January 31, 2025
Deckers Outdoor Corporation
DECK delivered an impressive third-quarter performance, surpassing expectations and raising its fiscal 2025 outlook. The standout performances of its HOKA and UGG brands were key drivers behind the strong results.
The company’s growth strategy continues to pay off, driven by an expanded brand presence and a strengthened direct-to-consumer (DTC) approach. Deckers’ focus on innovation, product development and international expansion has further solidified its position, setting the stage for sustained long-term success.
Shares of this Goleta, CA-based company have advanced 41.1% in the past three months compared with the industry’s 28.5% rise.
Deckers delivered quarterly earnings of $3.00 per share, which surpassed the Zacks Consensus Estimate of $2.60 per share. The reported figure increased substantially from the prior-year quarter’s tally of $2.52 per share.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
The net sales of this Zacks Rank #2 (Buy) company increased 17.1% year over year to $1,827.2 million and outpaced the consensus estimate of $1,713 million. On a constant-currency basis, net sales grew 16.6%.
The gross margin in the quarter expanded to 60.3% from 58.7% in the year-ago period and also surpassed our expectation of 55.5%. This improvement was driven by higher-margin UGG products, fewer closeouts to the wholesale channel, increased full-price sales for UGG and some benefits from favorable foreign currency exchange rates. However, this was partially offset by higher freight costs and increased discounting for HOKA, as expected.
SG&A expenses climbed 24.9% year over year to $535.3 million. As a percentage of net sales, SG&A expenses stood at 29.3%, up 180 basis points from the last year. We had anticipated SG&A to deleverage 150 basis points year over year.
The company’s operating income was $567.3 million, up from $487.9 million in the year-ago quarter. The operating margin contracted to 31% from 31.3% in the prior-year period. We had projected the operating margin to be 26.5%.
Deckers Outdoor Corporation price-consensus-eps-surprise-chart | Deckers Outdoor Corporation Quote
The HOKA brand maintained its impressive performance, achieving a 23.7% year-over-year increase in sales, reaching $530.9 million, which exceeded our projected figure of $514 million.
The UGG brand exhibited remarkable growth of 16.1% in net sales of $1,244 million, which surpassed our estimate of $1,082.8 million.
Teva brand's net sales reversed course, declining 6% to $24.1 million and falling short of our estimate of $25.3 million.
Meanwhile, net sales for Other brands, primarily comprising Koolaburra, declined 16.6% to $28 million, falling short of our estimate of $29.3 million.
Wholesale net sales increased 16.2% year over year to $815.8 million. DTC net sales advanced 17.9% to $1,011 million, while DTC comparable net sales surged 18.3%.
Domestic net sales jumped 11.5% to $1,169 million, while International net sales rose 28.5% to $657.9 million.
Cash and cash equivalents stood at $2,240.9 million as of Dec. 31, 2024. The company ended the quarter with a total stockholders’ equity of $2,630.9 million. There were no outstanding borrowings.
During the quarter, Deckers repurchased about 275 thousand shares for $44.7 million. As of Dec. 31, 2024, the company had $640.7 million remaining under its share repurchase authorization.
Deckers now envisions a 15% increase in fiscal 2025 net sales, reaching $4.9 billion, with HOKA anticipated to grow by around 24% and UGG by 10%. This is up from its earlier projection of $4.8 billion in net sales.
The fiscal 2025 gross margin is now expected to be at or slightly better than 57%, up from the earlier projection of 55%-55.5%. The current view suggests an expansion from the gross margin of 55.6% registered last year.
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 be approximately 22%, an increase from the earlier provided guidance range of 20%-20.5%. The current projection represents an increase from the 21.6% reported in the prior year.
Management now foresees fiscal 2025 earnings in the range of $5.75-$5.80 per share, up from $4.86 reported last year. Deckers had earlier guided earnings between $5.15 and $5.25 per share.
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 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 Urban Outfitters’ current financial-year revenues and earnings suggests growth of 7.5% and 20.6%, respectively, from the year-ago reported figures. URBN has a trailing four-quarter earnings surprise of 22.8%, on average.
Abercrombie & Fitch
ANF, an omnichannel specialty retailer of apparel and accessories for men, women and kids, carries a Zacks Rank #2.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year revenues and earnings calls for growth of 15.1% and 69.4%, respectively, from the year-ago reported figures. Abercrombie & Fitch has a trailing four-quarter earnings surprise of 14.8%, 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, carries a Zacks Rank #2.
The Zacks Consensus Estimate for Gap’s current financial-year revenues and earnings suggests growth of 0.7% and 41.3%, respectively, from the year-ago reported figures. GAP has a trailing four-quarter earnings surprise of 101.2%, on average.
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