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Deckers Outdoor is a decent safety play as a very profitable business trading at a low multiple, now with a buyback authorization of up to 33% of its market cap. Growth was somewhat slower than expected and guidance is mediocre, but a return to growth could make the stock jump. x.comÂ
On Holding is the better opportunity right now, supported by its recent earnings guidance. x.comÂ
On Holding holds zero interest now that its growth has slowed too much and all the founders have left. It would still be preferable to Nike or Lululemon, but retail and apparel are best avoided altogether. x.com x.comÂ
On Holding could rerate quickly from 9 times forward EBITDA back to 20 times if its growth decline slows or reverses, possibly in early 2027, while it holds premium gross margins. Over the past two quarters it deliberately held prices and protected its premium positioning, pulling back from wholesale toward direct-to-consumer. Its apparel business is growing 84%, small now but a clear sign its category expansion is working. x.comÂ
Deckers' lowered FY27 revenue guidance adds evidence of slowing growth behind the value-trap concern. Guidance is now $5.70B-$5.725B, down from $5.86B-$5.91B and below the $5.88B estimate; the stock trades at about 10 times next-twelve-month earnings. x.comÂ
On Holding looks likely to be dead money for a while after its first-ever guide-down sent shares down 19%. Revenue missed, guidance was soft and wholesale growth slowed, and part of the weakness may reflect Nike starting to recapture market share. x.comÂ
On Holding trades at about 16.5x forward earnings after a roughly 52% drawdown. x.comÂ
Deckers looks like a value trap, as fashion cyclicality has destroyed many value investors. Revenue is decelerating quickly, EBIT margins are double those of a decade ago, and there has not been a single insider purchase during its 63% drawdown. x.comÂ
Deckers Outdoor is the pick among beaten-down athletic brands, as it is likely buying back 5-10% of its float at these levels. x.comÂ
If one insists on a recovery play in sporting apparel, On Holding seems best suited thanks to its balance sheet. Long-term buy-and-holds of apparel stocks are highly unlikely to work, which makes the space hard to get behind. Trends are fickle: in Southern California, younger gym-goers no longer wear On, only older people. x.com x.comÂ