Dive Brief:
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Deckers is phasing out its Koolaburra brand in favor of its similar Ugg brand. The company said Thursday it will provide more details during its next earnings call in May.
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The company expects the brand’s website to sunset by this fiscal year’s end, which is March 31, and wind down its wholesale operations throughout the calendar year, CEO Stefano Caroti told analysts.
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In its most recent fiscal year, net sales at “other brands,” including Koolaburra, rose nearly 6% to $67.9 million, while Ugg rose over 16% to $2.2 billion. Overall at Deckers, which also runs Teva, Hoka and Ahnu, net sales rose over 18% to $4.3 billion.
Dive Insight:
Koolaburra is the second brand to be dropped from the Deckers portfolio since Caroti took the chief executive role about a year ago: The company sold its Sanuk line in August.
“Coupled with the recent sale of Sanuk, Deckers is clearly focusing on its highest potential brands, Ugg and, especially, Hoka,” Morningstar Senior Equity Analyst David Swartz said in a Thursday research note, adding, “As we did not expect Koolaburra would generate material sales or profits in the foreseeable future or contribute to Deckers’ moat, we have a favorable view of its discontinuation.”
Koolaburra only accounts for about 1% of Deckers’ total revenue, according to Swartz, and is positioned as a lower-priced version of Ugg.
The move comes “as Ugg has continued to solidify its positioning as a leading global lifestyle brand,” and in order to “maintain focus on our most significant organic opportunities,” Caroti said.
Also on Thursday, Deckers reported the results of its third quarter, when net sales rose over 17% year over year to $1.8 billion. By brand, Ugg rose 16.1% to $1.2 billion; Hoka rose 23.7% to $531 million; Teva fell 6% to $24.1 million and “other” brands fell 16.6% to $28 million. Net income rose over 17% to $456.7 million.
