Deckers (DECK) Poised Well on DTC Business & Brand Strength

Deckers Outdoor Corporation DECK appears good on the back of its robust omni-channel expansion endeavors, and impressive customer-centric product and marketing strategies. In keeping with the changing trends, DECK is constantly developing its e-commerce portal to capture incremental sales. DECK’s focus on expanding brand assortments and introducing more innovative line of products remain other positives.

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Talking about Deckers’ efforts, management made substantial investments to strengthen its online presence and improve the shopping experience for customers. DECK is focused on opening smaller concept omni-channel 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.

During the first quarter of fiscal 2023, direct-to-consumer (DTC) business grew 15%, thanks to increasing customer acquisition and retention for the HOKA brand. DTC business grew 58% at HOKA brand.

HOKA ONE ONE brand continues to build customer base through a combination of disruptive product innovation and disciplined marketing approach. Deckers is progressing toward building HOKA ONE ONE into a multibillion-dollar major player, elevating UGG as a global lifestyle brand with diverse product offerings round the year, and enhancing direct-to-consumer business. Deckers plans to open additional retail stores for the HOKA brand and continue exploring opportunities to strategically expand the HOKA brand retail store fleet.

HOKA ONE ONE and Foot Locker partnered to solidify the presence of the former by opening HOKA in a limited number of Foot Locker stores. Also, greater acceptance of the UGG brand's diverse product line along with its progress in Europe and the Asia Pacific bodes well. Management looks to elevate UGG as a global lifestyle brand with diverse product offerings.

Overall, Deckers’ focus on bolstering its e-commerce competencies and investments in digital marketing will continue aiding growth. Strength in DECK’s HOKA ONE ONE label and direct-to-consumer channel will keep driving growth.

We believe that management’s focus on ramping up inventory, optimizing channel mix to fulfill consumer demand, scaling production to support growth of brands and implementing targeted price increases should position Deckers well to respond to any unprecedented challenges.

Deckers, which shares space with Caleres CAL, Steven Madden SHOO and Skechers SKX, envisions net sales growth of 10-11% from the year-ago reported figure to $3.45-$3.50 billion. Management expects HOKA ONE ONE revenues to increase in the 40% range (from mid-to-high-30% previously), indicating an upside from greater inventory availability and stellar first-quarter performance. Management stated that the price increases in the HOKA ONE ONE and UGG brands will help offset freight headwinds and bolster margin in the second half.

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