Dubroff: C-Suite shift at Deckers Brands fitting exit for Martinez
Henry Dubroff
As you read this column, one of the legendary business leaders in the Tri-Counties will be headed into retirement. Sort of.
Angel Martinez, 60, the strategist who charted a growth path for Deckers Brands and helped turn the region into a hub for fashion forward design, said just before Memorial Day he’ll be stepping down as CEO.
Martinez is a Cuban immigrant, a New Yorker turned Californian and a key part of the brain trust that created Reebok. His arrival at Deckers in 2005 put the company on a different kind of trajectory — it emerged from the ranks of niche shoe companies to become a global player in footwear and accessories.
Ugg outlasted the skeptics who saw it as a fad and became a mainstream brand, captivating multiple generations of mainly women shoppers. Sandal maker Sanuk and others were acquired to fill out an upscale casual line, reinventing the shoe business for the 21st Century. A new headquarters has come online, putting design and oversight of all the brands in one place. A year ago we inducted him into the Pacific Coast Business Times Business Hall of Fame.
But the world has gotten a lot more complicated, too. Sales channels are fuzzy, middle-class shoppers are disappearing and competitive pressures from discounters are intense. In its 2016 earnings report, released at the same time as the management change, Deckers reported a loss for the quarter after taking a $27.4 million charge to close stores, clean up inventories and streamline operations.
In what looks like a well-orchestrated move, Dave Powers, a veteran of Nike and Timberland who joined the company in 2012 and was named president a year ago, will take over the CEO spot. Martinez will remain as chairman and presumably take a more strategic role.
“Throughout his career in retail and footwear, and especially during the past four years at Deckers, Dave has exhibited all the qualities that we’ve been looking for in the company’s next CEO,” Martinez said in a statement announcing his retirement.
Initially, Powers will have some tough numbers to report to Wall Street. The company said it is expecting a rare year of sales that are flat to down slightly and earnings per share of $4.05 to $4.45, down from the $4.66 reported in 2015 but ahead of the $3.73 reported this year after the restructuring charge. More charges may be ahead, the company warned.
But Todd Lowenstein, managing director and director of research at HighMark Capital, said the company looks like it will be better positioned after Powers settles in. “This is seemingly a transition year for Deckers, with management changes, new initiatives” and “streamlining the store base.”
Fewer impacts from the strong dollar, lower material costs and a more streamlined cost structure should offset the closeouts and promotions that hurt margins, said Lowenstein. Neither he nor HighMark has any conflicts in commenting on Deckers.
Powers was initially hired in the direct-to-consumer part of the enterprise and moved up the chain of command to oversee retail and ecommerce. At 49, he and Chief Operating Officer David Lafitte, 52, as well as longtime Chief Financial Officer Tom George, 60, will fill out the executive suite.
Give Martinez credit. He recognized a big change in footwear fashion and brilliantly exploited the opportunity to make Deckers a leading player in the industry. The past two years have been much more difficult, with partners like Nordstrom finding it tough to follow shoppers who hunt for bargains online and don’t behave in predictable ways.
Deckers shares have traded in the $50 range and are about 25 percent off their year-ago high of around $76, just before the air went out of China’s stock market. It will take some new vision and a disciplined approach to costs to return profits to a growth path.
In the end, it may also be a matter of timing and luck. With Europe and Japan not growing and China in a downshift, dramatic earnings growth for Deckers and any brand with a global reach may have to wait for the next economic upturn.
It would be a gratifying capstone to a great career if Martinez, as chairman, could see his succession plan pay off.
• Reach Editor Henry Dubroff at hdubroff@pacbiztimes.com.
