Deckers Brands is working to further enhance Hoka’s escalating sales trajectory and increase its brand awareness with a new “Fly Human, Fly” global marketing campaign, additional expansion outside the U.S. and a broader product reach that will tap into the trail, hike, walking, and lifestyle segments desired by key age groups, demographics and end users.
Deckers is currently bullish on Hoka’s total revenues, increasing 40 percent in the current fiscal year ending in March 2023 after brand sales rose 54.9 percent to $330 million in the first quarter and surpassed the $1 billion mark over the trailing 12 months. The Hoka business accounted for more than 50 percent of Deckers’ quarterly revenues for the first time.
During the period ended June 30, Hoka’s international revenues rose 66 percent year-over-year, with strength in France and a “slow build” in China. U.S. sales increased 49 percent, led by DTC. Wholesale and distributor revenues were 53 percent higher at $232 million. With a second New York City pop-up store slated to debut in August near Lincoln Center, preparations are underway to open a permanent Hoka store in the Big Apple in Spring 2023, with unspecified plans to take the brand to consumers in key cities around the world subsequently. Currently, Hoka distribution is entrenched in the U.S.-run specialty channel, available in less than 20 percent of all Dick’s Sporting Goods locations and beginning to become available in a handful of targeted Foot Locker locations.
Deckers’ net income slipped 6.8 percent to $44,849,000 from $48,124,000 in the first quarter. Comprehensive income, considering a $15.7 million hit from currency exchange impact, was off 42 percent year-over-year to $29,883,000 from $51,475,000. Operating income fell 8.9 percent to $56.3 million, and gross margin declined to 48.0 percent from 51.0 percent on higher freight costs, unfavorable foreign currency impact and product and channel mix for the Ugg business. Total first quarter revenues were up 22 percent to $614,461,000 from $504,678,000, with global DTC across all brands up 15 percent and revenues outside the U.S. increasing 36 percent year-on-year. The inventory level was 66 percent higher from March 31 at $839.5 million and up 83 percent year-on-year, with the company receiving products earlier than expected and immediately moving them into markets.
Among Deckers’ other brand segments, Ugg sales dipped 2.4 percent to $207.9 million, with sandals and international markets fueling growth; Teva sales rose 2.0 percent to $59.6 million; Sanuk sales declined 5.9 percent to $14.2 million; and net sales of all Other brands, including Koolaburra, sunk 45.3 percent to $2.7 million. During the period, Ugg, through its global DTC business, worked to transition its consumers away from its Fluff franchise, which was extremely strong throughout the pandemic, to more spring, outdoor and summer lifestyle items that included sandals and carried lower average selling prices than the Fluff.
