HOKA & UGG Propel Deckers' Q2 Earnings Beat, FY25 Guidance Raised

Deckers Outdoor Corporation DECK witnessed a 13.6% jump in its share price during the after-market trading session yesterday. This rally was in response to the company's outstanding second-quarter performance and an upbeat fiscal 2025 forecast. The strong quarterly results were underpinned by the exceptional performance of the HOKA and UGG brands.Deckers has shown robust growth through its strategic focus on expanding its brand presence and strengthening direct-to-consumer channels. This approach, along with a commitment to innovation in product development and a keen focus on international market expansion, has positioned the company for continued success.Shares of this Goleta, CA-based company have advanced 9.4% in the past six months compared with the industry’s 0.2% rise.Deckers’ Quarterly Performance: Key Metrics and InsightsDeckers delivered quarterly earnings of $1.59 per share, which surpassed the Zacks Consensus Estimate of $1.22 per share. The reported figure increased substantially from the prior-year quarter’s tally of $1.14 per share.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.The net sales of this Zacks Rank #3 (Hold) company increased 20.1% year over year to $1,311.3 million and outpaced the consensus estimate of $1,197 million. On a constant-currency basis, net sales grew 20.4%. The gross margin in the quarter expanded to 55.9% from 53.4% in the year-ago period and also surpassed our expectation of 51.6%. This improvement in gross margins was driven by a favorable mix of brands and products and a decrease in closeout sales to the wholesale channel. However, this was partly offset by higher freight costs.SG&A expenses climbed 19.5% year over year to $428.2 million. As a percentage of net sales, SG&A expenses stood at 32.7%, down 10 basis points from the last year. We had anticipated a year-over-year increase of 12.6% in the metric.The company’s operating income was $305.1 million, up from $224.6 million in the year-ago quarter. The operating margin increased to 23.3% from 20.6% in the prior-year period. We had projected the operating margin to be 17.6%.Deckers Outdoor Corporation Price, Consensus and EPS Surprise Deckers Outdoor Corporation price-consensus-eps-surprise-chart | Deckers Outdoor Corporation QuoteDECK’s Brand-Wise DiscussionThe HOKA brand maintained its impressive performance, achieving a 34.7% year-over-year increase in sales, reaching $570.9 million, which exceeded our projected figure of $512.4 million.The UGG brand exhibited remarkable growth of 13% in net sales of $689.9 million, which surpassed our estimate of $622.6 million.After five straight quarters of decline, Teva brand's net sales reversed course, rising 2.3% to $22 million and exceeding our estimate of $20.8 million.The Sanuk brand's dismal performance persisted, resulting in a 47.6% decrease in net sales to $2.8 million. Deckers concluded the divestment of the Sanuk brand on Aug. 15, 2024.Meanwhile, net sales for Other brands, primarily comprising Koolaburra, declined 15.8% to $25.8 million, falling short of our estimate of $30.8 million.Deckers’ Channel & Geography-Wise DiscussionWholesale net sales increased 20.2% year over year to $913.7 million. DTC net sales advanced 19.9% to $397.7 million, while DTC comparable net sales surged 17%. Domestic net sales jumped 14.2% to $853.9 million, while International net sales rose 33% to $457.4 million.DECK’s Financial SnapshotCash and cash equivalents stood at $1,225.7 million as of Sept. 30, 2024. The company ended the quarter with a total stockholders’ equity of $2,223.2 million. There were no outstanding borrowings.During the quarter, Deckers repurchased about 686 thousand shares for $104.3 million. As of Sept. 30, 2024, the company had $685.4 million remaining under its share repurchase authorization.A Sneak Peek Into Deckers’ OutlookDeckers now envisions a 12% increase in fiscal 2025 net sales, reaching $4.8 billion, with HOKA anticipated to grow by around 24% and UGG by mid-single digits. This is up from its earlier projection of $4.7 billion in net sales.The fiscal 2025 gross margin is now expected to be in the range of 55%-55.5%, up from the earlier projection of 54%. The current view still suggests a contraction from the gross margin of 55.6% registered last year due to a more normalized promotional environment and higher freight costs.SG&A expenses, as a percentage of net sales, are projected to be 35%, suggesting a deleverage of 100 basis points from last year. The operating margin is now expected to fall between 20% and 20.5%, an increase from the previous guidance range of 19.5% to 20%. However, this represents a decline from the 21.6% reported in the prior year.Management now foresees fiscal 2025 earnings in the range of $5.15-$5.25 per share, up from $4.86 reported last year. Deckers had earlier guided earnings between $4.96 and $5.11 per share.3 Stocks Looking HotAbercrombie & Fitch ANF, an omnichannel specialty retailer of apparel and accessories for men, women and kids, 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 Abercrombie & Fitch’s current financial-year revenues and earnings calls for growth of 13% and 63.4%, respectively, from the year-ago reported figures. Abercrombie & Fitch has a trailing four-quarter earnings surprise of 28%, on average.The Gap GAP, the largest specialty apparel company in the United States and a house of iconic brands, including Old Navy, Gap, Banana Republic and Athleta, sports a Zacks Rank #1. The Zacks Consensus Estimate for Gap’s current financial-year revenues and earnings suggests growth of 0.5% and 31.5%, respectively, from the year-ago reported figures. GAP has a trailing four-quarter earnings surprise of 142.8%, on average.Urban Outfitters URBN, a leading lifestyle products and services company, operates a portfolio of global consumer brands, including the Anthropologie, Free People, FP Movement, Urban Outfitters and Nuuly. The company carries a Zacks Rank #2 (Buy).The Zacks Consensus Estimate for Urban Outfitters’ current financial-year revenues and earnings suggests growth of 5.7% and 11.7%, respectively, from the year-ago reported figures. URBN has a trailing four-quarter earnings surprise of 17.6%, on average.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.7% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Abercrombie & Fitch Company (ANF): Free Stock Analysis Report Deckers Outdoor Corporation (DECK): Free Stock Analysis Report Urban Outfitters, Inc. (URBN): Free Stock Analysis Report The Gap, Inc. (GAP): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks