Bolstered by strong Q3 gains in the DTC channel, Deckers Brands has reported 35 percent operating income growth, 16 percent revenue expansion on a reported basis, and a 570-basis-point increase in gross margin for the period ended Dec. 31. With the strong results, the Ugg and Hoka parent raised its FY24 revenue guidance by 3.1 percent to $4.15 billion, representing 14 percent year-over-year sales growth. The annual sales estimate calculates Ugg’s full-year growth at “low double digits” and Hoka’s at approximately 25 percent.
“Our largest brands are two of the healthiest and most in demand in our industry,” CFO Steve Fashing told analysts. “With a robust balance sheet and our diligent operating approach, we are well positioned to drive future success.”
After Aug. 1, the group’s trajectory will be spearheaded by Stefano Caroti, the current Chief Commercial Officer, who will be appointed President and CEO on that date upon the formal retirement of Dave Powers. Caroti, a former managing director for Puma and past senior executive for Nike, has been with Deckers for more than nine years, with experience as both interim President of Hoka and President of Omnichannel. His omnichannel experience and European ties should bode well for the company’s intentions to expand its DTC business and reach across the globe.
Wall Street responded favorably to Deckers’ earnings report, raised outlook and announcement of the CEO succession plan, sending shares up nearly 15 percent in early trading on Feb. 2.
A deeper dive into the quarterly results reveals a 40 percent increase in year-over-year net income to $389.9 million on total sales of $1.56 billion and a gross margin of 58.7 percent. DTC sales rose by nearly 22 percent on a comparable basis to $858.1 million, while wholesale revenues were 8.6 percent higher at $702.2 million. US sales rose 15.6 percent higher to $1.048 billion; sales in all other global markets rose by 16.7 percent to $511.9 million.
Hoka’s 22 percent rise in quarterly sales to $429 million was largely driven by DTC, which itself rose 38 percent in the segment to represent 40 percent of the brand’s revenues. The DTC expansion has been driven by significant increases in consumer acquisition (International was up 50%) and a 55 percent gain in retained international customers. Hoka’s DTC business has been “particularly powerful” in Europe and China this FY, helped by an expanded retail presence. The brand’s first European retail store opened in London in Q3, and the second will debut in Paris before the Olympics commence, in July. In China, where Hoka has benefited from online traffic and strong full-price selling, four stores have opened year-to-date. The company contends that Hoka is “in the early stages” of expansion internationally.
As for Ugg, Q3 net sales rose by 15 percent to $1.072 billion, as the brand’s DTC business expanded by 20 percent to account for 62 percent of period revenues. The DTC growth helped the brand generate a double-digit increase in its consolidated global average selling price (ASP). Select price increases on a few popular styles and a reduced SKU count contributed to strong full-price selling and “escalated energy” behind key footwear styles.
