By Jorge Mercado Tuesday, February 7th, 2023

Deckers’ attempt to turn its running shoe brand, Hoka One One, into a billion-dollar blockbuster keeps panning out with each quarter that passes.

The Goleta-based company again outpaced analysts’ expectations, this time for the third quarter of 2022, as revenue and earnings both shot up thanks in large part to the continuing growth of the Hoka brand.

Net income for the quarter ended Dec. 31 was $278.6 million, up from $232.9 million in the same quarter, a year ago, Deckers reported on Feb. 2.

This equates to earnings per share of $10.55 in the third quarter, up from $8.49 in the same period a year ago.

Adjusted for one-time losses, Deckers, a premier footwear brand, earnings per share in the third quarter was $10.48, comfortably beating last year’s mark of $8.42 and analysts’ expectations of $9.57, according to Zacks Consensus Estimate.

Deckers also delivered revenue worth $1.3 billion in the third quarter of 2022, a 13.3% increase from the same quarter a year ago.

This mark also beat analysts over at Zacks Consensus Estimate projection of $1.2 billion.

Hoka was the key factor in these financial numbers, as sales for the running shoe grew 90% year-over-year to $352.1 million — a record amount in a single quarter for the brand.

“Our brands delivered another stellar quarter, led by record results for both HOKA as well as our consolidated direct-to-consumer business,” Dave Powers, President and CEO of Deckers, said during the company’s earnings call. 

“The consistent strength of Deckers results thus far in fiscal year 2023, despite macroeconomic and currency headwinds, are the result of our brand marketplace management actions and dedication to long-term strategic priorities.”

Investors were relatively pleased with the results as the stock remained flat when it closed on Feb. 3, one day after its earnings results. On that day, major stock indices closed down about 3%. 

As of Feb. 7, Deckers shares closed at $417.61, up about 7.5% from the beginning of the year.

Two quarters ago, Powers recalled the team celebrating over $1 billion in sales for Hoka on a trailing 12-month basis.

So far through fiscal year 2022, Hoka has already generated past $1 billion in sales.

Powers noted that Hoka continues gaining popularity amongst the female 18 to 34 demographic and continues to become an overall more powerful brand. 

Moreover, the brand is expanding beyond just being seen as primarily a running shoe brand, leading to gains across the market.

“According to aggregated US-run specialty store data, during December, HOKA increased market share by 5 percentage points versus last year, delivered the highest average product turns and maintain a gross margin well above the channel average,” Powers said

Ugg, Deckers’ premier brand, sales dipped about 1% year-over-year in the third quarter, but its sales are still strong, sitting at $930.4 million.

Powers also has no reason to believe the brand is losing any place in the market.

“We believe UGG and HOKA are two of the healthiest, well-positioned brands in their respective markets, and with the strength of our operating model, Deckers is poised for continued success going forward,” Powers said.

He noted that Ugg direct-to-consumer sales increased about 8% year-over-year but unfavorable foreign currency exchange rates impacted all channels, leading to an overall lower wholesale revenue.

Powers added that among 18 to 34-year-old males in the US, Ugg brand consideration reached an all-time-high in the third quarter, further showcasing how well the brand is positioned for years to come.

“The brand continues to attract new consumers and drive more business through direct-to-consumer with a loyalty program that now has massed over 7 million members worldwide,” Powers said. 

“We feel great about the brands’ ability that offset more normalized promotional activity through a strategic shift in channel mix, which also helped reduce marketplace inventories heading into the spring 2023 season.”

Sales for Deckers Teva sandal brand also saw healthy growth, gaining a 48.7% increase year-over-year with sales topping $30 million.

Direct-to-consumer grew 18.7% in the quarter, driven largely by Hoka and Ugg DTC sales, with revenue nearing $700 million for the third quarter — again only hindered by foreign currency exchange rates.

Wholesale sales were also still strong, delivering 8% growth to $646.3 million.

“With the brand heat we’re seeing on HOKA and UGG in particular, we feel Deckers is well positioned. Both brands operate on a pull model, and we believe the strong relationships our brands have built with key wholesale partners will serve us well,” Powers said.

Deckers ended the quarter with over $1 billion in cash and cash equivalents.

During the third quarter, the company also repurchased about 127,000 of its common stock for a total of $44.6 million at an average price of $350.35 per share.

As of Dec. 31, Deckers had approximately $1.4 billion remaining under its stock repurchase authorization.