Activist to Deckers: Sell Yourself, Or Else

December 1, 2017
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Activist investor Mick McGuire has issued an ultimatum to Deckers Outdoor (DECK). In a letter to the company’s board, McGuire’s Marcato Capital Management has threatened to replace the company’s board unless an ongoing strategic review process leads to a ugg australia sale of the company.

While we typically seek to work constructively with boards to implement change, we view this situation differently. Given Deckers’ chronic underperformance, stockholder frustration and fatigue, a ugg australia sale of the Company in this case very likely offers the highest risk-adjusted return for stockholders.  If, for any reason, the process fails to produce a desirable outcome, we believe a new management team led by a new Board of Directors will be much more likely to succeed in achieving the revenue and expense opportunities at Deckers. We are highly confident that the majority of Deckers’ stockholders share this perspective.  Therefore, should Deckers’ strategic review process not culminate in a ugg australia sale of the Company at an attractive value to all stockholders, we will be prepared to seek significant Board change at the Company’s next annual meeting by nominating a slate of director candidates to replace the entire Board.

Marcato owns a 6% stake in Deckers, famed as the maker of ugg australia boots. The stock is up 1.6% to $68.04 in today’s market action.

McGuire, who is fresh off a victory at Buffalo Wild Wings (BWLD), unveiled his position in Deckers back in February. In today’s letter, he complains that the strategic review process has suffered from “a lack of transparency.”

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