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Why Deckers Stock Popped Today

Source The Motley Fool

Shares of Deckers (NYSE: DECK) were among several footwear stocks climbing today, seemingly in response to a blowout September jobs report, which reassured investors about the strength of the economy, as well as the end of the dockworkers' strike, as both sides came to an agreement until at least Jan. 15. Shoes were among the products expected to be affected by the strike, so it's not surprising to see footwear stocks, including Skechers and On Holdings, rising broadly on the news.

Deckers stock closed up 6.4%, even as there was no company-specific news out on the stock.

Person shopping for sneakers in a store.

Image source: Getty Images.

Consumers are getting stronger

According to the report from the Labor Department, the U.S. economy added 254,000 jobs last month, well above expectations of 150,000. The unemployment rate fell from 4.2% to 4.1%, and wages grew by 4%, easily outpacing existing inflation.

Altogether, the report showed the economy was getting stronger, which was especially good news for consumer spending. Additionally, the end of the port shutdown is clearly good news for Deckers and its peers, especially ahead of the holiday season.

Stocks rose on the news, in particular in the consumer discretionary sector. The SPDR Select Consumer Discretionary Sector was up 1.2%, outpacing the overall market.

Deckers isn't struggling by any means, as its high-priced Hoka running shoes have swept the nation, driving the stock to new records, but the business is still sensitive to overall economic demand and depends on the global supply chain.

In the second quarter, revenue jumped 22% to $825.3 million, and earnings per share nearly doubled. Hoka has become the unquestionable star of the business, with revenue up 30% to $545.2 million.

Can Deckers keep gaining?

Deckers is fresh off a 6-for-1 stock split, a sign of the company's excellent execution. At this point, the business seems virtually flawless, but consumer tastes can be fickle, as Deckers experienced before with the rise and fall of UGG.

For now, the stock looks like a winner, but keep your eye on the competitive landscape, especially as Nike is touting a recovery in its running business.

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Jeremy Bowman has positions in Nike. The Motley Fool has positions in and recommends Nike and Skechers U.s.a. The Motley Fool recommends On Holding. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.

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