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Deckers Outdoor Sprints to All-Time Highs on Big Beat and Strong FY24 Guide

AInvestFriday, Feb 2, 2024 12:41 am ET
2min read

Deckers Outdoor, the footwear and lifestyle brand conglomerate, recently published its earnings report for Q3 (December) of fiscal year 2024, beating market expectations. The company reported earnings of $15.11 per share, surpassing estimates of $11.48 by a significant margin of $3.63. Revenues during this period grew by 16.0% year-over-year, reaching $1.56 billion, exceeding the $1.45 billion projected by analysts.

The company's major brands contributed significantly to this successful quarter. GG® brand net sales saw an increase of 15.2% to $1.072 billion, while HOKA® brand net sales rose by 21.9% to $429.3 million. Although Teva® and Sanuk® experienced declines, with net sales dropping by 16.2% and 28.9% respectively, other brands such as Koolaburra® helped offset the impact. The net sales for these other brands, which primarily include Koolaburra®, increased by 10.0% to $29.6 million.

Deckers Outdoor has also issued guidance for the full fiscal year 2024 (FY24). The company expects earnings per share (EPS) to be above consensus estimates at $26.25 to $26.50, compared to the estimated $24.18. Revenue guidance for FY24 has been raised to approximately $4.15 billion, also above the $4.1 billion market estimates. Gross margin is expected to be approximately 54.5%, and operating margin is forecasted at around 20%.

Key highlights from the Q3 report include a 16% increase in revenue to a record $1.56 billion for FY24, and a 44% jump in diluted EPS to $15.11 for Q3 FY24. The company also experienced a significant improvement in gross margin, reaching 58.7% from 53% in the prior year. Direct-to-Consumer (DTC) sales grew by 22.7%, with comparable net sales rising by 21.8%.

Deckers Outdoor's strong balance sheet showcased cash and cash equivalents of $1.651 billion, with no outstanding borrowings. In an effort to return value to its shareholders, the company repurchased approximately 196 thousand shares for $99.7 million.

The company's success can be attributed to its strategic focus on the DTC sales channel, which contributed to the overall growth of the business. Both domestic and international sales experienced growth, with domestic net sales increasing by 15.6% and international net sales rising by 16.7%.

Flagship brands UGG and HOKA were the primary drivers of the quarter's success, with UGG brand net sales increasing by 15.2% and HOKA brand net sales surging by 21.9%. However, the Teva and Sanuk brands experienced declines, indicating a potential need for strategic reassessment.

Deckers Outdoor's robust balance sheet and shareholder returns demonstrate the company's financial strength and commitment to its stakeholders. The strong inventory management and well-managed cash flow positions the company for future growth.

The optimistic outlook for FY24 underscores Deckers Outdoor's confidence in its brand strength and operational capabilities. President and CEO Dave Powers highlighted the exceptional performance driven by the UGG and HOKA brands, emphasizing the global gains in awareness and consumer connections. With a disciplined operating approach and a strong balance sheet, Deckers Outdoor continues to demonstrate its ability to deliver strong financial performance.


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