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Dive Brief:
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Deckers on Thursday reported that Q4 net sales rose 21.2% year over year to $959.8 million. Direct-to-consumer net sales rose 21% to $415.2 million, with comps up 20.5%, and wholesale net sales rose 21.4% to $544.6 million.
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By brand: Hoka net sales rose 34% to $533 million; Ugg rose 14.9% to $361.3 million; Teva fell 15.6% to $53 million; Sanuk fell 39.1% to $6.5 million; and other brands, mostly Koolaburra, stayed flat at $6 million.
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Gross margin expanded to 56.2% from 50% a year ago, and net income rose 39% to $127.6 million. Ending inventory was down 11% compared to last year.
Dive Insight:
Deckers’ Hoka brand took off in the fourth quarter — surging even more than its 22% year-over-year lift in Q3 — leading a portfolio where sister brand Ugg “remains incredibly hot as well,” according to Wedbush analysts led by Tom Nikic.
The footwear conglomerate “continues to be one of the fundamentally strongest names in our coverage,” Nikic said in emailed comments, noting that the company handily beat its guidance for the quarter. “Considering the strong momentum at both major brands (UGG and Hoka), conservative FY25 guidance, and a fortress balance sheet ($1.5 billion in cash with no debt), we remain very bullish.”
For fiscal year 2025, the company expects net sales to increase about 10% to $4.7 billion and gross margin to reach about 53.5%, per a company press release.
Rising brand awareness drove Hoka’s growth for the year, reaching about 40% in the U.S. and just over 20% internationally, CEO Dave Powers told analysts Thursday. The brand’s full-year net sales rose 27.9% to $1.8 billion. Deckers has centered Hoka’s growth on DTC sales, a strategy that has had mixed results elsewhere. Nike this year has identified some flaws in its own DTC-first approach, and wholesale declines at Levi’s drove a revenue drop earlier this year.
Hoka does continue to add retail partners, though it is being selective, and expects DTC “to grow faster than wholesale as we try to bolster that business and we get more interest in the brand from awareness increasing globally,” Powers said.
“As we continue to introduce Hoka to new consumers around the world, we view branded retail stores in key cities as an important consumer engagement vehicle,” he also said, noting that the brand recently opened a store in Paris, its second in Europe, that is already getting encouraging “consumer feedback, conversion and broad product adoption.”
“We were excited for Hoka to have a footing in this important market, particularly as the location expects to see high traffic during the upcoming summer Olympics,” Powers also said.
Full-year net sales at Ugg also surged, rising 16.1% to $2.2 billion. Net sales at Teva fell 18.9% to $148.5 million; at Sanuk fell 33% to $25.4 million; and at other brands, primarily Koolaburra, rose 5.9% to $67.9 million.
Company-wide for the full year, net sales rose 18.2% to $4.3 billion. DTC net sales rose 26.5% to $1.9 billion, with those comps ups 25.4%, as wholesale net sales rose 12.6% to $2.4 billion. Gross margin for the year expanded to 55.6% from 50.3% the year before.
via https://www.aiupnow.com
Daphne Howland, Khareem Sudlow
