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"Few would have guessed that an Australian sheepskin boot worn by California surfers would grow from a seasonal fad northface backpack to a global lifestyle brand. For parent company Deckers Outdoor Corp., Ugg has done just that and it's taken the footwear maker's share price along for the ride. Deckers shares have more than doubled in the past year as Ugg sales have surged almost 23% following the brand's launch of an expanded year-round collection of sandals and casual footwear. Ugg is ""no longer just a fall or holiday product and has proven that it can be a spring brand,"" says J.P. Morgan analyst Robert Samuels. Deckers went public 14 years ago with a share price of $24. Following that, however, shares were on a steady decline until around north face daypack 2003, when they reversed course in price and volume after several celebrities, including Oprah Winfrey, praised the Ugg brand, making it a must-have item for holiday shoppers.

The brand was also named Footwear News's brand of the year in 2003. Since then, shares have continued on a steady course upward, hitting a record of $113.50 on Aug. 8. The stock, however, fell to below north face laptop backpack $90 after that as the overall market declined. The stock closed yesterday at $90.08, down $4.14, or 4.4%. Deckers' stock also fell after the company said it would delay filing its 10-Q for the second quarter because of issues regarding the underpayment and underreporting of taxes by certain of its foreign subsidiaries. A Deckers audit committee is looking into the matter, which may result in Deckers having to the north face daypacks restate past financial results. Due to the delay in filing its 10-Q, the Nasdaq Stock Market sent Deckers a letter saying the company isn't in compliance with filing requirements. Deckers has requested a hearing before the Nasdaq panel.

The stock will stay listed on Nasdaq at least until the hearing. Deckers said the underpayment is no more than $500,000 a year and no more than $2.7 million total. Aside from the tax issue, some The North Face Extreme 70 Backpack investors still view Ugg as just a fad that will eventually fizzle out as consumers move on to the next big thing in the footwear aisle. Twenty percent of the stock's float is held by investors in a short- interest position, meaning they are betting the stock will fall. ""A lot of people on the bear side think the Ugg business is still a fad, the idea of wearing sheepskin boots is going to go out of style, and when it does, the business will suffer,"" says Wedbush Morgan analyst Jeff Mintz. Yet brand The North Face Recon Backpack sales have climbed steadily every year since 2001, tripling to $116 million in 2004. And Deckers products, including Ugg, have just begun to reach some consumers as the company has expanded its international presence in recent years.