What to Expect from Deckers’s Q3 EPS



EPS projections

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.

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Past performance

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.


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