Dive Brief:
- Deckers’ first-quarter net revenue increased 10% year over year to $675.8 million, according to a company press release Thursday. The company’s gross margin jumped from 48% to 51.3%, while its net income increased about 42% to $63.5 million.
- Across its portfolio, direct-to-consumer sales increased 35.3% to $250.4 million while wholesale decreased slightly from $429.4 million to $425.4 million. The Hoka brand saw net sales hit a quarterly record by increasing 27.4% to $420.5 million while Deckers’ other brands — including Teva, Ugg and Sanuk — all saw sales declines.
- CEO and President Dave Powers said on a call with analysts Thursday that the quarter’s results “give us increased confidence” to achieve its fiscal year 2024 outlook, which was slightly raised with net sales expected to be about $3.98 billion from a previously projected $3.95 billion.
Dive Insight:
With Hoka leading the company’s growth, direct-to-consumer remains a core focus for Deckers.
"Deckers begins fiscal year 2024 in a position of strength, accelerating towards our outlook for the full year, which has been raised to reflect Hoka brand momentum," Powers said in a statement. "We remain dedicated to delivering results in alignment with our strategic focus to grow DTC and build our presence within international markets.”
Powers said on Thursday’s call that the company remains focused on building Hoka into a multibillion-dollar brand. The executive said in May that the company expects Hoka to reach $2 billion in sales “pretty soon.” Hoka’s performance during the quarter was primarily driven by DTC growth, which increased by 63% year over year.
While Hoka’s DTC business is mostly from e-commerce sales, Powers said that its retail stores are helping to increase brand awareness and engagement with the use of community-oriented experiences in key markets.
“For these reasons, we expect to continue testing potential permanent locations through pop-up stores. We are excited about a couple of new doors that are in the pipeline and look forward to sharing more soon,” the chief executive said.
Overall, Deckers’ first quarter remained strong, though the market’s expectations for Hoka might need review, according to Wedbush analysts led by Tom Nikic.
“[Deckers] continues to perform well in a challenging macro environment, we think numbers for FY24 could continue to move higher as the year progresses, but there might not be quite as much upside potential as we thought at Hoka,” the analysts said in emailed comments. “While the slower Hoka growth is partially due to management's prudence around wholesale distribution (which we think is the right thing for long-term brand health), the market is going to need to recalibrate its expectations for Hoka in the near-term ... We remain encouraged by the outstanding DTC growth, however, which shows that the brand is still resonating with consumers.”
