Deckers outdoor profile
Company introduction
Deckers Outdoor (ticker: DECK) is a footwear designer and distributor founded in 1973 by UC Santa Barbara alumni Doug Otto and Karl F. Lopker.
For the sake of simplicity, this article will refer to Deckers Outdoor as Deckers.
Initial public offering
In October 1993, Deckers’s stock went public.
Brands owned by Deckers
Deckers designs and sells footwear, apparel and accessories for casual lifestyle and performance activities. The company’s brand portfolio includes UGG, Koolaburra, Hoka, Teva and AHNU.
Well-known HOKA
HOKA shoes owned by Deckers are designed with thick soles and bright colors. They were once called “ugly shoes”. However, with the popularity of 81-year-old U.S. President Biden, movie and TV celebrities Gyniss Petro, and Rui Siweisipeng has put them on their feet, leading the alternative fashion.
HOKA, the full name HOKA ONE ONE, comes from the Hari language, HOKA represents “earth”, ONE ONE pronounced “One, One” means flying, symbolizing shoes that can stand up in place. It was founded in 2009 by French cross-country runner Nicolas Mermoud and enthusiast Jean-Luc Diard.
HOKA went against the market trend of minimalism at that time, and with its enlarged midsole, high cushioning and rebound design, it was born as a cross-country running shoe that can bring a comfortable experience for all ages. With a completely different feel, HOKA quickly penetrated into mountain running groups and became a popular shoe for the Mont Blanc Supercross Endurance Race. HOKA has fans all over the world, and the road running group Jet Rabbit also They are all HOKA supporters.
Brand portfolio
Hoka
Hoka produces performance footwear and apparel for athletes. This is a major portion of the revenue pie and a key growth driver for Deckers Outdoor.
UGG
UGG, a lifestyle brand known for its iconic suede classic boots, is a rapidly growing premium line with 130 stores in major international markets including New York, San Francisco, Los Angeles, Paris, London, Tokyo, Shanghai and Beijing Concept stores and direct sales stores.
UGG partners with top retailers around the world. The Hoka and UGG brands combined accounted for more than 90% of Deckers’ revenue in the most recent first quarter of fiscal 2025 and are well positioned for the remainder of the year amid strong demand. Deckers hopes to reshape UGG from a trend-focused approach to a year-round premium model. Koolabra is a more affordable variant of UGG that dominates Deckers’ “other brands” business.
Teva
The Teva brand makes sandals for outdoor activities but has struggled with sluggish sales. In its most recent first quarter, Teva’s net sales fell 4.3% year over year to $46.3 million. However, Deckers hopes to revive the brand.
Ahnu
After being discontinued in 2018, Ahnu was relaunched by Deckers as a “super sneaker” brand that combines retro running shoe designs with modern performance materials for all-day comfort.
Operating performance
HOKA accounts for 50%+ revenue
The latest data comes from HOKA. As a representative of mountain-style shoes that have exploded in the past two years, this professional running shoe brand that could never be called a public before has achieved revenue of more than 1 billion US dollars in the past year, quickly approaching the second-tier New Balance, Reebok (ticker: RBK) and Vans.
According to the financial report released by the parent company Deckers, in the first quarter of fiscal year 2023, HOKA recorded revenue of US$330 million, accounting for 53.66% of the company’s total revenue. In the previous five fiscal years, HOKA has maintained a rapid growth of about 50%, becoming the brand with the highest revenue and the fastest growth under the parent company Deckers.
DTC business model
Over the past few years, Deckers’ direct-to-consumer sales pipeline (DTC) has been experiencing strong growth. In the most recent first quarter, DTC sales increased 24% year over year to $310.6 million, while DTC comparable net sales increased 21.9%. DTC sales accounted for nearly 38% of the business in the first quarter, and Deckers expects that metric to increase to 50% of the overall business.
International market
Deckers said its international growth makes the most sense in China and Europe, the Middle East and Africa, as both regions drive strong online growth and benefit from recent successful retail store openings. Deckers already has more Hoka stores in China than in any other country and plans more aggressive retail expansion there.
Q2 2024 result
Deckers has beaten EPS and revenue estimates for eight consecutive quarters, thanks to its product innovation, growth in its direct-to-consumer (DTC) pipeline, targeted store expansion and strategic focus on International growth in profitable markets, and strong wholesale business.
Deckers reported upbeat second-quarter results in late July.
Competitors
In addition to the hot newcomers such as Salomon and HOKA, which have just entered the public eye, among internationally renowned sports brands, Nike ACG launched the outdoor series “Mountain Fly”; Adidas TERREX launched “FREE HIKER”; Reebok (ticker : RBK) and Japanese mountain outdoor brand Mountain Research have launched joint slippers.
Financial performance
Solid revenue and profitability
Over the past three years, Deckers’ revenue has grown from $3.2 billion in 2022 to $4.3 billion in 2024, and is expected to grow 10% year over year to $4.7 billion in fiscal 2025 (ending March 31, 2025) . In the most recent first quarter, revenue grew 22.1% year over year to $825.3 million.
Hoka and UGG brands contributed more than 90% of revenue in the first quarter. The U.S. remained the largest revenue contributor, accounting for nearly 63% of total revenue in the first quarter, while international revenue accounted for 37%. It should be noted that wholesale is a large portion of the revenue mix, accounting for approximately 62% of Q1 revenue, while the remainder came from DTC sales.
The Koolaburra, the more affordable option in the UGG franchise, is a key contributor to Deckers’ other divisions, which reported first-quarter net sales of $4 million, up 123.5% from the same period last year. Operating income increases from $564.7 million in 2022 to $927.5 million in 2024. First-quarter operating income rose to $132.8 million from $70.7 million a year earlier. Net income increases from $451.9 million, or $16.26 per share, in 2022 to $759.6 million, or $29.16 per share, in 2024, with fiscal 2025 guidance ranging from $29.75 to $30.65. First-quarter net income rose to $115.6 million, or $4.52 a share, from $63.6 million, or $2.41 a share, a year earlier.
Excellent profit margins
Deckers has maintained its gross margin above 50% over the past three years and expects gross margin to reach 54% in fiscal 2025. Gross margin in the first quarter was 56.9%, compared with 51.3% in the same period last year, driven by full-price sales of the Hoka and UGG brands and more promotional sales compared with the same period last year. Over the past three years, operating margins have ranged between 18% and nearly 22%, and are expected to be between 19.5% and 20% in fiscal 2025.
Strong cash flow
Cash and cash equivalents were $1.4 billion as of June 30, 2024, compared to $1.1 billion as of June 30, 2023. Deckers has no outstanding borrowings.
Capital market performance
Share price performance
Deckers’ stock has outperformed the S&P 500 over the 2024 year-to-date, one-year, two-year and five-year periods.
Deckers’ stock has returned more than 500% over the past five years as the footwear company has steadily entered a market previously dominated by Nike and Adidas based on its superior profitability and product innovation.
Valuation
Deckers’ valuation is high compared to the industry median, and compared to Nike, Deckers’ historical five-year averages are higher than Nike’s on every valuation metric, and Nike’s cost The forward earnings ratio (P/E) multiple is 25 times, which is lower than its own 5-year average of 35.4 times.
Stock split
Given the strong rise in its stock price over the past decade, Deckers has had two stock splits in its history:
- Deckers conducted a 6-for-1 stock split on September 17, 2024 to increase trading liquidity for its common stock.
- Deckers implemented a three-for-one stock split in July 2010.
Shareholders reward programs
As for shareholder returns, a share buyback by Deckers is possible, and the Deckers operating team is discussing the possibility of a dividend with the board of directors, but the company has nothing concrete to announce yet.
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