Ugg brand global revenue for fiscal year 2023 was $1.93 billion, down 2.7 percent versus the prior fiscal year on a reported basis, but up slightly in constant-currency terms. Management said Ugg performed in line with expectations as the brand focused on driving growth through DTC and international markets, while facing tough comparisons from the prior fiscal year related to refilling domestic wholesale inventories as well as currency exchange rate pressures overseas.
Ugg brand net sales decreased 16.1 percent to $314.3 million in the fiscal fourth quarter as as the brand lapped abnormal wholesale shipping patterns in the prior-year quarter from pandemic-related supply chain issues and experienced more normalized DTC demand.
Despite these unique dynamics, parent company Deckers Brands management said Ugg maintained high levels of brand heat and demand, as evidenced by the strength of global DTC acquisition and retention, which increased 16 percent and 15 percent versus the prior fiscal year, respectively. Still, there was a reduction of Ugg domestic wholesale revenue as the company did not repeat the fill-in activity that occurred in fiscal year 2022.
“While this is a tremendous growth figure in terms of worldwide consumers, we have been even more encouraged by the trends in our international markets, where acquisition was up 29 percent and retention increased 37 percent over the prior year,” said Dave Powers, president and CEO, Deckers Brands, on a conference call with analysts.
EMEA was said to be the fastest-growing DTC region across the globe for Ugg, aided by an 80 percent increase in new visitors to Ugg.com in Europe. Helping drive the buzz around Ugg, the brand was featured in a number of highly respected fashion publications, with each touting the brand’s fashion relevance.
“The Ugg team has done an excellent job executing a brand-appropriate collaboration strategy over the past few years, which continues to benefit awareness and increase visibility with target consumers,” Powers said.
Powers said search interest for the Ugg brand in the U.S. increased 26 percent versus last year, according to Google Trends.
“Additionally, from a purchasing perspective, Ugg continue to over-index with 18 to 34 year-olds, which increased 21 percent versus last year, outpacing all other age groups and remaining the largest cohort of Ugg consumers in the U.S., he shared. “Ugg products that drove demand in this fiscal year included Heritage Classics like the Short and Mini, fashion updates to core styles such as the Platform Classics, new and hybrid styles like the Ultra Mini and Tasman. The popularity of these items reflects the brand’s consumer appeal across an exciting range of products helped by the successful category diversification strategy the Ugg brand has been working towards over the last 5 years.”
Powers said that, over time, they believe this strategy will drive better margins and greater efficiencies, allowing for more selective and impactful storytelling across a globally aligned and focused Ugg product offering.
“Ugg is now transitioning to the next phase of growth,” Powers stated. “Over the past several years, the brand has successfully established heightened consumer attention and increased global brand heat through product propositions that are both complementary and counter seasonal to its core lineup. This work increased the Ugg brand’s connection with consumers, established a permission to play in new categories and reenergized the love for the brand’s most iconic Ugg silhouettes. In fiscal year 2024, the brand is placing greater emphasis on these icons; ensuring inventory is strategically weighted to meet demand for the most popular products and building on its foundation for healthy full-price growth across a variety of category and gender offerings in the future.”
The CEO said Ugg delivered a fantastic result for the year given the challenges it faced, both in terms of comparing to abnormal shipping timing and volumes and impacts from currency headwinds.
“The Ugg team is developing compelling products through the integration of consumer data and insights within each layer of the product creation process,” he concluded. “We are excited for the year ahead as the brand continues to build on the international opportunity and maintaining the exciting momentum the last few years.”
Looking ahead, Ugg is forecast to increase revenues in the low-single-digits for fiscal 2024, driven by international expansion and a relatively flat U.S. marketplace as the brand focuses on driving the full-price business by maintaining the brand’s pull model. DTC growth is expected to once again outpace wholesale as the company drives consumer acquisition and retention, margin improvement and prioritized marketplace management.
For the fiscal first quarter ended June 30, parent company Deckers Brands sees consolidated revenue growth slightly below its full fiscal year guidance as Ugg is not expected to repeat the early U.S. wholesale shipments that the brand experienced over the last couple of years during the first quarter.
For the Fourth quarter and full year story on Ugg’s parent company Deckers Brands and its related brands, go here: