People underrate execution constantly in this business. They hardly ever want to say, "You know what, that CEO is so good, I am going to bet with them."
I understand. Lots of CEOs have let us down. The ones who stand out tend to be quiet people just doing their jobs, like Sandy Cutler at Eaton (ETN), Dave Cote at Honeywell (HON) and Ellen Kullman at DuPont (DD) -- all solid people toiling in old-line companies, reinventing them brick by brick and turning them into powerhouses.
But where the power of the CEO is chronically underestimated is in retail. Here the be-all and end-all is the eye of the CEO, the ability of the CEO to exploit, to spend, to try something different, to stretch the creativity of the mind.
That's what Mickey Drexler did at Gap (GPS) and then at J. Crew, which, by the way, is by far the most respected retailer that I know. There's J. Crew and there is everyone else, and when you talk to retail executives, they speak in awe of the man. They should. He has the perfect combination of a merchant's genius, fiscal discipline and concept creation.
But the other man people should be speaking about is Angel Martinez, the miracle man behind Deckers Outdoor (DECK) and someone who simply knows more about shoes than anyone else on the planet.
Here's someone who has taken an allegedly faddish show, Uggs, and has extended it to the ultimate worldwide luxury comfort item. Last quarter, he made a bold move to switch distribution systems in Europe to a more lucrative model. Wall Street was disappointed, wrongly, I might add, because when we saw last night's numbers it became clear that international growth is the key to the next leg of the story, and the distribution change allows the numbers to flow to the bottom line. That plus the bold move to go into men's Uggs, spearheaded by NFL star Tom Brady, is already paying dividends. Also look out for surfer flip-flop Sanuk, a recent purchase that hopes to smooth out seasonality of a company that was originally Teva, the sandal business.
Martinez is someone we have been praising for years. I've been behind him ever since he turned Rockport into the juggernaut cross show (work and play) and I am wearing them today, as I have since 1997 when I first saw them and endorsed them as THE answer to the conundrum of expensive men's shoes that tire your feet.
I thought Deckers would sell off when it reported because it had run so much. But the quarter was so strong, it didn't. Keep Deckers in mind for any selloff because you aren't just getting Uggs, you are getting Martinez, and that means you are getting the best brand in the footwear business.