Yahoo Finance Deckers (DECK) Poised Well on DTC Business & Brand Strength
Deckers Outdoor Corporation DECK remains focused on product innovations, store expansion and enhancement of e-commerce capabilities. DECK’s focus on expanding its brand assortments, bringing a more innovative line of products and optimizing omnichannel distribution bodes well. These initiatives have aided this Zacks Rank #3 (Hold) stock to surge 61.4% in the past six months, outperforming the industry’s 6% growth.
Let’s delve deeper.
Detailing Strategies
Deckers is targeting profitable and underpenetrated markets to boost overall sales. Greater acceptance of the UGG brand's diverse product line along with the progress in Europe and Asia Pacific bode well. The HOKA ONE ONE brand is also performing impressively. The brand continues to build its customer base through a combination of disruptive product innovation and a disciplined marketing approach.
Deckers is progressing toward building HOKA ONE ONE into a major multibillion-dollar player, elevating UGG as a global lifestyle brand with diverse product offerings, and enhancing direct-to-consumer (DTC) business. The company plans to open additional retail stores for the HOKA brand and to continue exploring opportunities to strategically expand the brand retail store fleet.
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During second-quarter fiscal 2023, HOKA ONE ONE brand net sales surged 58.3% while UGG brand net sales grew 6.3%. Teva brand net sales increased 4.3% year over year. DTC net sales rose 35.3% to $239.1 million, while comparable DTC net sales jumped 38.2%. DTC revenues grew 26% in the first half of fiscal 2023. HOKA continues to be a key driver of consolidated growth. The brand's growth rate increased in the second quarter from the first quarter, reflecting an overall increase of 66% in the first half. UGG also contributed to the first-half performance, as the brand reverted to growth in the second quarter, leading to a 4% jump for the brand in the first half.
In keeping with the changing trends, Deckers has been constantly developing its e-commerce portal to capture incremental sales. The company has made substantial investments to strengthen its online presence and improve the customers’ shopping experience. DECK is focused on opening smaller concept omnichannel outlets and expanding programs such as Retail Inventory Online, Infinite UGG, Buy Online, Return in Store; and Click and Collect to enhance customers’ shopping experience.
Deckers has been focusing on product and marketing strategies that are more skewed toward customers, and in this respect, it has been implementing customer relationship management software and concentrating on loyalty programs.
What’s More?
Deckers reported stellar second-quarter fiscal 2023 results, wherein both the top and the bottom lines grew year over year. Net sales of this Goleta, CA-based company rose 21.3% year over year, driven by the expansion of the HOKA ONE ONE brand and an increase in UGG international regions as the brand benefited from marketplace reset initiatives implemented over the past couple of years.
We believe that the company’s’ focus on ramping up inventory, optimizing channel mix to fulfill consumer demand, scaling production to support the growth of brands and implementing targeted price increases should position Deckers to respond to any unprecedented challenge. Management envisioned fiscal 2023 net sales in the range of $3.45 billion-$3.50 billion, suggesting an increase from the $3.150 billion reported in fiscal 2022. It expects HOKA ONE ONE revenues to increase up to 50% compared with last year. The company continues to expect fiscal 2023 earnings in the band of $17.50-$18.35 per share, versus $16.26 per share earned in the last fiscal.
Stocks to Consider
We highlighted three better-ranked stocks, namely, Designer Brands DBI, Delta Apparel DLA and Caleres CAL.
Designer Brands designs, manufactures and retails footwear and accessories. The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Designer Brands’ current financial-year revenues and earnings per share (EPS) suggests growth of 5.2% and 4.7%, respectively, from the corresponding year-ago reported figures. DBI has a trailing four-quarter earnings surprise of 32%, on average.
Delta Apparel is a manufacturer of active wear and lifestyle apparel products. DLA has a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for Delta Apparel’s current financial-year sales suggests growth of 6.3% from the year-ago corresponding figure. DLA has a trailing four-quarter earnings surprise of 7%, on average.
Caleres, a footwear dealer, has a Zacks Rank of 2 at present. CAL has a trailing four-quarter earnings surprise of 26%, on average.
The Zacks Consensus Estimate for Caleres’ current financial-year sales and EPS suggests growth of 5.7% and 1.6%, respectively, from the year-ago corresponding figures.
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Deckers Outdoor Corporation (DECK) : Free Stock Analysis Report
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