Why Did UGG Parent Sell Half A Year?

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The group has announced that it has been seeking sale for more than half a year. Although more than 90 potential buyers have asked, it has not been able to conclude the paction, and the plan has been halted.

Affected by the news, Deckers group (NYSE:DECK) yesterday plunged 6.5% to $65.5 a share, with a market value of about $2 billion 200 million.

In February this year, radical investor Marcato Capital private equity fund purchased 6% of the shares of Deckers group and issued an open letter to the management of the group with another shareholder, Sequoia Capital, or asked for a new group of directors to replace the existing board of directors.

Analysts at Susquehanna Financial Group said in the report that in view of the core of Deckers group

Ugg is short of innovation, over production and low performance. It is difficult for strategic buyers to buy. It is recommended that Deckers group make major reforms and strategic adjustments to its brands as soon as possible to restore profitability and growth.

In the Chinese market, UGG formally invited Chinese TV actor Angela Baby Angelababy to be the brand spokesperson at the end of August this year.

This is also the first time that since the establishment of UGG in 1978, Chinese stars have been used as brand spokesmen.

According to the data, UGG, which has annual sales of over 1 billion US dollars, now has more than 137 fashion boutiques and outlets in New York, Paris, London, Tokyo and Beijing. There are more than 1000 outlets in the world.

According to the world clothing and shoe net, Marcato Capital filed a lawsuit against the Deckers group in Delaware court in October 23rd, saying the group forced the annual meeting of shareholders to be postponed to prevent the board nominee from coming to the board of directors.

Due to the stranding of the Deckers group's sale plan, Marcato Capital submitted a new list of board candidates to the group in September.

In response, Deckers group responded that this year's shareholders' meeting has been determined to be held in December 14th, so Marcato Capital's accusation is not true. Marcato Capital also ignored the efforts made by the group for restructuring and restructuring. Insisting on the sale proposal is a selfish act at the expense of its shareholders' interests.

According to the latest data released by Deckers group, sales fell by 0.7% to 485 million US dollars in the second quarter of September 30th, and operating profit rose 24.8% to $67 million 400 thousand.

Wholesale channel sales decreased by 2.2% to US $391 million compared to the same period, while sales in direct retail outlets increased by 6.2% to US $91 million 300 thousand.

During the period, Deckers group's sales in Australia's domestic market decreased by 3.1% to 303 million US dollars, while international regional sales increased by 3.5% to US $180 million.

The picture shows the main performance data of Deckers group in the second quarter.

By brand:

Group core brand UGG sales decreased 2.9% to 400 million US dollars year-on-year.

Sanduc fell by 19.3% to 15 million 200 thousand dollars;

Sales of Hoka One One surged 34.4% to 40 million 600 thousand US dollars over the same period last year.

Teva sales rose 24.9% to 21 million 400 thousand US dollars over the same period.

At the same time, Deckers announced a $335 million share repurchase program, plus $65 million remaining in the previous stock repurchase program, accounting for 20% of the group's total capital of $400 million.

For the 2018 fiscal year's annual performance, Deckers expects sales to grow between 1% and 2%.

Group CEO Dave Powers said that with the advent of the winter and holiday season, its brand performance will grow significantly, and is confident of the group's performance in the second half of the fiscal year.

In fact, UGG products are generally at the two extreme in the eyes of consumers. Many consumers will like it very much, and some consumers have vowed never to wear them. The design of their products is too single to be questioned by the industry.

Some analysts pointed out that the sale plan ran aground, reflecting the problems of Deckers group's business strategy. Due to the explosion of UGG in the early years, they allocated most of the marketing budget and independent stores to this brand, so that UGG won the best sales revenue in 2015, but it was caught in the embarrassment of market saturation.

According to the consumer survey conducted by industry consulting firm NPD before the end of 2016, consumers' desire for winter boots was not only far less than that of sports shoes, or even slippers.

From this point of view, UGG and cave shoes Crocs are in a very similar position.

Analysts pointed out that the functionality and appearance of UGG is a fatal injury that the brand can not maintain the steady growth of its performance. In the rapidly changing fashion industry, UGG will face tough challenges because it does not continuously introduce products that make consumers feel fresh.

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