Shares of Deckers Outdoor Corp. rose $1.81, or 3.1 percent, on Wednesday to $60.55 after it reported it was exploring a sale. The move comes as activist investors had pushed for a sale.
The parent of Ugg, Hoka One One, Teva and Sanuk said late on Tuesday its board was exploring a broad range of strategic alternatives to enhance stockholder value, which may include a sale or other transaction. Moelis & Company LLC was retained as its financial advisor and Wilson Sonsini Goodrich & Rosati, Professional Corporation, as its legal counsel to assist in the review process.
“We have made significant progress in streamlining our cost structure, optimizing our retail store fleet, and realigning our brands, with the goal of improving profitability,” said Dave Powers, president and CEO of Deckers. “The management team continues to remain focused on driving improvements in the business through our recently announced $150 million savings program. We are also continuing to explore additional margin enhancing opportunities and plan to further articulate more details on our upcoming year-end earnings call on May 25, 2017.”
In late March, Red Mountain Capital Partners LLC sent a letter to the board of Deckers Outdoor pushing for a sale of the company. The investment firm, with a 3.3 percent stake in Deckers, said the stock has underperformed across all major indices over the past three to five years.
“This underperformance has been driven largely by management’s consistently poor capital allocation decisions,” Red Mountain’s Managing Partner Willem Mesdag said, according to a Reuters report.
The letter came nearly two months after Marcato Capital Management LP, which acquired a 6 percent stake in Deckers, said it intended to engage in discussions with directors and officers of Deckers Brands about “strategic alternatives,” including a potential sale of the company or “businesses or assets.”
On Tuesday, Deckers said it has not set a timetable for completion of the review process, and it does not intend to comment further unless a specific transaction is approved by the board of directors.
With the Board of Directors and management team focused on enhancing stockholder value and a commitment to pursuing the right course of action for all stockholders, the Board believes now is an appropriate time to explore a broad range of strategic alternatives that may have the potential to unlock further value. While the Board conducts its review, the entire Deckers team remains committed to improving operations and profitability.
Photo courtesy Ugg
