Deckers Brands Reports First Quarter Fiscal Year 2025 Financial Results

Rhea-AI Summary

Deckers Brands (NYSE: DECK) reported strong Q1 FY 2025 results, with revenue increasing 22.1% to $825.3 million and diluted EPS rising 87% to $4.52. The company raised its FY 2025 diluted EPS guidance to $29.75-$30.65. HOKA and UGG brands drove robust full-price demand, with HOKA sales up 29.7% and UGG sales up 14%. Direct-to-Consumer net sales grew 24%, while wholesale increased 21%. Gross margin improved to 56.9% from 51.3%. The company repurchased 177,000 shares for $152 million and announced plans to divest the Sanuk brand in August 2024. Deckers' strong performance and increased outlook reflect its successful brand strategy and market position.

Positive

• Revenue increased 22.1% to $825.3 million in Q1 FY 2025
• Diluted EPS rose 87% to $4.52
• FY 2025 diluted EPS guidance raised to $29.75-$30.65
• HOKA brand net sales increased 29.7% to $545.2 million
• UGG brand net sales grew 14% to $223 million
• Gross margin improved to 56.9% from 51.3%
• DTC net sales increased 24% to $310.6 million
• Wholesale net sales grew 21% to $514.8 million
• Cash and cash equivalents increased to $1.438 billion from $1.047 billion YoY

Negative

• Teva brand net sales decreased 4.3% to $46.3 million
• Sanuk brand net sales declined 28.4% to $6.9 million
• Inventories increased slightly to $753.3 million from $740.6 million YoY

Insights

Financial Analyst

Deckers Brands has delivered an impressive first quarter for FY 2025, showcasing robust growth and improved profitability. The 22.1% increase in net sales to $825.3 million and the 87% jump in diluted EPS to $4.52 are standout figures that signal strong momentum for the company.

Key highlights include:

• DTC net sales growth of 24%, indicating strong consumer demand and effective direct-to-consumer strategies.
• Wholesale net sales increase of 21%, suggesting healthy relationships with retail partners.
• Gross margin expansion from 51.3% to 56.9%, pointing to improved pricing power and operational efficiency.
• HOKA brand's exceptional performance with a 29.7% sales increase, solidifying its position as a growth driver.

The company's strong cash position of $1.438 billion and lack of outstanding borrowings indicate a healthy balance sheet. The $152 million spent on share repurchases demonstrates confidence in the company's future and commitment to shareholder returns.

The raised FY 2025 diluted EPS guidance to $29.75-$30.65 reflects management's optimism about the company's prospects. However, investors should monitor the performance of smaller brands like Teva and Sanuk, which showed declines. The planned divestiture of Sanuk could streamline operations and allow focus on higher-performing brands.

Overall, Deckers Brands appears well-positioned for continued growth, driven by its strong portfolio led by HOKA and UGG and supported by a solid financial foundation.

Market Research Analyst

Deckers Brands' Q1 FY2025 results reveal significant market traction and brand strength. The 21.9% increase in DTC comparable net sales is particularly noteworthy, indicating strong consumer affinity and effective marketing strategies.

Brand performance analysis:

• HOKA: The 29.7% growth cements its status as the company's growth engine, likely benefiting from the ongoing athleisure trend and expansion into new markets.
• UGG: A solid 14% growth suggests successful product diversification beyond its classic offerings and potential seasonal expansion.
• Teva and Sanuk: The declines in these brands (-4.3% and -28.4% respectively) highlight the need for strategic reassessment, with the Sanuk divestiture addressing this concern.

The 20.8% growth in international sales is promising, indicating successful global expansion efforts. However, the stronger domestic growth (23%) suggests there's still room for international market penetration.

The substantial increase in SG&A expenses ($337.2 million vs $275.7 million) warrants attention. While it's likely tied to growth initiatives, maintaining efficiency as the company scales will be crucial.

The upcoming CEO transition from Dave Powers to Stefano Caroti is a key event to watch. Caroti's background as Chief Commercial Officer suggests a potential focus on further expanding Deckers' market reach and brand positioning.

In conclusion, Deckers Brands demonstrates strong market momentum, particularly in its core brands, with opportunities for continued growth and optimization across its portfolio and global presence.

• First Quarter FY 2025 Revenue Increased 22% to $825 Million
• First Quarter FY 2025 Diluted EPS Increased 87% to $4.52
• FY 2025 Diluted EPS Guidance Raised to Range of $29.75-$30.65

GOLETA, Calif.--(BUSINESS WIRE)-- Deckers Brands (NYSE: DECK), a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories, today announced financial results for the first fiscal quarter ended June 30, 2024. The Company also provided an update to its financial outlook for the full fiscal year ending March 31, 2025.

“As this is my last quarter to report as CEO, I am pleased to share these strong results to kick-off fiscal year 2025,” said Dave Powers, President and Chief Executive Officer. “HOKA and UGG continue to drive robust full-price demand in the global marketplace by delivering compelling product that consumers love. Deckers has an exciting future ahead as Stefano transitions into his new role as CEO next week."

"Fiscal year 2025 is off to a great start, with HOKA and UGG delivering fantastic first quarter results that have contributed to our increased outlook for the full fiscal year," said Stefano Caroti, Chief Commercial Officer and incoming President and Chief Executive Officer. "I'm excited by the opportunity to now lead Deckers and its iconic brands, with the support of our talented teams that remain focused on the long-term opportunities ahead for this great company."

First Quarter Fiscal 2025 Financial Review (Compared to the Same Period Last Year)

• Net sales increased 22.1% to $825.3 million compared to $675.8 million. On a constant currency basis, net sales increased 23.0%.
  • Channel
    • Direct-to-Consumer (DTC) net sales increased 24.0% to $310.6 million compared to $250.4 million. DTC comparable net sales increased 21.9%.
    • Wholesale net sales increased 21.0% to $514.8 million compared to $425.4 million.
  • Geography
    • Domestic net sales increased 23.0% to $515.9 million compared to $419.5 million.
    • International net sales increased 20.8% to $309.5 million compared to $256.3 million.
• Gross margin was 56.9% compared to 51.3%.
• Selling, general, and administrative (SG&A) expenses were $337.2 million compared to $275.7 million.
• Operating income was $132.8 million compared to $70.7 million.
• Diluted earnings per share was $4.52 compared to $2.41.

First Quarter Fiscal 2025 Brand Summary (Compared to the Same Period Last Year)

• HOKA® brand net sales increased 29.7% to $545.2 million compared to $420.5 million.
• UGG® brand net sales increased 14.0% to $223.0 million compared to $195.5 million.
• Teva® brand net sales decreased 4.3% to $46.3 million compared to $48.4 million.
• Sanuk® brand net sales decreased 28.4% to $6.9 million compared to $9.6 million.
• Other brands, primarily composed of Koolaburra®, net sales increased 123.5% to $4.0 million compared to $1.8 million.

Balance Sheet (June 30, 2024 as compared to June 30, 2023)

• Cash and cash equivalents were $1.438 billion compared to $1.047 billion.
• Inventories were $753.3 million compared to $740.6 million.
• The Company had no outstanding borrowings.

Capital Allocation

During the first fiscal quarter, the Company repurchased approximately 177 thousand shares of its common stock for a total of $152.0 million at a weighted average price paid per share of $858.79. As of June 30, 2024, the Company had approximately $789.7 million remaining under its stock repurchase authorization.

Subsequent to quarter end, the Company entered into an agreement to divest the Sanuk brand, which we expect to close in August 2024.

Full Fiscal Year 2025 Outlook for the Twelve Month Period Ending March 31, 2025

The Company’s full fiscal year 2025 outlook is forward-looking in nature, reflecting our expectations as of July 25, 2024, and is subject to significant risks and uncertainties that limit our ability to accurately forecast results. This outlook assumes no meaningful changes to the Company’s business prospects or risks and uncertainties identified by management that could impact future results, which include but are not limited to: changes in economic conditions, including consumer confidence, discretionary spending, inflationary pressures, and foreign currency fluctuations; supply chain disruptions; and geopolitical tensions.

• Net sales are still expected to increase approximately 10% to $4.7 billion.
• Gross margin is now expected to be approximately 54%.
• SG&A expenses as a percentage of net sales are now expected to be in the range of 34% to 34.5%.
• Operating margin is now expected to be in the range of 19.5% to 20%.
• Effective tax rate is still expected to be in the range of 22% to 23%.
• Diluted earnings per share is now expected to be in the range of $29.75 to $30.65.
• The earnings per share guidance does not take into account the impact from any potential future share repurchases or the proposed six-for-one forward stock split, which has been approved by our Board of Directors and is pending stockholder approval at our 2024 annual meeting of stockholders to be held on September 9, 2024.

Non-GAAP Financial Measures

In certain instances the Company may present financial measures that were not prepared in accordance with generally accepted accounting principles in the United States (non-GAAP financial measures), including constant currency, to provide information that may assist investors in understanding its financial results and assessing its prospects for future performance. The Company believes these non-GAAP financial measures are important indicators of its operating performance because they exclude items that are unrelated to, and may not be indicative of, its core operating results.

The non-GAAP financial measures presented by the Company may not necessarily be comparable to similarly titled measures of other companies and may not be appropriate measures for comparing the performance of other companies relative to Deckers. For example, in order to calculate constant currency information, the Company calculates the current period financial information using the foreign currency exchange rates that were in effect during the previous comparable period, excluding the effects of foreign currency exchange rate hedges and remeasurements in the condensed consolidated financial statements. Further, the Company reports DTC comparable net sales on a constant currency basis for DTC operations that were open throughout the current and prior reporting periods, and may adjust prior reporting periods to conform to current year accounting policies. These non-GAAP financial measures are not intended to represent, and should not be considered to be more meaningful measures than, or alternatives to, measures of operating performance as determined in accordance with GAAP. To the extent the Company utilizes such non-GAAP financial measures in the future, it expects to calculate them using a consistent method from period-to-period.

Conference Call Information

The Company’s conference call to review the results for the first quarter fiscal year 2025 will be broadcast live today, Thursday, July 25, 2024, at 4:30 pm Eastern Time and hosted at ir.deckers.com. You can access the broadcast by clicking on the link within the “Webcast” box at the top of the page. A replay of the broadcast will be available for at least 30 days following the conference call and can be accessed under the “Quarterly Earnings” section of the “Financials” tab at the aforementioned website.

About Deckers Brands

Deckers Brands is a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories developed for both everyday casual lifestyle use and high-performance activities. The Company’s portfolio of brands includes UGG®, HOKA®, Teva®, Sanuk®, Koolaburra®, and AHNU®. Deckers Brands products are sold in more than 50 countries and territories through select department and specialty stores, Company-owned and operated retail stores, and select online stores, including Company-owned websites. Deckers Brands has over 50 years of history building niche footwear brands into lifestyle market leaders attracting millions of loyal consumers globally. For more information, please visit www.deckers.com.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, which statements are subject to considerable risks and uncertainties. Forward-looking statements include all statements other than statements of historical fact contained in this press release, including statements regarding our projected financial results, including net sales, gross margin, SG&A expenses, operating margin, inventories, effective tax rate, and diluted earnings per share; consumer confidence and discretionary spending; the strength of our brands and demand for our products; our ability to drive future growth and profitability; our ability to execute on our long-term strategies and objectives; our capital allocation, including the potential repurchase of shares; the expected timing and impact of our planned leadership transition; and the impact of the pending forward stock split. We have attempted to identify forward-looking statements by using words such as “anticipate,” “believe,” “estimate,” “intend,” “may,” “plan,” “predict,” “project,” “should,” “will,” or “would,” and similar expressions or the negative of these expressions.

Forward-looking statements represent our management’s current expectations and predictions about trends affecting our business and industry and are based on information available as of the time such statements are made. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy or completeness. Forward-looking statements involve numerous known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements predicted, assumed or implied by the forward-looking statements. Some of the risks and uncertainties that may cause our actual results to materially differ from those expressed or implied by these forward-looking statements are described in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2024, as well as in our Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. Except as required by applicable law or the listing rules of the New York Stock Exchange, we expressly disclaim any intent or obligation to update any forward-looking statements, or to update the reasons actual results could differ materially from those expressed or implied by these forward-looking statements, whether to conform such statements to actual results or changes in our expectations, or as a result of the availability of new information.

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (dollar and share data amounts in thousands, except per share data)
	Three Months Ended June 30,
		2024				2023
Net sales	$	825,347			$	675,791
Cost of sales		355,347				329,367
Gross profit		470,000				346,424
Selling, general, and administrative expenses		337,193				275,688
Income from operations		132,807				70,736
Total other income, net		(16,346	)			(10,628	)
Income before income taxes		149,153				81,364
Income tax expense		33,528				17,812
Net income		115,625				63,552
Total other comprehensive loss, net of tax		(3,800	)			(8,299	)
Comprehensive income	$	111,825			$	55,253
Net income per share
Basic	$	4.54			$	2.43
Diluted	$	4.52			$	2.41
Weighted-average common shares outstanding
Basic		25,478				26,165
Diluted		25,581				26,321

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (dollar amounts in thousands)
	June 30, 2024			March 31, 2024
ASSETS				(AUDITED)
Current assets
Cash and cash equivalents	$	1,438,397		$	1,502,051
Trade accounts receivable, net		303,128			296,565
Inventories		753,282			474,311
Other current assets		118,023			170,556
Total current assets		2,612,830			2,443,483
Property and equipment, net		305,585			302,122
Operating lease assets		221,207			225,669
Other noncurrent assets		166,597			164,305
Total assets	$	3,306,219		$	3,135,579
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Trade accounts payable	$	642,595		$	378,503
Operating lease liabilities		46,362			53,581
Other current liabilities		223,513			287,909
Total current liabilities		912,470			719,993
Long-term operating lease liabilities		216,006			213,298
Other long-term liabilities		103,261			94,820
Total long-term liabilities		319,267			308,118
Total stockholders’ equity		2,074,482			2,107,468
Total liabilities and stockholders’ equity	$	3,306,219		$	3,135,579

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240725088622/en/

Investor Contact:

Erinn Kohler | VP, Investor Relations, Corporate Planning & Business Analytics | Deckers Brands | 805.967.7611

Source: Deckers Brands

FAQ

What was Deckers Brands' revenue growth in Q1 FY 2025?

Deckers Brands (DECK) reported a 22.1% increase in revenue to $825.3 million for Q1 FY 2025 compared to the same period last year.

How much did HOKA brand sales grow in Q1 FY 2025?

HOKA brand net sales increased 29.7% to $545.2 million in Q1 FY 2025 compared to $420.5 million in the same period last year.

What is Deckers Brands' updated EPS guidance for FY 2025?

Deckers Brands (DECK) raised its FY 2025 diluted EPS guidance to a range of $29.75-$30.65.

How much did Deckers Brands' gross margin improve in Q1 FY 2025?

Deckers Brands' gross margin improved to 56.9% in Q1 FY 2025, compared to 51.3% in the same period last year.

What are Deckers Brands' plans for the Sanuk brand?

Deckers Brands (DECK) announced plans to divest the Sanuk brand, with the transaction expected to close in August 2024.