June 18, 2024
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Hoka sees growth, but the rest of Deckers’ footwear sales struggle

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Goleta-based Deckers Brands announced its earnings report for the first quarter after the markets closed on July 27 and behind the news that the majority of its footwear brands hit a snag, some investors have lowered their opinion on the stock.

Deckers reported revenue worth $675.8 million, a 10% increase compared to $614.5 million in the same quarter a year ago.

The company also nearly doubled its net income, generating $55.2 million in the first quarter, up from $29.8 million in the same quarter a year ago. 

When accounting for one-time losses, Deckers generated earnings per share worth $2.41, up from $1.66 in the same quarter a year ago.

Both marks were good enough to beat analysts’ expectations, delivering above the expectations of $2.23 in earnings per share and revenue worth $666.9 million.

Still, that didn’t stop Zachary Warring, an equity analyst at CFRA Research, to downgrade his opinion on Deckers’ shares from a buy rating to a hold rating.

This is because while Deckers’ Hoka brand saw net sales increase 27.4% to $420.5 million compared to $330.0 million, every other brand struggled.

Deckers’ premier brand, Ugg, saw net sales decrease 6% to $195.5 million. Other brands such as 

Teva fell 18.8% to $48.4 million while Sanuk saw net sales drop 32.3% to $9.6 million compared to $14.2 million.

Other brands, primarily composed of Koolaburra, saw net sales decrease 33.9% to $1.8 million.

“We continue to like management’s execution behind the strong growth in the company’s HOKA brand; however, due to the slowdown across its other core brands, we believe shares are fairly valued trading over 23.0x our 2023 EPS estimate and above the company’s 3-year average forward P/E,” Warring said in a note to investors.

Direct-to-Consumer net sales increased 35.3% to $250.4 million, a positive that the company has been focusing in on, said Deckers’ CEO Dave Powers in a press release.

Deckers shares have fallen about 3% since its earnings announcement on July 27, with the stock closing at $540.92 on Aug. 2.

Deckers ended the quarter with cash and cash equivalents worth $1 billion.