DECKERS BRANDS REPORTS FOURTH QUARTER AND FULL FISCAL YEAR 2024 FINANCIAL RESULTS

Rhea-AI Summary

Deckers Brands (NYSE: DECK) reported strong financial results for Q4 and FY 2024, with a revenue increase of 18% to $4.29 billion and a diluted EPS rise of 51% to $29.16. The company anticipates FY 2025 revenue growth of approximately 10% and EPS ranging from $29.50 to $30.00. Q4 net sales rose 21.2% to $959.8 million. Key brand performances included a 34% increase in HOKA brand sales and a 14.9% rise in UGG brand sales. However, Teva and Sanuk brand sales declined. Full-year DTC net sales grew by 26.5% and wholesale by 12.6%. Operating income for FY 2024 was $927.5 million, with a gross margin of 55.6%. Cash and cash equivalents were $1.502 billion, and inventories were reduced to $474.3 million. The company also repurchased $414.9 million worth of shares.

Positive

• FY 2024 revenue increased by 18% to $4.29 billion.
• Diluted EPS for FY 2024 rose by 51% to $29.16.
• Q4 net sales increased by 21.2% to $959.8 million.
• Gross margin for FY 2024 was 55.6%, up from 50.3%.
• DTC net sales for FY 2024 increased by 26.5%.
• Wholesale net sales for FY 2024 increased by 12.6%.
• Operating income for FY 2024 rose to $927.5 million, a significant increase from $652.8 million.
• HOKA brand net sales increased by 34% in Q4 and 27.9% for FY 2024.
• UGG brand net sales increased by 14.9% in Q4 and 16.1% for FY 2024.
• Cash and cash equivalents increased to $1.502 billion.
• Inventories decreased to $474.3 million.
• Repurchased shares worth $414.9 million during FY 2024.

Negative

• Teva brand net sales decreased by 15.6% in Q4 and 18.9% for FY 2024.
• Sanuk brand net sales decreased by 39.1% in Q4 and 33% for FY 2024.
• SG&A expenses increased to $1.458 billion from $1.173 billion in FY 2023.

Insights

Financial Analyst

Deckers Brands' financial results for FY 2024 are notable for several reasons: The company achieved a record revenue of $4.29 billion, up by 18% compared to the previous year. Additionally, diluted earnings per share (EPS) increased by 51% to a record $29.16. These significant gains highlight strong operational performance and effective cost management.

Key Insights:

1. Revenue Growth: The 18% increase in revenue is well above the industry average for the apparel and footwear sector, which typically sees single-digit growth. This robust growth suggests strong consumer demand and successful marketing strategies for brands like HOKA and UGG.

2. Gross Margin: The gross margin improved to 55.6% from 50.3%, indicating better cost control and pricing power. This is a positive sign for investors as it suggests the company is efficiently managing its production costs and setting competitive prices.

3. Stock Repurchase Program: Deckers repurchased $414.9 million worth of shares during FY 2024, signaling confidence in their own stock value. This often leads to a higher EPS over time as the number of outstanding shares decreases.

Short-term: The stock is likely to see a positive reaction given the strong quarterly results and optimistic guidance for FY 2025.

Long-term: Sustained growth in revenue and EPS provides a solid foundation for long-term investors. However, the decrease in net sales for brands like Teva and Sanuk may need attention, as it could signify shifting consumer preferences within their portfolio.

Market Research Analyst

Market Position and Competitive Advantage:

Deckers Brands, particularly through its HOKA and UGG brands, continues to strengthen its market position. The 34% increase in HOKA's net sales and the 14.9% increase in UGG's net sales demonstrate the appeal and resilience of these brands. The company's ability to innovate and align with consumer preferences is a key driver of these results.

Geographic Performance: Domestic net sales rose by 16.8%, while international sales increased by 21.1%. This suggests not only strong brand recognition in the U.S. but also successful penetration into international markets. The higher growth rate internationally indicates substantial global market potential.

Channel Performance: The 26.5% increase in Direct-to-Consumer (DTC) net sales, outpacing wholesale growth, underscores a strategic shift towards higher-margin sales channels. This can lead to improved profitability and stronger customer relationships over the long term.

Strategic Implications: Deckers' focus on DTC and international expansion bodes well for future revenue streams. However, maintaining momentum in these areas will require continued investment in marketing, innovation and supply chain logistics.

Short-term: The positive market reception is expected as the company’s growth strategy appears to be yielding strong results.

Long-term: Investors should watch how effectively Deckers can maintain its growth trajectory, particularly in international markets and the DTC channel, as these will be important for sustained long-term success.

Stock Market Analyst

Stock Performance:

Deckers Brands' stock performance is likely to benefit from these robust financial results. The company’s guidance for FY 2025, with expected revenue growth of approximately 10% and an EPS range of $29.50-$30.00, suggests continued strong performance. This outlook provides a degree of confidence to investors about the company’s future profitability.

Investment Considerations: The significant EPS growth of 51% and strong operating income of $927.5 million point to effective management and operational efficiency. Investors will find the 55.6% gross margin particularly appealing as it suggests that Deckers is maximizing its profit potential from each dollar of sales.

Balance Sheet: With cash and cash equivalents at $1.502 billion and no outstanding borrowings, Deckers has a strong liquidity position. This financial health allows for continued investment in growth opportunities, such as new product lines, market expansion and potential acquisitions.

Risk Factors: The drops in sales for Teva and Sanuk brands are areas of concern. Investors should monitor whether these declines are part of a broader trend or specific issues that Deckers can address through strategic adjustments.

Short-term: Positive investor sentiment is likely to drive stock price appreciation in the short term.

Long-term: Sustainable growth and strong financial health position Deckers well for long-term value creation, though vigilance is needed regarding underperforming brands.

• FY 2024 REVENUE INCREASED 18% TO A RECORD $4.29 BILLION
• FY 2024 DILUTED EPS INCREASED 51% TO A RECORD $29.16
• GUIDES FY 2025 REVENUE GROWTH OF APPROX. 10%; EPS RANGE OF $29.50-$30.00

GOLETA, Calif., May 23, 2024 /PRNewswire/ -- Deckers Brands (NYSE: DECK), a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories, today announced financial results for the fourth fiscal quarter and full fiscal year ended March 31, 2024. The Company also provided its financial outlook for the full fiscal year ending March 31, 2025.

"Deckers achieved record results during fiscal year 2024, as we delivered revenue growth of 18% and increased earnings per share by 51%, reflecting a continued dedication to maintain exceptional levels of profitability as our brands scale," said Dave Powers, President and Chief Executive Officer. "HOKA and UGG remain two of the most admired and well-positioned brands in the marketplace, each with a robust innovation product pipeline designed to win with global consumers. Looking forward, our talented teams are highly motivated to continue driving towards the long-term opportunities of these iconic brands."

Fourth Quarter Fiscal 2024 Financial Review (Compared to the Same Period Last Year)

• Net sales increased 21.2% to $959.8 million compared to $791.6 million. On a constant currency basis, net sales increased 21.1%.
  • Channel
    • Direct-to-Consumer (DTC) net sales increased 21.0% to $415.2 million compared to $343.1 million. DTC comparable net sales increased 20.5%.
    • Wholesale net sales increased 21.4% to $544.6 million compared to $448.4 million.
  • Geography
    • Domestic net sales increased 19.4% to $647.7 million compared to $542.4 million.
    • International net sales increased 25.2% to $312.0 million compared to $249.1 million.
• Gross margin was 56.2% compared to 50.0%.
• Selling, general, and administrative (SG&A) expenses were $395.2 million compared to $290.2 million.
• Operating income was $144.3 million compared to $105.9 million.
• Diluted earnings per share was $4.95 compared to $3.46.

Fourth Quarter Fiscal 2024 Brand Summary (Compared to the Same Period Last Year)

• HOKA® brand net sales increased 34.0% to $533.0 million compared to $397.7 million.
• UGG® brand net sales increased 14.9% to $361.3 million compared to $314.3 million.
• Teva® brand net sales decreased 15.6% to $53.0 million compared to $62.8 million.
• Sanuk® brand net sales decreased 39.1% to $6.5 million compared to $10.7 million.
• Other brands, primarily composed of Koolaburra®, net sales were approximately flat at $6.0 million.

Full Fiscal Year 2024 Financial Review (Compared to the Same Period Last Year)

• Net sales increased 18.2% to $4.288 billion compared to $3.627 billion. On a constant currency basis, net sales increased 17.9%.
  • Channel
    • DTC net sales increased 26.5% to $1.855 billion compared to $1.467 billion. DTC comparable net sales increased 25.4% over the same period last year.
    • Wholesale net sales increased 12.6% to $2.432 billion compared to $2.161 billion.
  • Geography
    • Domestic net sales increased 16.8% to $2.864 billion compared to $2.451 billion.
    • International net sales increased 21.1% to $1.424 billion compared to $1.176 billion.
• Gross margin was 55.6% compared to 50.3%.
• SG&A expenses were $1.458 billion compared to $1.173 billion.
• Operating income was $927.5 million compared to $652.8 million.
• Diluted earnings per share was $29.16 compared to $19.37.

Full Fiscal Year 2024 Brand Summary (Compared to the Same Period Last Year)

• HOKA® brand net sales increased 27.9% to $1.807 billion compared to $1.413 billion.
• UGG® brand net sales increased 16.1% to $2.239 billion compared to $1.929 billion.
• Teva® brand net sales decreased 18.9% to $148.5 million compared to $183.1 million.
• Sanuk® brand net sales decreased 33.0% to $25.4 million compared to $38.0 million.
• Other brands, primarily composed of Koolaburra®, net sales increased 5.9% to $67.9 million compared to $64.1 million.

Balance Sheet (March 31, 2024 as compared to March 31, 2023)

• Cash and cash equivalents were $1.502 billion compared to $981.8 million.
• Inventories were $474.3 million compared to $532.9 million.
• The Company had no outstanding borrowings.

Stock Repurchase Program

During the fourth fiscal quarter, the Company repurchased approximately 119 thousand shares of its common stock for a total of $104.3 million at a weighted average price paid per share of $875.01.

During the full fiscal year 2024, the Company repurchased approximately 715 thousand shares of its common stock for a total of $414.9 million at a weighted average price paid per share of $580.44.

As of March 31, 2024, the Company had approximately $941.7 million remaining under its stock repurchase authorization.

CFO Commentary

"Deckers has grown revenue at a 19% CAGR over the past four years, consecutively delivering a double-digit revenue increase each year, while at the same time more than tripling earnings per share," said Steve Fasching, Chief Financial Officer. "Our record results demonstrate the exceptional demand for our brands and the strength of Deckers' nimble operating model, delivering industry leading financial performance. As we continue to build an exciting future for Deckers, we remain committed to making the necessary investments to maintain the momentum of our brands."

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 May 23, 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 and discretionary spending, inflationary pressures, and foreign currency fluctuation; geopolitical tensions; and supply chain disruptions, constraints and related expenses.

• Net sales are expected to increase approximately 10% to $4.7 billion.
• Gross margin is expected to be approximately 53.5%.
• SG&A expenses as a percentage of net sales are expected to be approximately 34%.
• Operating margin is expected to be approximately 19.5%.
• Effective tax rate is expected to be in the range of 22% to 23%.
• Diluted earnings per share is expected to be in the range of $29.50 to $30.00.
• The earnings per share guidance does not assume any impact from potential future share repurchases.

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 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 fourth quarter and full fiscal year 2024 will be broadcast live today, Thursday, May 23, 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; and our potential repurchase of shares. 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, 2023, 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 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (dollar and share data amounts in thousands, except per share data)
	Three Months Ended March 31,				Years Ended March 31,
	2024		2023		2024		2023
Net sales	$    959,758		$    791,571		$ 4,287,763		$ 3,627,286
Cost of sales	420,282		395,403		1,902,275		1,801,916
Gross profit	539,476		396,168		2,385,488		1,825,370
Selling, general, and administrative expenses	395,214		290,249		1,457,974		1,172,619
Income from operations	144,262		105,919		927,514		652,751
Total other income, net	(19,945)		(8,939)		(51,427)		(13,331)
Income before income taxes	164,207		114,858		978,941		666,082
Income tax expense	36,662		23,071		219,378		149,260
Net income	127,545		91,787		759,563		516,822
Total other comprehensive (loss) income, net of tax	(8,359)		1,241		(11,698)		(14,080)
Comprehensive income	$    119,186		$      93,028		$    747,865		$    502,742
Net income per share
Basic	$          4.98		$          3.49		$        29.36		$        19.50
Diluted	$          4.95		$          3.46		$        29.16		$        19.37
Weighted-average common shares outstanding
Basic	25,623		26,302		25,871		26,504
Diluted	25,785		26,493		26,048		26,686

 

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (dollar amounts in thousands)
	March 31, 2024		March 31, 2023
ASSETS			(AUDITED)
Current assets
Cash and cash equivalents	$           1,502,051		$              981,795
Trade accounts receivable, net	296,565		301,511
Inventories	474,311		532,852
Other current assets	170,556		94,095
Total current assets	2,443,483		1,910,253
Property and equipment, net	302,122		266,679
Operating lease assets	225,669		213,302
Other noncurrent assets	164,305		165,969
Total assets	$           3,135,579		$           2,556,203
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Trade accounts payable	$              378,503		$              265,605
Operating lease liabilities	53,581		50,765
Other current liabilities	287,909		181,010
Total current liabilities	719,993		497,380
Long-term operating lease liabilities	213,298		195,723
Other long-term liabilities	94,820		97,367
Total long-term liabilities	308,118		293,090
Total stockholders' equity	2,107,468		1,765,733
Total liabilities and stockholders' equity	$           3,135,579		$           2,556,203

 

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SOURCE Deckers Brands

FAQ

How much did Deckers Brands' revenue increase in FY 2024?

Deckers Brands' revenue increased by 18% to $4.29 billion in FY 2024.

What was the diluted EPS for Deckers Brands in FY 2024?

Deckers Brands reported a diluted EPS of $29.16 for FY 2024, a 51% increase.

What are Deckers Brands' revenue growth expectations for FY 2025?

Deckers Brands expects FY 2025 revenue growth of approximately 10%.

How did Deckers Brands perform in the fourth quarter of FY 2024?

In Q4 FY 2024, Deckers Brands' net sales increased by 21.2% to $959.8 million.

How did the HOKA brand perform in Q4 FY 2024?

HOKA brand net sales increased by 34% to $533 million in Q4 FY 2024.

What was the performance of the UGG brand in Q4 FY 2024?

UGG brand net sales increased by 14.9% to $361.3 million in Q4 FY 2024.

What were Deckers Brands' gross margin and operating income for FY 2024?

Deckers Brands' gross margin was 55.6%, and operating income was $927.5 million for FY 2024.

How much did Deckers Brands repurchase in shares during FY 2024?

Deckers Brands repurchased $414.9 million worth of shares during FY 2024.

What was Deckers Brands' cash and inventory status at the end of FY 2024?

At the end of FY 2024, Deckers Brands had $1.502 billion in cash and inventory levels of $474.3 million.

Which Deckers Brands experienced a decline in net sales in FY 2024?

Teva and Sanuk brands experienced declines in net sales by 18.9% and 33%, respectively, in FY 2024.