Deckers Board pleads to shareholders to keep company on track
Deckers Brands Board of Directors revealed the turmoil the brand is currently going through in a letter it sent to its shareholders urging them to retain the current Board and not replace them with hedge fund nominees.
Deckers will hold its Annual Meeting next month where a vote will take place to elect nine members for the Board of Directors. John Gibbons, Chairman of Deckers' Board, wrote the impassioned letter asking for shareholders to trust the strategy Deckers has been implementing to turn its business around.
Deckers explained to its shareholders that the San Francisco-based hedge fund Marcato Capital Managment, which owns 8 percent of Deckers stock, has its own list of nine nominees it would like to see put on the Board. Gibbons wrote that Marcato "is trying to seize control of our Board of Directors"
Deckers explained to its shareholders that Marcato's nominees will lead the company in the wrong direction. It feels Marcato's goals will "disrupt the strong momentum" of Deckers' strategic plan which, Gibbons emphasised, has been working.
The strategic plan positions Deckers for a marketplace transformation. In it, Deckers plans to grow its Ugg brand as well as its $100 million dollar Hoka One One brand. Deckers' strategy also included consolidating operations for Sanuk and Hoka One One to the corporate headquarters. The company intends to create more seasonal assortments and also expand internationally.
Deckers is on track for an operating profit of $100 million by 2020. Gibbons points to closing unprofitable retail stores, including 25 Ugg stores, and streamlining production for all brands as two significant factors that will help it achieve its goals.
According to the shareholder letter, Deckers has outperformed its peer group and shows larger returns than its competitors. The peer group researched includes The Buckle, Carter's, Chico's, Columbia Sportswear Company, Crocs, DSW, Express, Finish Line, Fossil, G-III, Guess, Lululemon, Skechers, Steven Madden, Under Armour and Wolverine World Wide.
Deckers Annual Meeting will take place on December 14th at which time the vote will take place.
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