days, currently holding a Zacks Rank 1 [8]. - **Deckers Outdoor Corporation (DECK)**: Anticipated earnings growth rate of 21% for next year, with a 5.9% improvement in earnings estimates over the past 60 days, currently holding a Zacks Rank 2 [10]. - **The Gap, Inc. (GAP)**: Expected earnings growth rate of 7.7% for next year, with a 9.7% improvement in earnings estimates over the past 60 days, currently holding a Zacks Rank 1 [11]. - **Tapestry, Inc. (TPR)**: Expected earnings growth rate of 14.5% for the current year, with a 6.3% improvement in earnings estimates over the past 60 days, currently holding a Zacks Rank 2 [13]. - **Urban Outfitters, Inc. (URBN)**: Expected earnings growth rate of 11.8% for the current year, with an 8.1% improvement in earnings estimates over the past 60 days, currently holding a Zacks Rank 2 [15].

Core Insights - Deckers Outdoor is recognized for its footwear brands, particularly the UGG sheepskin boots and the Hoka brand of high-performance running shoes [1][2] - Hoka has evolved into a fashion phenomenon with expected sales exceeding $2 billion this year [2] - Longtime shareholders have seen a significant return on investment, with a $10,000 investment worth $100,060 today, reflecting a 901% return [3] Financial Performance - Deckers Outdoor reported a record year for revenue and earnings, with total revenue climbing by 17% year over year in the fiscal third quarter [4] - Despite strong performance, shares have been volatile, down about 40% year to date, raising concerns about potential deceleration in growth and profitability margins [4][5] Valuation and Future Outlook - The recent sell-off has reset the company's valuation, with a forward price-to-earnings (P/E) ratio of 21 [6][7] - The earnings per share guidance is between $5.75 and $5.80, suggesting the stock could be undervalued if the company exceeds expectations in its global expansion [7] - While another significant return may not be imminent, the company is well-positioned for long-term shareholder rewards [7]

Core Insights - Deckers Outdoor Corporation (DECK) is experiencing strong financial growth, primarily driven by the success of its brands UGG and HOKA, international expansion, and a focus on direct-to-consumer (DTC) sales [1][2][3] Financial Performance - The company reported record-breaking sales in the third quarter of fiscal 2025, with HOKA and UGG achieving year-over-year sales growth of 23.7% and 16.1%, respectively [4] - DTC net sales rose 17.9% year over year to $1.01 billion in the fiscal third quarter, with comparable net sales increasing 18.3% [5] - Deckers expects fiscal 2025 total revenues to grow 15% year over year to $4.9 billion, with HOKA rising 24% and UGG up 10% [14] - The company anticipates an improvement in gross margin, expecting it to reach or slightly exceed 57% compared to the previous year's 55.6% [15] Brand and Product Development - UGG maintains its dominance in the premium lifestyle footwear market, while HOKA is gaining traction in high-performance athletics [4] - Deckers is committed to innovation, expanding its product offerings across lifestyle and performance footwear, including new product launches for HOKA and diversification for UGG [9][10] International Expansion - International markets are increasingly important for Deckers, particularly for HOKA, which is seeing strong adoption due to brand awareness and managed wholesale expansion [7] - UGG's diversification into new product categories and international markets, especially in high-potential regions like China, presents significant long-term revenue opportunities [8] Financial Strength and Shareholder Value - Deckers maintains a strong financial position with a debt-free balance sheet and substantial cash reserves of $2.24 billion as of December 31, 2024 [12] - The company repurchased approximately 275,000 shares for $44.7 million in the fiscal third quarter, with $640.7 million remaining under its share repurchase authorization [12][13]

Core Insights - The Motley Fool aims to enhance the intelligence, happiness, and wealth of individuals globally [1] Company Overview - Founded in 1993, The Motley Fool is a financial services company [1] - The company reaches millions of people monthly through various channels including premium investing solutions, free guidance, market analysis on Fool.com, top-rated podcasts, and its non-profit arm, The Motley Fool Foundation [1]

Core Viewpoint - Deckers Outdoor's stock experienced a significant decline of 21.4% in February following the release of its fiscal third-quarter results, despite beating estimates and raising guidance [1][2]. Financial Performance - Deckers reported fiscal third-quarter results on January 30, 2025, exceeding expectations and raising its guidance, yet the stock price fell sharply [2]. - For the upcoming fiscal fourth quarter, Deckers anticipates net sales of approximately $936 million, down from $960 million in the same quarter of fiscal 2024 [3]. - The company expects a gross margin of about 52% for Q4, a decrease from over 56% in the prior-year period, indicating potential challenges in growth and margins [4]. Market Context - Deckers has been publicly traded for 30 years and is guiding for a record-high gross margin of 57% for fiscal 2025, attributed to high average selling prices and lower wholesale sales [5]. - The CFO of Deckers cautioned that the current high levels of full-price selling and low wholesale closeouts are not sustainable, suggesting a potential normalization in future performance [6]. Industry Trends - Shoe retailers, including Foot Locker, have noted a shift in consumer behavior towards seeking discounted shoes, which poses challenges for the entire footwear sector, including Deckers [7]. - Despite current challenges, Deckers projects a 15% growth in net sales for fiscal 2025 and aims for a record gross margin of over 57%, indicating a robust business outlook [7]. Future Outlook - The key question for Deckers is the potential for growth in fiscal 2026 and beyond, where even moderate growth could lead to favorable stock performance given the company's financial strength and reduced valuation [8].

Core Viewpoint - Deckers Outdoor Corporation (DECK) is currently trading at a premium valuation compared to industry averages, suggesting potential overvaluation despite strong fundamentals and growth prospects [1][2][3]. Valuation - DECK is trading at a forward 12-month price-to-sales (P/S) multiple of 3.91X, significantly higher than the Zacks Retail-Apparel and Shoes industry's average of 1.61X and the Retail-Wholesale sector's 1.63X [1]. - The stock is above its five-year median P/S level of 3.24, indicating a premium valuation [1]. Recent Performance - DECK shares closed at $139.36, experiencing a 17.8% decline over the past month, compared to a 9.4% decline in the industry [3]. - The recent stock price drop is attributed to revenue slowdown and inventory constraints, particularly for the UGG brand, alongside potential gross margin pressure in the fourth quarter [4]. Brand Performance and Growth Opportunities - Deckers is enhancing brand assortments and optimizing distribution channels, with UGG and HOKA brands showing strong sales growth of 16.1% and 23.7% year-over-year, respectively [5][7]. - The direct-to-consumer (DTC) business is a major growth driver, with DTC net sales increasing 17.9% to $1.01 billion in the fiscal third quarter [8]. - International expansion, particularly in high-potential regions like China, is expected to accelerate revenue growth [9]. Financial Strength - Deckers maintains a strong financial position with a debt-free balance sheet and cash reserves of $2.24 billion as of December 31, 2024 [11]. - The company repurchased approximately 275 thousand shares for $44.7 million, with $640.7 million remaining under its share repurchase authorization [11]. Future Outlook - Total revenues are projected to increase by 15% year-over-year to $4.9 billion, with HOKA expected to grow by 24% and UGG by 10% [12]. - The gross margin is anticipated to reach or slightly exceed 57%, with earnings per share (EPS) guidance raised to $5.75-$5.80 [13]. Analyst Sentiment - Analysts have positively revised earnings estimates, with the consensus estimate for the current fiscal year at $5.89 per share, reflecting a year-over-year growth rate of 21.2% [14]. - Sales estimates for the current and next fiscal years are projected at $4.96 billion and $5.46 billion, indicating growth rates of 15.6% and 10.1%, respectively [15]. Competitive Position - Despite trading at a premium, Deckers is viewed as a compelling investment opportunity due to strong brand momentum and growth strategies [18].

Core Viewpoint - Growth investors are increasingly focused on stocks with above-average financial growth, which can lead to solid returns, but identifying such stocks is challenging due to inherent volatility and risks [1] Group 1: Company Overview - Deckers (DECK) is highlighted as a strong growth stock, possessing a favorable Growth Score and a top Zacks Rank [2][10] Group 2: Earnings Growth - Deckers has a historical EPS growth rate of 30.1%, with projected EPS growth of 21.1% for the current year, surpassing the industry average of 14.4% [5][4] Group 3: Cash Flow Growth - The year-over-year cash flow growth for Deckers stands at 49.7%, significantly higher than the industry average of -13.5% [6] - The annualized cash flow growth rate for Deckers over the past 3-5 years is 21.7%, compared to the industry average of 4.7% [7] Group 4: Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for Deckers, with the Zacks Consensus Estimate for the current year increasing by 5.1% over the past month [8] Group 5: Investment Potential - Deckers has achieved a Growth Score of A and a Zacks Rank 1, indicating its potential as an outperformer and a solid choice for growth investors [10]

Group 1 - Deckers (DECK) has experienced significant selling pressure, resulting in a 29% decline in stock price over the past four weeks, but analysts anticipate better earnings than previously predicted [1] - The stock is currently in oversold territory, indicated by a Relative Strength Index (RSI) reading of 26.26, suggesting a potential reversal in trend [5] - There has been a 7.2% increase in the consensus EPS estimate for DECK over the last 30 days due to a strong agreement among sell-side analysts, which typically correlates with price appreciation [6] Group 2 - DECK holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, indicating a strong potential for a turnaround [7]

Core Viewpoint - Investors are increasingly seeking growth stocks that demonstrate above-average growth potential, with Deckers (DECK) identified as a strong candidate due to its favorable growth metrics and Zacks Rank [2][10]. Group 1: Earnings Growth - Deckers has a historical EPS growth rate of 30.1%, with projected EPS growth of 19.9% for the current year, surpassing the industry average of 15.3% [5]. Group 2: Cash Flow Growth - The year-over-year cash flow growth for Deckers stands at 49.7%, significantly higher than the industry average of -10.7% [6]. - The historical annualized cash flow growth rate for Deckers over the past 3-5 years is 21.7%, compared to the industry average of 4.7% [7]. Group 3: Earnings Estimate Revisions - There has been an 8% upward revision in current-year earnings estimates for Deckers over the past month, indicating positive momentum [9].