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Hoka, Ugg Are Twin Engines for Deckers’ 15% Net Sales Bump

Largely thanks to its Hoka One One and Ugg brands—both products in line with larger pandemic trends—Deckers Brands saw a 15 percent year-over-year net sales increase in second quarter fiscal 2021.

Deckers CFO Steven Fasching, speaking in an earnings conference call Thursday, said both Ugg and Hoka One One had benefited from shifting consumer behaviors amidst the global pandemic. The first, he said, “from consumers working and learning from home, as the brand has been known to provide consumers with a feeling of comfort and security,” and the latter from “increasing awareness and positioning within the expanding active category.”

President and CEO Dave Powers also acknowledged the spotlight Covid has put on Deckers’ brands, but attributed the company’s revenue increase more to the strength of its brands and the strategy it has been working on over the past few years, including generating awareness of Hoka One One, driving DTC customer acquisition and marketing to the covetable 18- to 34-year-old demographic. Deckers, he noted, saw a 182 percent increase in these customers year-to-date in the U.S.

Deckers’ revenue increase came mostly from the direct-to-consumer category. DTC net sales for the quarter rose 74.2 percent year-over-year from $98.7 million to $171.9 million. DTC comparable sales increased 86.2 percent over the same period last year. Wholesale net sales also rose, but by just 1.8 percent, from $443.5 million to $451.6 million. Approximately 95 percent of the company’s global stores were open for the entire second quarter.

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According to Powers, the company’s mix of DTC revenue increased from 18 percent last year to 28 percent this year.

Running shoe brand Hoka One One experienced an 83.2 percent jump in net sales, from $78.1 million to $143.1 million. Ugg net sales rose too, by 2.5 percent, from $404.9 million to $415.1 million. Deckers’ smaller outdoor-focused Teva brand saw its own substantial rise in net sales, 20.5 percent, from $23 million to $27.7 million. Hurt by a soft department store channel, the company’s Sanuk brand experienced an 11.4 percent decline in net sales from $10.7 million to $9.5 million.

Domestic net sales for the quarter rose 19.4 percent to $427.4 million compared to $358.0 million for the same period last year. International net sales also increased, but by 6.4 percent year over year to $196.1 million.

Looking ahead—Deckers, like most companies during the pandemic, declined to offer any formal financial guidance—Fasching said that after spending the past three-plus years in the mid-teens operating margin, “there is going to have to be some investment in the next coming one to two years to be able to take advantage of the opportunities that we’re now seeing.

“Our long-term strategy through Covid has actually probably been accelerated with the shift to e-commerce, younger consumers coming in, the increase marketing spend,” Fasching added. “But we’re going to need to invest in further capabilities to optimize that e-commerce engine even more than we already have to provide better…data and analytics capabilities, systems improvements, and just continue to fuel the growth of these brands through marketing.”