Deckers Brands Sees Sees Slower Growth Trend in Year Ahead

Deckers Brands reported that fiscal fourth quarter net sales increased 21.2 percent to $959.8 million for the three-month period ended March 31, compared to net sales of $791.6 million in the prior-year comparative quarter. On a constant-currency basis, net sales increased 21.1 percent.

• Brand
  • Hoka brand net sales increased 34.0 percennt to $533.0 million compared to $397.7 million.
  • Ugg brand net sales increased 14.9 percent to $361.3 million compared to $314.3 million.
  • Teva brand net sales decreased 15.6 percent to $53.0 million compared to $62.8 million.
  • Sanuk brand net sales decreased 39.1 percent to $6.5 million compared to $10.7 million.
  • Other brands, primarily composed of Koolaburra, net sales were approximately flat at $6.0 million.
• Channel
  • Direct-to-consumer (DTC) net sales increased 21.0 percent to $415.2 million in Q4,  compared to $343.1 million in the prior-year Q4 period. DTC comparable net sales increased 20.5 percent.
  • Wholesale net sales increased 21.4 percent to $544.6 million compared to $448.4 million.
• Geography
  • Domestic net sales increased 19.4 percent to $647.7 million compared to $542.4 million.
  • International net sales increased 25.2 percent to $312.0 million compared to $249.1 million.
• Gross margin was 56.2 percent of net sales in Q4, compared to 50.0 percent in the prior-year Q4 period.
• 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.

Full Fiscal Year 2024 Financial Review
(compared to the same period last year)

Net sales increased 18.2 percent to $4.288 billion compared to $3.627 billion. On a constant currency basis, net sales increased 17.9 percent.

• Channel
  • DTC net sales increased 26.5 percent to $1.855 billion compared to $1.467 billion. DTC comparable net sales increased 25.4 percent over the same period last year. Wholesale net sales increased 12.6 percent to $2.432 billion compared to $2.161 billion.

• Geography
  • Domestic net sales increased 16.8 percent to $2.864 billion compared to $2.451 billion. International net sales increased 21.1 percent to $1.424 billion compared to $1.176 billion.
• Gross margin was 55.6 percent compared to 50.3 percent.
• 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 percent to $1.807 billion compared to $1.413 billion.
• Ugg brand net sales increased 16.1 percent to $2.239 billion compared to $1.929 billion.
• Teva brand net sales decreased 18.9 percent to $148.5 million compared to $183.1 million.
• Sanuk brand net sales decreased 33.0 percent to $25.4 million compared to $38.0 million.
• Other brands, primarily composed of Koolaburra, net sales increased 5.9 percent 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 percent 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 its expectations as of May 23, 2024, and is subject to significant risks and uncertainties that limit its ability to accurately forecast results. 

• Net sales are expected to increase approximately 10 percent to $4.7 billion.
• Gross margin is expected to be approximately 53.5 percent.
• SG&A expenses, as a percentage of net sales, are expected to be approximately 34 percent.
• Operating margin is expected to be approximately 19.5 percent.
• Effective tax rate is expected to be in the range of 22 percent to 23 percent.
• 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.

Image courtesy Hoka