Deckers Brands’ board of directors released a letter to shareholders, highlighting improvements to its costs, sales and stock performance and urging shareholders to vote for its nominees over those of activist investor Marcato Capital Management.
In the Nov. 2 letter, the Goleta-based footwear and apparel company said it had made headway toward its $100 million profit improvement goal, freeing up cash to accelerate its share buyback plan to $400 million.
Marcato, which purchased an 8.4 percent stake in the company earlier in the year, has demanded that Deckers put itself up for sale and nominated a new slate of directors for approval at the company’s annual shareholder meeting, scheduled for Dec. 14. It later filed a lawsuit to avoid change-of-control penalties that could pay up to $36 million in executive compensation if shareholders approve its picks.
Deckers announced on Oct. 26 that it would not engage in a sale of the company, after meeting with 90 potential acquirers.
“Deckers has a diverse and experienced board of directors that is actively engaged in overseeing our transformation and is holding management accountable for delivering continued operational improvement,” the letter states.
Cost improvements have been driven by the closure of underperforming retail stores, streamlining production and the consolidation of its offices, it added. The company also introduced a year-round strategy, put resources toward building its Hoka One One, Teva and Sanuk brands and developed new sales channels like its growing direct-to-consumer business.
The letter also refuted Marcato’s previous assertion that Deckers was underperforming in its category.
“These achievements required some difficult decisions. But these decisions were made by our board —long before we ever spoke to Marcato — in order to enable Deckers to be a faster, leaner and more focused business that is better positioned to build stockholder value and win in the marketplace,” the company said.
Shares for Deckers fell nearly 2 percent to $67.17 as of 10:40 a.m. Nov. 3.
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