Global Hoka brand revenue for fiscal year 2023 increased 58.5 percent, or $521 million, versus the prior fiscal year to $1.41 billion, the fourth consecutive year Hoka has delivered revenue growth above 50 percent. Let that sink in; $521 million in additional annual revenue—for a running brand.
Hoka’s growth for the year was said to be driven by a more than 30 percent increase in global brand awareness in fall 2022; an acceleration of DTC, which grew 85 percent versus the prior year; broader category adoption; market share growth with existing points of wholesale distribution; and additional access points with the brand’s strategic partners, which was complemented by the increased availability of product inventory and an improved supply chain environment.
Hoka brand net sales increased 40.3 percent to $397.7 million in the fiscal fourth quarter.
“In June of 2022, Hoka launched Fly Human Fly, its first-ever globally integrated marketing campaign,” Deckers Brands President and CEO Dave Powers shared on a conference call with analysts. “The campaign was designed to build awareness and elevate the Hoka brand in the minds of global consumers through rich storytelling and targeted activations in key cities. The Hoka team utilized connected TV and digital and out-of-home channels to reach a broader audience with creative that combined emotionally connected brand and product messaging. As a result of the investments behind this campaign, Hoka awareness increased across a broad spectrum of key markets, such as the U.S., France, the U.K., China, and Germany, with three of those countries increasing awareness by more than 40 percent compared to fall 2021. Given the success the brand has experienced, we continue to see a significant opportunity for growth in each of our markets over the long term.
“Specifically, we are working to close the awareness gap between the U.S. and international regions to build a more global brand,” Powers continued. “The Hoka marketing team has done a fantastic job developing insights from the initial campaign to evolve the next iteration of Fly Human Fly, which will focus on the brand’s roots and performance through inclusive storytelling that emphasizes the joy of movement for everybody. Stay tuned for more details on the campaign when it launches next month.”
Powers said the Hoka brand’s momentum helped drive a 5 percentage point increase in DTC mix up to 34 percent of total brand revenue in fiscal 2023 as compared to 29 percent in the prior fiscal year. He said Hoka continues to bring new consumers into the brand, while also retaining existing consumers, evidenced by a 78 percent increase in acquisition and an 81 percent increase in retention as compared to the prior year.
“Momentum with younger consumers in the U.S. helped drive these increases as Hoka more than doubled the number of purchasers aged 18 to 34 years old,” Powers shared. “As Hoka continues to expand, we are encouraged by the broader product adoption from consumers beyond the brand’s heritage running styles. We have seen this trend among DTC consumers and continue to gain category shelf space with wholesalers.”
Among DTC purchasers in the U.S. and EMEA, multi-category purchases reportedly increased 79 percent and 127 percent versus last year, respectively. Across all channels, Hoka more than doubled revenue on trail and hike products aided by the Speedgoat and Challenger updates as well as market share gains with the Kaha and Anacapa franchises and fitness and recovery products benefiting from greater over-recovery sandal adoption and introduction of both the Solimar and Transport Styles.
“With the success, Hoka is experiencing across a variety of innovative products, we are very excited to now offer a selection of our most popular items to the next generation of Hoka athletes with the brand’s recently launched first youth collection through our DTC channel and with very select wholesale partners. We view the opportunity with kids as an avenue to further expose the brand to parents and younger athletes over the long term,” Powers explained.
Hoka’s full-year wholesale revenue increased 47 percent versus the prior fiscal year, driven by market share gains with existing points of distribution, which accounted for approximately two-thirds of global dollar growth, and additional access points with strategic partners. Powers said Hoka continues to prioritize delivering a pinnacle experience with performance products with the brand’s run and outdoor specialty partners while expanding the addressable market through strategic relationships that broaden brand awareness beyond the traditional specialty consumer.
“With expanded distribution, Hoka is placing greater emphasis on the segmentation to align product and marketing with the respective distribution partner’s target consumer,” Powers said. “Hoka is leveraging the run and outdoor specialty channel to maintain authenticity and brand credibility by offering exclusive high-performance products that are only available at DTC and select specialty doors.”
Powers said marketplace management continues to be a top priority for Hoka as the brand enters fiscal year 2024.
“At the current scale north of $1.4 billion, our focus is to protect the Hoka brand’s premium positioning and maintain a pull model,” he offered. “Hoka plans to emphasize growth in the DTC channel, driving high full-price sell-through and building market share with existing points of wholesale distribution, especially in light of a dynamic consumer environment.”
Powers said the focus on marketplace management will be particularly evident in their EMEA region as Hoka expects to prioritize low levels of promotion in the coming year.
Looking ahead, Hoka parent Deckers Brands is forecasting top-line revenue of approximately $3.95 billion for full fiscal year 2024, representing growth of approximately 9 percent versus the prior year, with Hoka as the main growth engine once again.
Hoka has seen increasing revenues in the range of 20 percent versus the prior year as they prioritize marketplace management. The majority of the Hoka growth is expected in the brand’s DTC channel with wholesale growth expectations assuming no net new doors added globally.
Consolidated company gross margin is expected to be approximately 52 percent of sales in fiscal 2024, which is more than 150 basis points above last year as Deckers anticipates “favorability from increasing DTC mix, increasing Hoka mix, with slight offsets from promotions,” which management expects to be higher than last year as they anticipate a consumer environment that may have greater uncertainty.
For the fiscal first quarter ended June 30, Hoka international wholesale growth is anticipated to be slower due to not repeating the earlier distributor shipments that occurred in this past fiscal year’s first quarter.
For the Fourth quarter and full year story on Hoka’s parent company Deckers Brands and its related brands, go here:
EXEC: Deckers’ Q4 Is A Tale Of Two Diverging Brands With A Common DTC Focus
Photo courtesy Hoka