Shares of Deckers Outdoor (NYSE: DECK) fell as much as 9.4% on Wednesday after an analyst note from M Science highlighted a slowdown in sales during June. As of 2:30 p.m. ET shares were down 6% on the day.
Data research firm M Science noted that its data showed a deceleration in sales for Hoka and Ugg brands during June. This wouldn’t be particularly surprising given the slowdown reported by Nike last quarter and week guidance Nike for its fiscal first quarter. Consumers have been pinched by higher inflation and slow wage growth, which ultimately will lead to less discretionary spending on items like high-end shoes from Hoka.
There have been several signs that consumer spending is slowing for brands that rely directly on consumers and this is just another example of the trend. Lululemon Athletica has struggled recently, I mentioned Nike above, and hot brands like Celsius have seen channel checks report slowing growth.
Deckers Outdoor won’t report earnings until August, but results for the fiscal fourth quarter, which ended March 31, showed 21.2% revenue growth and a 34% jump in Hoka sales and a 14.9% increase at Ugg, the other brand M Science said may see slower growth.
Shares aren’t cheap at 30.4 times trailing earnings, so a disappointing quarter wouldn’t be received well by the market, but until we get more solid data I wouldn’t panic sell a high-growth company like Deckers Outdoor.
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Travis Hoium has positions in Celsius. The Motley Fool has positions in and recommends Celsius, Lululemon Athletica, and Nike. The Motley Fool recommends the following options: long January 2025 $47.50 calls on Nike. The Motley Fool has a disclosure policy.
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