Hoka, Ugg drive Deckers to record-high revenue
Goleta-based Deckers Brands saw revenue increase more than 10% in the third quarter of its 2021-22 fiscal year, beating analysts’ expectations in both revenue and net income with its Feb. 3 earnings release.
Deckers’ revenue hit $1.18 billion for the quarter ended Dec. 31, its largest figure ever for a single quarter, CEO David Powers said during the company’s earnings call. Net income was $232 million, $8.49 per share, down 8.6% from the same quarter a year earlier.
The company’s adjusted earnings per share saw a similar dip, from $8.99 per share in 2020 to $8.42 this year, but adjusted earnings still beat Zacks’ Consensus Estimate by 0.84%.
All of Deckers’ main product lines saw consistent growth in the most recent quarter, but Ugg, the company’s premier brand, and Hoka One One, the company’s athletic shoe brand, continued to be the main drivers of growth for Deckers.
“We saw balanced growth across our entire brand portfolio as direct to consumer wholesale and multiple geographies drove impressive results,” Powers said. “With Hoka continuing to expand its share of the global performance market, we believe our portfolio contains two of the strongest brands in the footwear industry, with much more promising growth ahead.”
Deckers’ third quarter results were released after the markets closed Feb. 3. The company’s shares closed at $322.15 before the earnings release, down 2.5% from the previous day, on a day when the S&P 500 lost 2.4%. Deckers shares were up 1.8% in after-hours trading.
The company’s shares have dropped more than 9% since the beginning of the year compared to the S&P 500’s decline of about 4%.
Powers said he sees Hoka One One has a billion-dollar-per-year brand, similar to what Ugg brings to the table. Hoka generated $184.6 million in sales in the third quarter, a 30.3% increase compared to the same quarter a year ago. Hoka sales are up 54% for the first three quarters of Deckers’ fiscal year.
Hoka’s newest launches, such as the Bondi X, also drove younger customers to Deckers, Powers said.
“This is a fantastic accomplishment and speaks to the incredible momentum of Hoka as a brand marches closer to a billion dollars in revenue and beyond,” Powers said. “We have enormous confidence in the brand’s ability to continue building share in a highly competitive marketplace.”
Like many companies across various industries, Deckers has seen shipping delays and growing costs due to supply chain issues, Powers said, adding that there is no sign of near-term improvement any time soon.
Powers said the company is “prioritizing the fulfillment of Hoka demand.”
“Ramping production of this highly technical performance product will require some additional time, but our measured approach will ensure Hoka is built to become a long-term major player in the performance space of delivering the quality products our consumers expect,” he said.
Ugg brand sales increased 7.9% to $945.9 million for the quarter, while the Teva sandal brand saw net sales increase 31.4% to $20.6 million in the quarter.
Sanuk, the company’s leisure footwear brand, saw sales decrease 13.4%, to $6.1 million.
Deckers’ sales for the quarter were split nearly evenly between wholesale distribution and direct-to-consumer sales: Wholesale net sales for the third quarter increased 7.3% to $598.4 million, while direct-to-consumer net sales increased 13.4% to $589.4 million.
Deckers’ ended the quarter with cash and cash equivalents worth $998.3 million and no outstanding borrowings.
During the third quarter, Deckers also repurchased approximately 354,000 of its shares for a total of $130.7 million at an average price paid per share of $369.12.
As of Dec. 31, the company had $544.0 million remaining under its stock repurchase authorization, Deckers said in a news release.
