Deckers Outdoor (DECK) is scheduled to report its results for the third quarter of fiscal 2019 on January 31. Analysts expect its adjusted EPS to be $5.28 in the quarter. In contrast, Deckers expects its EPS to be $5.10–$5.25.
Higher sales and a lower tax rate could cushion Deckers Outdoor’s bottom line performance. Share repurchases could also offer some upside. As of September 30, the company has $116 million remaining under its existing share buyback authorization.
Analysts expect Nike (NKE) to deliver a 7.4% YoY (year-over-year) fall in its fiscal 2019 third-quarter adjusted EPS to $0.63. In the fourth quarter of fiscal 2018, analysts expect Foot Locker’s (FL) adjusted EPS to be $1.38, a rise of 9.5% YoY.
In the second quarter of fiscal 2019, Deckers Outdoor reported adjusted EPS of $2.38, much better than analysts’ expectation of $1.72 and up 54.5% YoY. The company’s second-quarter gross margin expanded 350 basis points to 50.2% driven primarily by higher direct-to-consumer sales for all its brands and reduced airfreight costs. Its SG&A (selling, general, and administrative) expenses increased 2.4% YoY. Its second-quarter operating profit rose 34.2% to $90.4 million. Its adjusted operating income rose 33.8% to $90.7 million.
Fiscal 2019 outlook
For fiscal 2019, Deckers’s management expects its adjusted EPS to be $6.65–$6.85 compared to its previous guidance of $6.25–$6.45. Its tax rate for fiscal 2019 is expected to be 21%.
For fiscal 2019, Deckers expects gross margin to be ~50%. Its operating margin is expected to be 13.0%–13.2%. The company expects its SG&A expense rate come in a bit above 37.0% in its current fiscal year.