Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of footwear specialist Deckers Outdoor (NASDAQ: DECK ) sank as low as 10% today after its quarterly results disappointed Wall Street.
So what: The stock has rebounded nicely in 2013 on signs of improving fundamentals, but today's second-quarter results -- loss of $29.3 million on a revenue drop of 3% -- coupled with a market-missing forecast reignites worries over waning Ugg popularity. Additionally, gross margins declined 110 basis points over the year-ago period, triggering concerns that management is overinvesting in its less-profitable retail business.
Now what: Management now expects 2013 EPS and revenues to both grow about 8%, implying earnings of $3.73 per share and sales of $1.52 billion, versus Wall Street's view of $3.99 and $1.51 billion. "We remain optimistic about our ability to expand sales and margins as we head into our highest volume sales quarters, and we continue to be excited about the many long-term growth opportunities that we believe exist for our business," said CEO Angel Martinez. With the stock still well off its 52-week lows and trading at a P/E above 15, however, I'd wait for more of a pullback before buying into that optimism.
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