In its proxy seeking to replace all 10 Deckers Outdoors’ directors with its own slate, Marcato Capital Management in part is urging Deckers to sell all its smaller brands (Hoka One One, Teva and Sanuk) and focus solely on Ugg if a sale of the whole company can’t be completed.

In the proxy, the activist shareholder group called Ugg “a substantial footwear brand that generates strong cash flows, returns and is underpenetated internationally.”

Hoka One One is a “rapidly growing running shoe brand whose value is not recognized by the market” while both Teva and Sanuk are facing “low growth.”

Marcato also wrote that said Deckers’ shares and operational performance are being hurt by a “failed brick & mortar expansion and unchecked expense growth.”

The group listed five opportunities to enhance shareholder value:

  • Focus on core UGG brand, pursue sale or spin-off of non-core brands.
  • Hire strategy consultants to implement efficiency program targeting aggressive retail closures, corporate cost reduction and supply chain efficiencies.
  • Recapitalize balance sheet with initial target leverage ratio of 1x Net Debt/EBITDA.
  • Use proceeds of recapitalization and sales of brands to repurchase shares..
  • Align management compensation with margin, return and TSR improvement.

Marcato projected its moves would increase EPS from $3.82 in FY17 to $12.68 by FY 2021.

The proxy can be seen HERE.

In June, Marcato Capital, which owns approximately 6.0 percent of Deckers’ shares, said that if an ongoing review by Deckers’ strategic review process did not culminate in a sale of the company, Marcato would nominate a slate of director candidates to replace the entire Board. Marcato’s 10 candidates were nominated on September 13.

The annual meeting will take place on December 14, 2017.