Skip to content Skip to navigation

Activist Investor Turns Up Heat on Deckers

Print Friendly and PDF
  • File photo courtesy of Deckers Brands

Activist investor Marcato Capital Management continues to turn up the heat on Deckers Brands Inc., the parent company of Ugg, Sanuk and Teva.

Marcato, which owns 6.1% of the company’s shares, has been pressing Deckers to improve shareholder value, including a potential sale of the company.

Wednesday, Marcato announced that it is nominating a slate of 10 candidates for the company’s board of directors, including former executives at L.L. Bean, Toys ‘R’ Us, Ralph Lauren, Justice, and Michael Kors.

Marcato believes years of mismanagement at Deckers has led to the company’s underperformance.

“…A review of Deckers’ operating history underscores that this underperformance is not the result of one-off events beyond the company’s control, but instead is attributable to years of strategic, operational, and capital allocation missteps,” Marcato said in an SEC filing today.

OUR SPONSORS

“We believe that the Board bears ultimate responsibility for this long-running neglect for shareholder value. While we recognize the company is exploring a sale, should this process fail to achieve an attractive outcome for shareholders, we believe significant board change is necessary.

“Accordingly, we are nominating a group of highly qualified directors who we believe will bring the fresh perspectives and direct experience needed to establish a strategic plan that creates long-term value for shareholders,” Marcato said.

Deckers is in the midst of  “reviewing strategic alternatives,” which means it is exploring a possible sale of some or all of its brands.

The company has also launched a plan to improve profitability by cutting costs by $150 million from a combination of SG&A and cost of goods improvements, and believes those changes can lead to a $100 million upgrade in operating profit by 2020. Deckers has already seen some benefits from these efforts.

The company responded to Marcato’s nomination of board candidates with the following statement:

OUR SPONSORS

“Deckers welcomes open communications with its stockholders and values constructive input toward the shared goal of enhancing stockholder value,” the company said.

“Although we engage regularly with our stockholders, it is Deckers’ policy not to comment on discussions with individual stockholders. However, it is important to note that members of the board and senior management team have held a number of discussions with Marcato during the past eight months and those discussions remain ongoing.

“Deckers has a strong and independent board, with three new directors who have joined since 2014. The board believes that it has an appropriate mix of skills, experience and leadership to drive performance and provide effective oversight. At the same time, the board will give full and fair consideration to the nominees proposed by Marcato.

“As previously announced on April 25, 2017, the board is reviewing a broad range of strategic alternatives to enhance stockholder value. The board has retained Moelis & Company LLC as its financial advisor and Wilson Sonsini Goodrich & Rosati, Professional Corporation as its legal counsel in connection with the review process. While the board conducts its review, the entire Deckers team remains committed to improving operations and profitability.

“As previously announced, Deckers is executing on a focused strategy to drive improvements in the business through streamlining its cost structure.

“Deckers continues to aggressively move forward with its $100 million operating profit improvement plan: in fiscal year 2018, Deckers expects to achieve net savings in excess of $30 million, and is targeting a similar cadence of savings each year through fiscal year 2020. To achieve this, Deckers is taking a number of actions to improve its gross profit margins, as well as its corporate overhead expense structure,” Deckers said.

The board of directors vote will be settled at the company’s annual shareholder meeting on Dec. 14.

More news

Last updated: : 12/15/2017 - 13:00

Of all the companies doing marketing on the North Shore in December, RVCA seemed to dominate the space for what it calls RVCAloha week. We talk with Global VP of Marketing Brian Cassaro about the strategy, and about the involvement of Founder Pat Tenore this year.

Last updated: : 12/15/2017 - 10:40

The Dragon Global Brand Manager sent an email to colleagues and friends this week announcing his departure

Last updated: : 12/14/2017 - 13:49

The owner of Ugg and Sanuk announced this morning that attempts to overthrow the board of directors failed

Last updated: : 12/13/2017 - 08:55

We spoke with Ziggy Williams, Co-Founder and Design Director, about the brand and West Coast Board Riders

Last updated: : 12/12/2017 - 13:34

A talk with the Global Marketing VPs for Billabong Men's and Women's about the many marketing projects in Hawaii

Last updated: : 12/11/2017 - 13:50

Paul Naude and Jake Mizuno are opening Stoke House in a hip and up-and-coming area of Honolulu

Last updated: : 12/10/2017 - 13:43

A few photos of who SES has seen during the past few days on the North Shore

Last updated: : 12/08/2017 - 13:07

Photos from the new store which opened Nov. 1 and is a partnership with HIC

Last updated: : 12/07/2017 - 12:59

We ask about his career path, how he has overcome challenges, and his advice for others

Last updated: : 12/06/2017 - 08:47

We sat down with Mary Miller and Dylan Slater to talk about what’s new with the women’s brand