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Why Deckers Sees Hoka One One Becoming a $500 Million Brand

With celebrity fans like Britney Spears and Reese Witherspoon, first-quarter sales that grew 69 percent over their comp and the backing of a footwear company that knows how to build a brand on hype—Hoka One One has turned into one of the footwear industry’s most compelling success stories.

And in Deckers Brand’s most recent conference call, David Powers, CEO and president of the company suggested that Hoka One One is just getting started on its growth trajectory.

“I’ve always said I could see a path to $0.5 billion for this brand,” Powers said. “I think that the real opportunity is probably bigger than that. We don’t want to get ahead of ourselves, but we are thinking big with Hoka and we see this as a game-changer for Deckers long-term.”

The brand has experienced spectacular growth in recent quarters, jumping 53.1 percent in comparable sales during the first quarter of FY19 before the aforementioned jump in growth in Q1 of Fy20. Powers says the brand owes that success to powerful activations paired with relevant product development, and the increased influence of digital channels—all supported by the brand’s “story-sharing philosophy.”

To further illustrate that point, Deckers said Hoka One One has more than doubled its new consumer acquisition over the past year, with roughly 40 percent of its digital sales coming from first-time buyers. Company data showed a clear increase in brand awareness, currently sitting at around 12 percent in North America. As a result, Hoka One One products have seen increased sell-through both domestically and internationally, powering Deckers to an 11 percent improvement in wholesale channels and 16 percent comparable sales growth for its direct-to-consumer operations.

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“There’s a bit of a cult following for the brand, if you can’t tell,” Powers explained. “As soon as something goes up on the website that’s new, new launches or new styles, people are just grabbing them.”

Interest in the brand was primarily driven by activations around new styles, like Hoka’s carbon-plate-equipped “impossibly-cushioned, impossibly-lightweight” Carbon X runner, released in May. Coinciding with the drop, the brand’s marketing team launched “Project X.” The project’s sole purpose, other than boosting the brand’s authenticity in runner’s circles, was to sponsor a group of ultramarathon racers in order to break the men and women’s records for a 100-kilometer race.

Project X was successful and, soon after, the Carbon X’s strong performance during its initial limited release helped Deckers Brands break its quarterly sales record, too.

“Consumers are raving about the experience of the Carbon X as seen by overwhelmingly positive online product reviews,” Powers said. “We feel the Carbon X launch event impressions drove serious momentum in brand awareness, leading up to a key release in our Clifton franchise.”

Powers called the Clifton 6 the most innovative update to a core franchise the brand has made since its launch in 2009. After just a month on the market, Powers said the style showed “very high sell-through rates” and it’s currently either the first or second best-selling shoe in the majority of all U.S. wholesale specialty running accounts.

Still, Powers said Deckers sees a great deal of white space for Hoka One One to target over the coming years as comparable sales for the growing brand become more difficult to match, forcing it to find new business.

The focus for new customer acquisition will be two-fold: first, Hoka One One will continue to capitalize on its cult-like fan base—which has proven to be more prone to repeat purchases than Deckers originally suspected. At the high price points Hoka One One styles demand, this advantage is set to drive sales higher as long as the brand continues to generate more consumer interest. Additionally, Powers said strong marketing tactics and “tight and controlled distribution” will likely drive a high rate of full-price selling.

As far as new business is concerned, Powers said the brand will look to existing channels first. In particular, Hoka One One will target international channels driven by e-commerce. The Deckers CEO said he anticipates a “substantial amount of international growth” to be driven by elevated brand awareness in new markets like China and Japan.

Noting that the average age of Hoka One One consumers skews a “little older than we would like,” Powers said the brand would also like to begin targeting younger shoppers.

“The momentum and the conversation and the buzz about the Hoka brand is improving,” Powers said. “And it just gives us confidence that we can reach some of those aspirational goals in the next three to five years. Hard to put a number on it right now, but I think if look at Hoka in the context of some of the other running brands out there, the runway is pretty significant for us.”