A mirror image of last quarter, Deckers Outdoor (DECK, Financial) is surging today as its shares hit all-time highs following impressive Q4 results and solid FY25 guidance. Known for its Hoka and Ugg brands, DECK has capitalized on weakening demand at established footwear giants like NIKE (NKE, Financial), Adidas (ADDYY, Financial), and Under Armour (UAA, Financial). Similarly, On (ONON, Financial) also reported significant top and bottom-line beats in Q1, boosting its FY24 revenue outlook.
- Hoka and Ugg led DECK's 21.2% year-over-year revenue growth to $959.76 million in Q4. Despite declines in Teva and Sanuk brands, Hoka and Ugg, which make up over 93% of total revenue, saw jumps of 34.0% and 14.9%, respectively.
- DECK delivered its third consecutive quarter of more than $1.00 in earnings upside, driven by strong direct-to-consumer (DTC) demand. DECK's DTC net sales increased by 21.0% year-over-year in Q4, unlike NKE, which struggled with its DTC strategy.
- Wholesale revenue for DECK also saw a 21.4% year-over-year improvement in Q4, indicating robust growth across both DTC and wholesale channels.
- Hoka benefited from increasing DTC volume growth and reaccelerating wholesale volume, thanks to product launches and wholesale fill-in activity. Ugg also saw healthy DTC growth despite some inventory shortages and wholesale growth.
- For FY25, DECK projects Hoka and Ugg to maintain their positive momentum, forecasting around 20% and mid-single-digit year-over-year sales growth, respectively. DECK issued FY25 guidance with EPS of $29.50-30.00 and revenue of $4.70 billion. However, the EPS figure missed analyst expectations due to anticipated margin squeezes from a normalized promotional environment.
Despite inflationary pressures, DECK continues to showcase its competitive edge with robust sales growth, leveraging the recent struggles of its rivals. With the upcoming CEO transition from Dave Powers to Stefano Caroti on August 1, the company is expected to maintain its successful trajectory, focusing on its core Hoka and Ugg brands.
