High Stepping SandalsBy
For a while, the stock of Deckers Outdoor (DECK) took a shellacking on Wall Street because of fear that Nike and Reebok would run it out of business. That hasn't happened. Deckers' sandals and shoes have been a real kicker: The stock rebounded from 11 in December to a high of 161/4 on Apr. 25.
One reason: More and more investors are starting to recognize that Deckers' flagship products--Teva sports sandals--have become the industry standard. "High functionality due to patented strapping has made this the sandal of choice for sports enthusiasts," explains Pete Castellanos, an analyst at Cruttenden.
For a long while, the stock was overlooked because Deckers was seen as a one-product outfit--with Teva garnering 80% of sales last year, says Allison Malkin of Evergreen Fund, which has accumulated a 3% stake. She thinks the market has yet to recognize Deckers' other product: Simple shoes, an athletic line that features an understated, casual style.
Indeed, Deckers sales and earnings have been on the rise. Kemper Securities analyst Kevin Dukesherer figures revenues will jump to $105 million this year, up from 1994's $85 million. And he sees the earnings climbing to $1.35 this year and to $1.65 in 1996, vs. last year's $1.09.
One New York money manager thinks that if Deckers sustains its fast growth, either Nike or Reebok may gobble it up as a quick way to step into sandals. In a buyout, he says, the stock is worth 30 a share. Deckers Chairman and President Doug Otto wouldn't say whether he has been approached by Nike or Reebok. Reebok declined comment. Nike didn't respond.
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