April 2, 2024
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Deckers shares flat despite earnings and revenue growth


Goleta-based Deckers Brands’ second quarter 2022 soundly beat analysts’ expectations in both revenue and earnings, but the company did not raise its guidances for the full fiscal year, giving investors some caution moving forward.

Deckers, which owns Ugg, Hoka One One and other footwear brands, generated net income of $101 million for the quarter, or $3.83 per share, on par with the company’s performance a year earlier.

Adjusted for one-time purchases, Deckers delivered earnings per share of $3.80, up from $3.66 in the same quarter a year ago, and higher than analysts’ estimates of $3.60 for the quarter, Zacks Consensus Estimate reported.

Deckers also reported revenue of $876 million in the second quarter, 21% growth from the same quarter of 2021, when the company reported $721.9 million in sales and a 8% beat of analysts’ expectations.

This was driven by the continued growth of Deckers’ running shoe brand, Hoka One One, which saw sales increase 58A% in a year, to $333 million in the most recent quarter.

Sales for Ugg, Deckers’ biggest brand, increased 6% year-over-year, to $476.5 million.

“Our long-term vision is to build Hoka into a multibillion-dollar major player in the performance athletic space, further diversify the UGG brand’s product, geographic and seasonal mix, grow our DTC business through consumer acquisition and retention and drive international markets through strategic investments, while maintaining top-tier levels of profitability for the company overall,” CEO Dave Powers said during the company’s earnings call.

Despite the earnings beat, shares of Deckers dipped 5% the day after its Oct. 27 earnings announcement.

It gained that entire loss back, though, with the stock closing at $363 on Nov. 1.

Analysts shared caution, however, because Deckers did not issue new revenue and earnings guidances. The company raised guidance after a solid earnings beat in the first quarter.

Instead, Deckers reiterated that it is on track to deliver revenue between $3.45 and $3.5 billion and earnings per share of $17.50 to $18.35.

Those predictions stayed flat even after Powers said during the earnings call that the company is heading into “Ugg brand’s peak selling season.”

But, with a recession perhaps on the horizon, many companies are likely not wanting to raise guidances or even slashing them, as consumer spending could dip over the next six months.

Moreover, Deckers CFO Steve Fasching said during the earnings call the company is still experiencing supply chain delays, with container transit times remaining difficult to predict, though things have gotten better.

“The headwinds we have experienced from ocean freight in the first half are expected to turn neutral for the remainder of this fiscal year,” he said. “With the improvement we’ve seen on transit times and our strategic prioritization to bring inventory in earlier and hold higher levels in the country of sale, we no longer expect to use a material level of air freight in this fiscal year.”

Deckers’ sales for the quarter were led by wholesale distribution, which increase 16.7% from the same quarter a year ago to $636.5 million. Direct-to-consumer sales increased 35% to $239.1 million.

Sales in the United States came in at $617.7 million, a 20% increase, while international sales saw a slightly higher bump of 24.4% to $257.9 million.

During the third quarter, Deckers also repurchased approximately 173,000 of its shares for a total of $50.2 million at an average price paid per share of $290.01.

As of September 30, 2022, the company had approximately $1.5 billion remaining under its stock repurchase authorization, Deckers said in a news release.

Deckers ended the quarter with cash and cash equivalents worth $419.3 million.