Deckers Brands shares fell in the mid-teens on Thursday afternoon, January 30, after the company reported fiscal third-quarter results for the three-month period ended December 31, 2024. The issue appears to be that the increased revenue growth guidance came in below analysts expectations.

Net sales increased 17.1 percent to $1.83 billion compared to $1.56 billion in the prior-year Q3 period. On a constant-currency (cc) basis, net sales increased 16.6 percent. Analysts were expecting growth of 11.6 percent, a clear beat.

  • Ugg brand net sales increased 16.1 percent year-over-year (y/y) to $1.24 billion.
  • Hoka brand net sales increased 23.7 percent y/y to $530.9 million.
  • Teva brand net sales decreased 6.0 percent y/y to $24.1 million.
  • Other brands net sales decreased 16.6 percent y/y to $28.0 million.

Direct-to-Consumer (DTC) net sales increased 17.9 percent to $1.01 billion compared to $858.1 million in the prior-year quarter. DTC comparable net sales increased 18.3 percent.

Wholesale net sales increased 16.2 percent to $815.8 million in fiscal Q3, compared to $702.2 million in the prior-year Q3 period.

Domestic net sales increased 11.5 percent to $1.17 billion compared to $1.05 billion in the year-ago period. International net sales increased 28.5 percent to $657.9 million compared to $511.9 million in the prior-year Q3 period.

Income Statement Summary

  • Gross margin was 60.3 percent of net sales in the fiscal third quarter, compared to 58.7 percent in the prior-year Q3 period.
  • Selling, general and administrative (SG&A) expenses were $535.3 million in the quarter, compared to $428.7 million in fiscal Q3 last year.
  • Operating income was $567.3 million in Q3, compared to $487.9 million in the year-ago Q3 period.
  • Diluted earnings per share was $3.00 in the third quarter, compared to $2.52 per diluted share in the year-ago period.

As previously disclosed, the company effected a six-for-one forward stock split of its common stock during the second fiscal quarter. The share, per share, and resulting financial amounts in this press release have been adjusted to reflect the effectiveness of the stock split.

“Deckers posted exceptional results in the third quarter, delivering record quarterly revenue, gross margin, and earnings,” said Stefano Caroti, president and CEO of Deckers Brands. “Ugg continued to experience incredible global momentum, with the brand’s iconic franchises capturing strong full-price consumer demand across all regions. At the same time, Hoka delivered impressive results consistent with our strategy, remaining focused on scaling through innovative performance products.

“Our increased full-year revenue outlook calls for 15 percent growth, which would be our fifth consecutive year growing mid-teens or higher, complemented by our commitment to maintain top-tier levels of operating margin,” continued Caroti.

Balance Sheet Summary
Cash and cash equivalents were $2.24 billion at quarter-end compared to $1.65 billion at the prior-year quarter-end.

Inventories were $576.7 million at quarter-end compared to $539.0 million at the prior quarter-end.

The company had no outstanding borrowings.

Capital Allocation
During the third fiscal quarter, the company repurchased approximately 275 thousand shares of its common stock for a total of $44.7 million at a weighted average price paid per share of $162.85. As of December 31, 2024, the company had approximately $640.7 million remaining under its stock repurchase authorization.

Full Fiscal Year 2025 Outlook
The company’s full fiscal year 2025 outlook is forward-looking in nature, reflecting company expectations as of January 30, 2025, and is subject to significant risks and uncertainties that limit our ability to accurately forecast results.

The company said this outlook assumes no meaningful changes to its business prospects or risks and uncertainties identified by management that could impact future results, which include but are not limited to foreign currency fluctuations, changes in economic conditions, including consumer confidence, discretionary spending, and inflationary pressures; supply chain disruptions; and geopolitical tensions.

The company now expects:

  • Net sales to increase approximately 15 percent to $4.9 billion.
  • Gross margin to be at or slightly better than 57 percent.
  • SG&A expenses as a percentage of net sales to be approximately 35 percent.
  • Operating margin to be approximately 22 percent.
  • Effective tax rate to be approximately 23.5 percent.
  • Diluted earnings per share to be in the range of $5.75 to $5.80 per share.

The earnings per share guidance takes into account the effectiveness of the stock split but does not take into account the impact from any potential future share repurchases.

Image courtesy Ugg/Deckers Outdoor