Why Deckers Outdoor Corp's Shares Jumped 14.8% in July

By Markets Fool.com

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Image source: Deckers Outdoor.

What: Shares of UGG maker Deckers Outdoor Corp (NYSE: DECK) jumped 14.5% in July, according to data provided by S&P Global Market Intelligence, after investors gained some confidence in the company's turnaround.

So what: Second quarter results released during the month helped ease fear that profit estimates wouldn't be hit in fiscal 2017. Sales did fall 18.4% in the quarter to $174.4 million and net loss ballooned to $52.3 million, but management still expects to hit its own guidance for the year. That includes net sales being flat to down 3% versus a year ago, and earnings of $4.05 to $4.40 per share. If management can hit those numbers after this quarter, the stock could be set up for a good year.

Now what: The reaction in July was relief that operations weren't even worse rather than a ringing endorsement of the company's falling sales and growing losses. But Deckers Outdoor is trying to stabilize the business and return to growth long-term. Maybe we're seeing signs of that happening -- but before jumping in, I'd like to see clear evidence that Deckers is going to hit its profit numbers, because falling sales in the shoe business is a big concern for investors.

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Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends Deckers Outdoor. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.