Hoka continues to post blockbuster results for parent company Deckers Brands, with double-digit growth in both wholesale and DTC channels in the quarter ended March 31.
“This quarter was an excellent start to the year for Hoka with healthy full-price demand across global markets,” said Deckers CEO Dave Powers. “The team is laser focused on executing the brand strategy to build global brand awareness and market share with an enhanced focus on international markets, (expanding) DTC for consumer acquisition and retention gains, and (exciting) consumers with performance innovations.”
Hoka’s revenue increased 30% to $545 million during the quarter.
DTC revenue jumped 33%, while wholesale rose 28%.
Hoka’s Wholesale Expansion Strategy
Deckers has been focused on strategically growing Hoka’s brand awareness by adding large wholesale partners globally including Dick’s Sporting Goods and Foot Locker in the United States, JD Sports in Europe, Sport Chek in Canada, and others.
The company believes consumers that find Hoka products in the wholesale channel are also likely to become Hoka DTC customers in the future.
“Part of our approach to building Hoka brand awareness is through expanded points of distribution with key partners,” Powers said. “During the quarter, we added strategic doors with select partners around the world, which contributed to Hoka wholesale growth in the quarter. We also continued adding shelf space and gaining market share as the brand refilled inventory in the channel and continued to see high levels of full-price sell-through.”
While Hoka continues to grow rapidly and is strategically expanding in the wholesale channel, Powers emphasized that the company plans to manage the marketplace carefully so it doesn’t expand too quickly.
“We’re in this for the long game and looking for sustainable, healthy, profitable growth for years to come,” he said.
Gearing Up for Hoka Apparel
Deckers continues to believe that footwear specialist Hoka has a big opportunity in apparel in the future.
Thus far, Powers described Hoka’s nascent apparel offering as “okay.”
He said ramping up and improving Hoka’s apparel line is a key priority over the next few years.
Consumers want apparel from Hoka, he said, and “we have a tremendous opportunity to disrupt that category.
“We’re investing in leadership and also infrastructure to support those efforts over the years to come” Powers said. “But it’s early days still.”
Hoka Retail Plans
It’s also early days with Hoka retail stores, which number 32 globally, according to Deckers’ filings with the SEC.
The brand just opened its biggest store ever on Fifth Avenue in New York City, which Powers said is doing “extremely well.”
“We’re learning a lot there,” he said. “It’s early days for Hoka retail, but we see the demand, we see the opportunity. And we’ll be a little bit more strategic, a little bit more aggressive, but we’re not looking to roll out to 200 door across a fleet. We’re going to manage this tightly along with the marketplace and make sure that we have great experiences for our consumers.”
Deckers Brands Q1 Results
Thanks to the strength of Hoka as well as Ugg, which increased sales 14% during the quarter, Deckers reported strong results and raised its profit guidance for the full year.
Total Q1 Deckers sales rose 22% to $825 million.
Gross margin increased 560 basis points to 56.9%.
Net income jumped 81% to $115.6 million.
Teva, Sanuk Results
Teva sales: down 4.3% to $46.3 million.
Sanuk sales: down 28.4% to $6.9 million. Deckers announced it has found a buyer for Sanuk, but did not say who the buyer is on the earnings call.
Other brands’ sales: Primarily Koolaburra, increased 123.5% to $4 million.
Full-Year Guidance Raised
After the strong first quarter, Deckers raised its bottom-line guidance for the year.
The company now expects gross margin of 54% and earnings per share to range from $29.75 to $30.65. That compares to the previous full-year guidance of $29 to $30.
Deckers’ top-line guidance stayed the same, with full-year revenue expected to grow 10% to $4.7 billion.
