Deckers' shares fall on analyst downgrade
Shares of Deckers Outdoor (Nasdaq: DECK), parent of Teva, Ugg and Simple, fell after Credit Suisse analysts expressed concerns that the company's Ugg brand has limited growth potential, initiating coverage of the company with an "underperform" rating.
Analysts Omar Saad and Spencer Hill wrote in a research note that it appears the Ugg product line is reaching saturation in the United States and that future growth will be minimal. They estimate that Ugg sells nearly three pairs per 100 people in the United States each year. The rate is much higher among the brand's target demographic, they added.
While Ugg owners buying replacement pairs will keep sales from collapsing, the analysts said they don't believe there are enough buyers to offset the number of customers who no longer want or can no longer afford the product in the weak economy.
Shares of Deckers shed $4.45 to close at $53.24 on Mar. 27. The stock has ranged from $37.24 to $146.60 over the past year.
West Marine opens flagship store in Florida
West Marine (Nasdaq: WMAR) has opened its flagship and largest store in Jacksonville, Fla. The company said it chose Jacksonville for its 30,000-square-foot prototype because of the boating opportunities and culture in the area, the success of the existing stores and the centralized location at the Markets at Town Center.
Aimed at boaters, sailors, anglers and water sports enthusiasts, the store is about four times larger than the company's average size store and will offer 16,000 national and local products compared with 7,000 to 8,000 products in the average store. The store also has skylights designed to reduce the need for electricity as part of the company’s overall goal of energy efficiency.
The company has not been immune to the recession, reporting a 2008 fourth quarter loss of $29 million, a revenue decline of 6.1 percent to $111.1 million and a comparable stores sales decline of 9.9 percent.
The company said it is moving forward with expansion plans cautiously and could open as many as 12 to 15 within the next few years, based on the economy.
West Marine operates 343 stores mostly in the United States.
--Compiled by Wendy Geister
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