Running shoe sales propel Deckers to profitable quarter
Goleta-based Deckers Brands started its 2021-22 fiscal year strong, reporting huge increases in earnings and revenue in quarterly results released after the markets closed July 29.
The parent company of Ugg, Teva and other footwear brands delivered earnings of $48.1 million in the most recent quarter, or $1.71 per share, much better than the same quarter last year, when it suffered a loss of $7.9 million, or 28 cents per share.
Revenue was also up 78.1% compared to a year earlier, at $504.7 million in the first quarter of 2021-22.
Hoka One One, a running shoe brand, accounted for nearly 40% of that revenue, bringing in $213.1 million in the first quarter of 2021-22, a 95.5% increase from a year earlier.
Deckers’ shares closed at $406.69 on July 29, 2% higher than its opening that day. In after-hours trading, after the earnings were released, shares were up a fraction of a percent.
“While unique marketplace dynamics contributed to this result, we believe the growing influence of Hoka, with its more evenly spread seasonal volumes, will continue to drive our organization towards a more balanced business across quarters,” Deckers President and CEO Dave Powers said during the company’s earnings call.
Powers added that the successful first quarter was driven by “global wholesale growth” in the Hoka brand as well as Ugg, its premier footwear brand, and the sandal and casual footwear brand Teva.
Deckers generated $344.3 million in total wholesale revenue, a 110.5% jump from the same quarter last year. Of that total, Hoka One One accounted for $151 million, Ugg made $131 million and Teva brought in $43 million.
“Hoka One One, Ugg and Teva’s compelling products are continuing to build market share and overcome the disruption in the channel that began during the pandemic,” Powers said.
Hoka One One is also driving the company’s direct-to-consumer sales. DTC revenue for Deckers was up 14.7%, to $160.4 million in the most recent quarter, and Hoka accounted for 38.6% of total direct sales.
“The brand continues to build awareness through digital marketing, introducing innovative products and category disruptors that drive new consumer acquisition and deliver a consistent consumer experience for online replenishment,” Powers said.
Powers added that Deckers wants to continue prioritizing direct-to-consumer sales, and hopes they will eventually reach 50% of total sales.
“Given the momentum of our brands and their respective market share opportunities, we are focused on meeting consumers where they want to shop and to optimize growth in this less-than-certain marketplace, but remain committed to driving direct-to-consumer demand over the longer term,” Powers said.
With the success of the first quarter, Deckers wants to accelerate its long-term plans as well, which include building the Hoka brand into a $1 billion powerhouse, and making Ugg a more year-round lifestyle brand by adding more “diverse products,” Powers said.
Ugg generated $213 million in the first quarter of 2021-22, a 70.8% increase from the same quarter a year ago.
Teva produced sales of $58.5 million, a 65.9% increase from the same quarter last year, while Sanuk made $15 million, a 13.7% increase.
During the first quarter, Deckers also repurchased approximately 249,000 shares of its common stock for a total of $82.2 million, at an average price of $329.55 per share.
The company also increased its guidance for its full-year earnings to $14.45-$15.10, up from a prior projection of $14.05-$14.65.
Deckers ended the quarter with cash and cash equivalents worth $956.7 million compared to $661.9 million in the same period last year. The company is debt-free.
About 66% of Deckers’ stores were also open during the first quarter, the company said. However, the spread of the delta strain of COVID-19 could lead to closures in some parts of the world.