Deckers Outdoor Corporation DECK is strategically positioning itself for success by focusing on profitable and underpenetrated markets while keeping a keen eye on product innovation, store expansion and reinforcement of its e-commerce capabilities. Additionally, Deckers is capitalizing on digital channels to effectively reach and engage consumers, optimizing its omni-channel distribution for increased accessibility.
The company has a customer-centric approach, with a strong emphasis on implementing customer relationship management software and loyalty programs. Moreover, its direct engagement with wholesale customers resulted in robust momentum in its global wholesale business. This, in turn, led to a notable 19.4% year-over-year increase in wholesale net sales ($760.2 million) in the second quarter of fiscal 2024.
Deckers is well-positioned for success, thanks to robust advancements in direct-to-consumer (DTC) channels, brand expansion, a resilient balance sheet and a steadfast operating model.
The DTC business has emerged as a pivotal growth driver, with both HOKA and UGG brands experiencing more than 30% growth in consumer acquisition in the second quarter. Deckers reported a remarkable 40% year-over-year increase in DTC business, underscoring the success of its strategic initiatives.
Net sales in DTC surged 38.8% year over year to $331.7 million. DTC’s comparable net sales experienced a substantial increase of 36.8% during the same time frame.
Deckers Outdoor Corporation Price, Consensus and EPS Surprise 
Deckers Outdoor Corporation price-consensus-eps-surprise-chart | Deckers Outdoor Corporation Quote
Success of UGG and HOKA Bodes Well
The UGG and HOKA brands also recorded an impressive 28.1% and 27.3% growth, respectively, contributing to the overall consolidated revenue growth of 24.7%.
The HOKA brand is expected to rise more than 20% in fiscal 2024, with most of the increase likely to come from the brand's DTC business. UGG’s revenues are anticipated to rise in the mid-single digits, supported by sustained global brand momentum and robust demand.
Promising Outlook
Deckers' dedication to disciplined management of brand marketplaces and an adaptable operating model strengthens its belief in meeting the heightened full-year expectations. This strategic methodology positions the company favorably to propel sustained success for its diverse array of brands in the long term.
DECK expects fiscal 2024 net sales to be approximately $4,025 million, up from the earlier projection of $3,980 million. This suggests an increase of about 11% from $3,627 million reported in fiscal 2023. The company projects fiscal 2024 earnings in the range of $22.90-$23.25 per share, up from the formerly estimated band of $21.75-$22.25. Deckers reported earnings of $19.37 per share in fiscal 2023.
The company is also expecting an improvement in its profitability in fiscal 2024. The gross margin is expected to be in the range of 52.5-53%, up from the previous projection of 52%, with an anticipated expansion of 220-270 basis points year over year. The operating margin is expected to be 18.5%, up from the previous year’s reported figure of 18%.
Wrapping Up
Deckers’ proactive strategy, centered on expanding brand offerings and embracing innovation, positions it for success in evolving consumer landscapes. With a focus on profitable markets, product innovation and e-commerce, coupled with customer-centric initiatives, the company demonstrates adaptability in the retail-apparel and shoes industry.
The Zacks Rank #2 (Buy) company’s shares have rallied 81% in the past year compared with the industry’s growth of 0.3%.
3 Other Promising Stocks
A few other top-ranked stocks in the same space are American Eagle Outfitters Inc. AEO, Abercrombie & Fitch Co. ANF and Skechers U.S.A., Inc. SKX.
American Eagle Outfitters is a specialty retailer of casual apparel, accessories and footwear. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for American Eagle Outfitters’ current fiscal-year earnings and sales indicates growth of 36.1% and 2.4%, respectively, from the previous year’s reported figures. AEO has a trailing four-quarter average earnings surprise of 43.2%.
Abercrombie & Fitch is a specialty retailer of premium, high-quality casual apparel. The company currently carries a Zacks Rank #2. ANF delivered a significant earnings surprise in the last reported quarter.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current fiscal-year sales implies growth of 10.3% from the previous year’s reported number. ANF has a trailing four-quarter average earnings surprise of 724.8%.
Skechers U.S.A. designs, develops, markets and distributes footwear for men, women and children. It currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for Skechers’ current financial-year earnings and sales indicates growth of 44.1% and 8.2%, respectively, from the previous year’s reported figures. SKX has a trailing four-quarter average earnings surprise of 50.3%.
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