Why Deckers Outdoor Corp. Stock Tumbled Today

Image source: Ugg.

What happened

Shares ofDeckers Outdoor Corp.(NYSE: DECK) were slipping today after the Ugg maker reported disappointing third-quarter earnings. As of 11:58 a.m. EST, the stock was down 16.8%.

So what

The holiday-season quarter is the most important one for Deckers as its sheepskin boots are popular in winter, but its results came up short. Earnings per share fell from $4.78 to $4.11, missing estimates of $4.24. Revenue was down as well, decreasing 4.5% to $760.3 million. That also did not meet expectations of $786.8 million. Ugg sales, which make up the vast majority of overall sales, were down 5.3%. CEO Dave Powers said the company experienced a "slow start to the holiday season, but sell-through accelerated sharply late in the quarter." In December, direct-to-consumer comparable sales increased 4.7%, a sign of positive momentum.

Now what

Deckers' outlook for the fourth quarter and the full year was also weak, further pressuring the stock. The company expects sales to fall 5-6% in the current quarter, and a per-share loss of $0.11 to $0.10.

Wall Street, on the other hand, expected revenue growth of 1%-2% and a per-share profit of $0.44, much better than the new guidance.

Deckers stock has been volatile for several years as its trademark Ugg boots move in and out of fashion. With its current guidance and the fact that the company hasn't come up with a stable growth model, this stock may be best avoided.

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Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends Deckers Outdoor. The Motley Fool has a disclosure policy.