Deckers Brands, the parent of Ugg and other footwear brands, managed to reduce its net losses significantly in its first fiscal quarter ended June 30, down to $19.3 million, as compared to $30.4 million for the year-ago quarter. Revenues climbed by 10.5 percent to $276.9 million, or by 11.6 percent constant currencies, driven by gains from Ugg and Hoka One One.
Wholesale revenues rose by 10.7 percent to $196.6 million, while direct-to-consumer sales improved by 10.0 percent to $80.3 million including a gain of 16.2 percent in DTC comparable sales.
U.S. sales benefited from the expansion of Ugg and Hoka, and soared by 18.1 percent to $167.3 million. However, the international Ugg business was softer, and as a result, total international sales only inched up by 0.6 percent to $109.5 million.
Hoka One One was again the quarter's shining star, with sales rocketing by 69.2 percent to $79.5 million. Domestic and international sales were both strong. In international wholesale, the brand benefited from marketing campaigns for the Carbon X high-performance shoe, which features a carbon fiber plate to help propel runners, and sponsorships of Iron Man strength events in several countries.
The new Carbon X drew 800 million impressions around the world, and first-time customers accounted for 40 percent of the product's direct-to-consumer sales.
The Ugg brand's sales gained 2 percent to $138.5 million, with domestic sales increasing by high-teens, both in the DTC and wholesale channels, but international sales declined (more on this brand in Shoe Intelligence). Both Teva and Sanuk disappointed, with Teva's revenues down by 4 percent to $38.3 million and Sanuk dipping by 24 percent to $18.7 million, weighed down by sluggish sales in the Yoga Sling franchise and a strategic decision to exit the warehouse store channel.
Overall, the group's gross margin improved by 1.1 percentage points to 47 percent, thanks to a favorable product mix and fewer close-out sales, partially offset by currency headwinds and channel mix.
For the current financial year, the company raised its sales guidance and is now projecting sales of $2,100 to $2,125 million, instead of the previously expected $2,095 million to $2,120 million, with the gross margin forecast to reach 50.5 percent.