Deckers Brands has another winner on its hands.
The Goleta, Calif.-based company delivered another quarter of better-than-expected earnings on Thursday, reporting record annual revenues of $2.02 billion. But while its flagship brand, Ugg, still drove the bulk of its sales, it was rising star Hoka One One that propelled it past the finish line.
The running shoe brand’s sales grew 33.2% to $67.1 million for three months ended Mar. 31, compared with $50.4 million for the same period last year. Its annual net sales hit $223.1 million, an increase of 45.4% year over year.
Deckers sees more where that came from ahead, too.
“We believe there’s tremendous potential upside for the brand,” said president and CEO Dave Powers on a call with investors and analysts. “And it’s all about getting shoes on feet, because we’ve learned that once you get… the Hoka brand on someone, they become consumers for a long time, and then we can really build on that.”
To that end, the company said it will invest in marketing “in a very strategic and controlled manner built for the long term health of the brand” and to drive awareness about new categories (in addition to sneakers, Hoka offers sandals and hiking boots, the latter of which Kanye West recently wore).
Analysts are taking notice of the success: Susquehanna recently upgraded Deckers’ stock from “neutral” to “positive,” citing Hoka One One’s rapid ascent.
Deckers’ largest brand, Ugg, saw sales slip 7.2% to $239.0 million in the fiscal fourth quarter, but results for the full year painted a better picture. For fiscal 2019, the boot brand’s sales rose 1.7% to $1.53 billion on strength in its North American business and a more diversified product offering.
Overall, Deckers’ net sales for the year increased 5.8% on a constant currency basis. Its earnings per share were $8.84 compared with $3.58 for the same period in 2018.
“We’re delivering top tier performance among our peer group,” said Powers.
For the fourth quarter, its diluted earnings per share were 82 cents topping the 70 cents by Wall Street. Net sales sunk 1.3% to $394.1 million, but beat the consensus estimate of $377.97 million.
Deckers shares rose more than 5% in after-market trading.
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