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Dive Brief:
- As the company teases launching a new footwear brand, Deckers’ second quarter for fiscal 2024 saw net sales increase 24.7% year over year to more than $1 billion, according to a Thursday press release. The company — which boasts a brand portfolio including Hoka and Ugg — saw its net income increase about 76% to $178.5 million and operating income jumped similarly to $224.6 million.
- The company’s direct-to-consumer net sales increased 38.8% to $331.7 million during the quarter whereas wholesale increased 19.4% to $760.2 million. Hoka’s net sales grew 27.3% to $424 million during the period and Ugg’s net sales increased 28.1% to $610.5 million. But the Sanuk and Teva brands saw declines. The parent company announced its intent to divest the Sanuk brand and is searching for a buyer.
- Deckers’ DTC business was “the fastest-growing component of revenue growth in the second quarter,” with Hoka seeing a 46% increase in the channel, president and CEO Dave Powers said on a call with analysts Thursday.
Dive Insight:
Given its latest quarterly results, Deckers raised its full-year outlook again on Thursday to $4.025 billion in net sales instead of the previously predicted $3.98 billion.
"The strength of demand for our Hoka and Ugg brands continued to drive exceptional performance, producing record revenue and earnings for Deckers in both the second quarter and first half of fiscal year 2024," Powers said in a statement.
DTC is a key focus for Deckers’ top brands. Powers reiterated on the call Thursday that the company’s long-term goal is to grow Hoka into a multibillion-dollar brand, utilize DTC to grow Ugg and expand overall DTC through customer acquisition and retention.
Hoka’s DTC revenue growth during the first half of the year, particularly among consumers aged 18 to 34 years old, may be partially attributed to popularity at back-to-school time for college students. The brand is aiming to grow its DTC awareness outside the U.S. as well, recently opening its first European flagship store in London, per Powers.
“We want to maintain a healthy and clean marketplace and continue to drive real strength through our DTC channel,” Powers added. “And that's our strategy, and it's working well so far.”
On a call with analysts in May, Powers noted that Hoka was expected to become a $2 billion brand “pretty soon,” with the executive saying there was white space opportunity in terms of global brand awareness and category expansion.
Though Deckers intends to divest its Sanuk footwear brand, Powers said on Thursday that the brand wasn’t necessarily “holding us back from building and launching a new brand,” but the journey to scale the brand meaningfully is too long and the company would rather invest in other areas. Deckers closed on its acquisition of Sanuk in July 2011 after it entered into an agreement a few months earlier that included an initial payment of approximately $120 million in cash.
Powers teased the launch of a new “super sneaker brand across various categories.” The company wants to ensure it has share in the sneaker industry going forward beyond Hoka.
via https://www.aiupnow.com
Dani James, Khareem Sudlow
