By Senad Karaahmetovic

Premarket trading saw Deckers shares rise 13% after better-than-expected quarterly net sales.

DECK reported net sales of $736 million for the fourth quarter. That’s 31% more YoY than analysts expected and higher than $639.1 million. Deckers’ Q4 earnings per share were $2.51, an increase of $1.18 from the previous year.

The gross margin stood 48.7%, as compared with 53.2% during the previous year and consensus estimates at 50.3%.

Deckers projects FY2023, an EPS range between $17.40- $18.25. Analysts had expected $18.21 per share. Expect net sales to be in the range of $3.45 to $3.50 instead of the $3.45 to $4.45 billion.

DECK projects a FY gross margin around 51.5%, as opposed to 52.4%. The FY operating margin is estimated to be between 17.5% and 18%.

“Despite facing significant incremental costs related to supply chain disruption, our teams were able to nimbly respond to these changing market dynamics to manage costs and deliver an operating margin of 17.9% in fiscal year 2022, at the top end of our original guidance range,” the company said.

BTIG analyst Camilo Lyon reiterated a Buy rating and a $487.00 per share price target after “impressive” results.

“The company guided to +50bps of gross margin expansion for the year, which includes freight headwinds in 1H (continued use of air freight on HOKA and significantly higher ocean rates vs. last year), however this could prove conservative as DECK benefits from 6%-8% price increases across the portfolio and a reduction in air freight on UGG (~$30M benefit, by our math),” the analyst commented.

Cowen analyst John Kernan hiked the price target to $407.00 per share from $358.00 after seeing “big Q4 upside.

“The stock has some of the best risk/reward in the entire Softlines space as management’s execution is far in excess of peers in the sector and guidance could prove conservative. We can model $30+ in EPS by FY26 and an FY23 bull case of $500 in stock price,” Kernan said in a note.