Shares of Deckers Outdoor Corp. rose to their highest level in a year and a half on Friday, a day after the maker of Ugg boots posted third-quarter results that beat Wall Street expectations and increased its outlook for the full year.
THE SPARK: The footwear company, which is based in Goleta, Calif., earned $33.1 million, or 95 cents per share, in the three months ending Sept. 30, up from $43.1 million, or $1.18 per share, a year ago. Analysts polled by FactSet on average expected profit of 72 cents per share. Revenue rose 3 percent to $386.7 million. Analysts expected $386 million.
The company expects 2013 earnings to increase 10 percent from 2012, up from its previous projection of about 8 percent growth. It still expects full year revenue to rise 8 percent from 2012.
THE BIG PICTURE: Deckers said last year's acquisition of the Hoka One One brand gave sales a boost. Sales for the Ugg brand rose 1.3 percent to $337 million, helped by the launch of the company's new websites and new store openings.
Sales of its other brands, Teva and Sanuk, also rose slightly.
THE ANALYSIS: Sterne Agee analysts Sam Poser and Ben Shamsian said in a note to clients that they expect sheep skin prices, which is used in Ugg boots, to be down 10 percent in 2014 from 2013. That should help the company's margins, said Poser and Shamsian, who also kept a "Buy" rating on shares of Deckers.
THE SHARES: Up $11.23, or 19.2 percent, to $69.23 in midday trading Friday. They rose as high $69.90 earlier, their highest level since March 2012.