Dive Brief:
- Athletic footwear brand Hoka is expected to become a $2 billion brand “pretty soon,” Deckers CEO and President Dave Powers said on a call with analysts Thursday. Powers said there is white space opportunity for the Hoka brand in regards to global awareness and category expansion, according to a Seeking Alpha transcript.
- During the fourth quarter, Hoka’s net sales increased by 40.3% year over year to $397.7 million, according to a company press release. Powers told analysts that Hoka’s direct-to-consumer channel grew 85% for the year and this was the fourth consecutive year Hoka reported revenue growth above 50%. For the full fiscal year, the brand’s net sales jumped 58.5% to $1.4 billion.
- Deckers — which also owns Ugg, Teva, Sanuk and Koolaburra — reported net sales across the portfolio increased by 7.5% to $791.6 million during Q4. Wholesale dropped slightly from $448.8 million to $448.4 million while DTC grew 19.5% to $343.1 million. Net income increased for the year and the last quarter, while gross margin dropped during fiscal year 2023 from 51% to 50.3%.
Dive Insight:
Hoka has quickly grown in popularity with younger shoppers, becoming a key brand in the Deckers portfolio.
“Momentum with younger consumers in the U.S. helped drive these increases as Hoka more than doubled the number of purchasers aged 18 to 34 years old,” Powers said on the call. “[W]e’re in this sort of long game, and we feel like we have a very special, very, very strong brand with a lot of runway ahead of it.”
Increasing global awareness has been important for the Hoka brand, which launched its first global marketing campaign in June of 2022. The Fly Human Fly campaign launched alongside the release of its Mach 5 sneaker. The campaign helped grow awareness in France, the U.K., China and Germany, according to Powers.
In the long-term, Deckers is focused on its DTC growth, with Powers noting that it is its most profitable channel. However, the company isn’t exactly pulling back from wholesale in an effort to grow its DTC business.
“Now that doesn’t mean we don’t like wholesale and we’re going to pull back from wholesale. We want to be in wholesale in a positive way with the best partners, and that’s what we’re doing, as you know as well,” Powers said. “You’re going to see both Hoka and Ugg growing this year ahead at a faster rate in DTC than wholesale.”
The Hoka brand remains strong, according to Wedbush analysts led by Tom Nikic, despite a more conservative outlook on fiscal year 2024.
“[Deckers] continues to be one of the most fundamentally sound companies in our coverage, and we see a path to FY24 numbers continuing to move higher as the year goes on,” the analysts said in emailed comments. “For the year ahead, they guided [Hoka] to just 20% growth, which appears very conservative to us, particularly as it assumes no net new door growth this year (despite the significant distribution opportunity).”
