Why Does UGG Parent Require Marcato To Initiate Ultimatum?

According to the world clothing shoes and hats net, early this year, become a shareholder.

The parent company Deckers Outdoor Corp. (NYSE:DECK) and require the selling rights investor Marcato Capital Management LP to launch ultimatum.

The Losangeles Investment Fund said on Tuesday that if Deckers Outdoor Corp.'s strategy assessment fails to facilitate selling at attractive prices, Marcato Capital Management LP will replace the group's entire board of directors and appoint a new management at the annual general meeting.

Marcato Capital Management LP holds nearly 6% of Deckers Outdoor Corp. shares and is the fifth largest shareholder of the group.

Mick McGuire, founder and management partner of Marcato Capital Management LP, revealed in a letter to the board of directors of Deckers Outdoor Corp., that at least six other major shareholders requested the group to seek sale, including the Red Mountain Red, which was publicly presented in March.

Red Mountain Capital Partners LLC, which owns 3.3% of the group, pointed out that the share price performance of Deckers Outdoor Corp. (NYSE:DECK) in the past 3-5 years ran out of all major indexes, which was largely caused by the poor capital allocation that management has always been.

In fact, Deckers Outdoor Corp. announced in April this year that it had announced the strategic options including sales, and invited Moelis & Co. LLC to deal with sales matters for financial advisers, but so far no new progress has been made. Mick McGuire also criticized the lack of pparency in the process.

"Although we usually seek constructive cooperation with the board of directors to carry out reforms, the situation of Deckers Outdoor Corp. is different," Mick McGuire said.

If the group fails to produce satisfactory results for any reason (successfully sold), Mick McGuire believes that the new management team led by the new board will most likely achieve the goal of revenue and expenditure. He believes that the group should cut at least $200 million in expenditure, rather than the $100 million previously proposed by the management.

In addition, Mick McGuire also dissatisfied with the lack of shareholder representatives of the board, and the existing shareholders lack M&A experience.

What is more, the chairman of the board, Angel Martinez, has announced her candidacy for mayor Santa Barbara St. Barbara of California, and Mick McGuire believes that "it makes people wonder if the board can get the right leadership".

The latest record of Mick McGuire is to launch the twenty year CEO Sally Smith of Buffalo Wild Wings (NASDAQ:BWLD) in the beginning of this month.

"Our board of directors will continue to act in the best interests of the group and all shareholders," Deckers Outdoor Corp. said yesterday.

The group informed SEC earlier this month that it would postpone the second half of the fourth quarter of March 2018 as a result of strategic assessment.

Macquarie Capital USA Inc. analyst Laurent Vasilescu pointed out that this meant that Deckers Outdoor Corp. did not want to deal with the militant shareholders such as Marcato Capital, Corp., and so on.

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Susquehanna Financial Group LLP analyst Sam Poser considered light luxury.

The initial UGG has been weakened after the mass distribution of Macy 's Inc. Inc. (NYSE:M) Messi department store and Amazon.com Inc. (NASDAQ:AMZN) Amazon.

He estimated that Deckers Outdoor Corp. would not be able to get the offer that satisfied shareholders.

For many years, Deckers Outdoor Corp. mainly relies on a brand name of UGG, and UGG has always been the endorsement of snow boots. It is greatly affected by the season. In the four quarter of a year, it usually has two quarterly losses and two quarterly profits, which is extremely unfavorable to the development of the group.

More importantly, the brand's current sales have come to a bottleneck.

Although the group has been trying to fashion UGG and fashion, and develop more men's shoes, but the snowball boots have swept the globe, causing consumers to have an inherent impression of the brand, so other categories have been difficult to do.

Data show that in the fourth quarter of 2017 fiscal year ended March 31st, the group's revenue declined, declining by 2.4% to 369 million 500 thousand US dollars annually, of which UGG's brand sales decreased by 1.1% to US $243 million compared to the same period last year. During the period, the growth of the direct consumer channel and international wholesale business was offset by the decline in US wholesale business.

Net losses narrowed to $15 million 700 thousand from $23 million 710 thousand in the same period last year.

Adjusted EPS recorded a profit of US $0.11, which was flat in the same period last year, far exceeding the combined expected loss of FactSet US $0.06.

The net sales of $1 billion 790 million 100 thousand in fiscal year 2017 decreased by 4.5% compared with $1 billion 875 million 200 thousand in the previous year.

Net profit fell sharply by 95.3% to 5 million 710 thousand US dollars, and adjusted EPS, from 4.50 US dollars to US $3.82.

In the cost reduction plan announced in February this year, Deckers Outdoor Corp. set a goal of saving us $150 million over the next two years. President and chief executive officer Dave Powers said that the plan will improve the operating profit in the 2020 fiscal year by 100 million US dollars.

The group also provided a long-term outlook for the 2020 fiscal year. It is expected that total sales will grow to $2 billion at that time, which will represent an increase of 11.3% over last year, with a profit margin of about 13% and a return on capital of more than 20%.

Deckers Outdoor Corp. (NYSE:DECK) increased 1.17% on Tuesday to $67.72, expanding its cumulative growth to 21% in 2017.

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