San Francisco (U.S.) based investor Marcato Capital Management LP, which manages about 6% of Deckers’ outstanding common shares, sent a letter to the Company’s Board of Directors highlighting its history of underperformance and questioning the company’s leadership and ability to generate sustainable, long-term profitability.

Accordingly, if Deckers’ strategic review process does not culminate in a sale of the company at an attractive value to all shareholders, Marcato said it 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. Mick McGuire, Marcato Managing Partner, said in the letter that despite being profitable the Company has failed to achieve growth in earnings and stockholder value. The corrective action requested have been “consistently ignored”.

Another activist fund, Red Mountain Capital Partners which owns 3.3% in Deckers, is said to asked the company’s management to rationalise its store network, streamline its brand portfolio and cut costs. In March 2017, Red Mountain said it was pushing the company to explore a sale. In following month, Deckers said it would review a range of strategic alternatives, which could include a sale.

Decker’s classic Ugg boot, which accounts for 80% of the Company’s business, is said to be fading out of fashion and the brand, which started as ‘accessible luxury’, has become far too accessible to consumers.

Marcato is also said to be concerned with the lack of shareholder representation on the board, as well as the lack of experience of Decker’s Directors in mergers and acquisitions. 

Source: Bloomberg