Ugg’s parent company Deckers Outdoor Corp (NYSE:DECK) is making a dangerous move by moving into 200 more stores owned by Macy’s Inc (NYSE:M) according to analysts.
Analysts at Susquehanna Financial Group stated that Deckers’ decision to launch the Ugg brand in 200 stores owned by Macy’s stores might be a risky move. The analysts are concerned about the promotional environment of the retailer. Susquehanna stated that its checks revealed that higher-end Ugg accounts are taking a cautious stance with Ugg due to wide distribution. This means they are afraid that the aggressive push might end up being detrimental to the firm.
“History has taught us that Macy’s has and will promote heavily in order to drive sales while demanding markdown money,” the analysts pointed out in a statement released on Friday.
Analysts have considered similar unsuccessful moves from others
The analysts pointed out that companies such as Ralph Lauren Corp (NYSE:RL) and Coach Inc (NYSE:COH) have been doing the opposite of what the Ugg brand is currently doing. They have been working on exiting the department store strategy so that they can focus on minimum promotions. The official launch of Ugg’s products at Macy’s kicked off during the autumn season at the retail company’s Herald Square store. The official launch was then followed up by 35 more stores to facilitate the testing phase.
Ugg now wants to expand into more stores with the planned 200 stores in new locations. Deckers’ CEO Dave Powers stated that his firm wants to boost business in those stores so that there will be a strong focus on all genders and throughout all the seasons. Analysts at Susquehanna Financial Group also believe that Deckers will register strong performance soon, though it might not be able to achieve its targets in the future. This is because Deckers’s targets will be set quite high.
Macy’s stock closed the latest trading session on Friday at $23.44 after a 0.34 percent surge from the previous close.