Today, Stefano Caroti is handed the reins of Deckers Brands by outgoing CEO Dave Powers, who leaves the company with strong tailwinds. Over the course of his eight years at the helm starting in June 2016, Powers guided the company from $1.8 billion in fiscal 2017 to $4.3 billion in 2024, an 18% advance over previous year.
And he exits on a high note: First quarter 2025 revenues advanced 22% to $825 million with comparable increases across the board by channel – direct-to-consumer up 24% and wholesale up 21% – and geography – domestic grew 24% and international up 21%. Operating income growth was even more impressive, up nearly 90% from $70.7 million last year to $132.8 million this.
Caroti has worked nine years side by side with Powers, having joined the company in November 2015 as omni-channel president, a few months before Powers was appointed CEO from company president. In April 2023, Caroti was promoted to chief commercial officer. Long-time CFO Steve Fasching will continue to provide Caroti support.
“It has been the honor of a lifetime leading Deckers for the last eight years,” Powers said closing his remarks in the earnings call.
“Deckers is in excellent hands with Stefano and his leadership team. I have no double he will do an exceptional job leading this organization and maintaining our great culture and strong results,” he continued.
Deckers Brands Corporate
While Deckers’ first quarter stellar performance was balanced by channel and geography, it was less so by brand.
Performance footwear Hoka took the lead, advancing 30% to $545.2 million. Premium comfort Ugg brand, known for its sheepskin boots, grew 14% to $223 million and Ugg’s affordably-priced Koolaburra spin-off fashion brand drove a 124% increase in Deckers’ other brands reporting segment, to $4 million from $1.8 million last year.
On the flip side came Teva sandals, down 4% to $46.4 million, and California-surfing-inspired Sanuk dropped 28% to $6.9 million. Sanuk, which brought in $25.4 million last year, is set to be divested this month and has been written out of the company’s guidance. No new acquisitions are in the offing.
The company is guiding on a 10% annual increase to $4.7 billion with an operating margin in the 19.5% to 20% range; it currently is at 16%.
Raymond James investment analyst Rick Patel notes Deckers is typically conservative in its guidance and is modeling upwards of a 13% increase at year end, advising, “DECK remains a solid growth story with momentum,” as he gives it an outperform rating.
Deckers stock began trading this year at $674 per share and closed July at $923. Given its rapidly rising stock price – Nike had been trading around $100 per share for most of the year but slipped to the $75 range after a disappointing fourth quarter – Deckers Brands just announced a six-for-one stock split in September, pending stockholder approval.
Deckers’ future hinges on continued growth of Hoka in the sports space, where it is already giving industry leader Nike fits, and effective management of the Ugg brand as it shifts from being trend-focused to a year-round, near-luxury lifestyle brand.
Hoka In Early Innings
Deckers acquired Hoka in 2012 for a reported $1.1 million when sales were in the $3 million range. What an investment it has been.
By fiscal 2018, it earned its own line on Deckers’ financial report when it reached $154 million in sales. Since then, it grew to $1.8 billion in fiscal 2024– an astounding 51% compound annual growth rate – and by all reckonings, it has only just begun.
Hoka got its start in specialty running stores and it remains heavily invested in that channel, with some $333 million of its $545 million in first quarter sales generated in the wholesale channel.
CFO Fasching said, “FY 2025 is going to be a year of wholesale growth,” and it will expand wholesale distribution through Dick’s Sporting Good, Foot Locker and JD Sports, along with Intersport in Europe, Top Sport in China and Sport Chek in Canada.
But the long-term strategy is to bring new customers in through wholesale and convert then to direct-to-consumer channels, both online and in its growing Hoka store network.
“We know that when we feed and bring in new customers through wholesale, we see them migrate to our DTC. This is part of our strategy; it’s about growth,” he continued.
At the end of fiscal 2024, it operated a total of 26 Hoka stores and it currently has 11 North American stores, including five in California, two in New York City, two in Florida, and one in Chicago, Boston and Toronto. It has also expanded internationally in London, Japan and China where its highest concentration of Hoka stores are.
Affirming that Hoka remains in the early days of brick-and-mortar retail, Powers said, “We’re not looking to roll out to 200 doors across the fleet. We’re going to manage this tightly. We’ll be a bit more strategic.”
Also in Hoka’s growth plans is expanding its athletic apparel offerings, so its brand loyal runners, everyday athletes and anybody else can sport the Hoka vibe around town. Nike is the pacesetter here generating nearly 30% of its $49.3 billion revenues in apparel versus 67% in footwear. Decker doesn’t report revenues by product category, but Hoka apparel offerings are limited.
Building Hoka brand awareness is pivotal to the strategic plan. “HOKA continues to experience global gains through consumer acquisition and retention with particular strength among retained consumers in the first quarter. We believe this is a powerful reflection of HOKA consumer loyalty, reinforcing the long runway we see for this brand,” Powers observed.
Keep Ugg Demand Strong
Deckers acquired Ugg in 1995 and it became a fashion sensation in 2003 when Oprah Winfrey named it to her favorite things list that year.
In less than a decade, it grew to a billion dollar brand with sales reaching $1.3 billion in fiscal 2013. It treaded water at about $1.5 billion through fiscal 2020, then took off after the pandemic when comfort became the “thing,” rising to $1.7 billion in 2021 and remained level at $1.9 billion in 2022 and 2023.
It got a 16% bounce to reach $2.2 billion in fiscal 2024. Through the first quarter 2025, it continues its double-digit growth surge, but it is expected to moderate as comps get more challenging as the year progresses.
The prescription for the brand is to maintain steady, sustainable growth. “We are encouraged by the consumer demand for UGG in the first quarter as we believe it reflects continued progress in creating year-round excitement for the brand’s versatile and seasonally relevant product,” Powers related.
“The UGG product team has done a fantastic job building product with purpose that is consumer informed, champions UGG brand codes, and has increased wearing occasions, allowing the brand to build and sustain demand over longer periods of time,” he continued.
Critical to the Ugg near-luxury strategy is to keep demand higher than supply. Wholesale holds a prominent place in driving demand and awareness, accounting for nearly two-thirds of revenues in the latest quarter, but as with Hoka, the plan is to pull more customers into its direct-to-consumer platforms. At the end of fiscal 2024, it operated around 60 Ugg full-priced stores and some 80 outlets globally.
Also providing Ugg an awareness boost is its more affordable Koolaburra by Ugg franchise, which gives next-generation customers an on-ramp to the near-luxury parent brand as their incomes rise. Koolaburra revenues are not reported separately, but it makes up the lion’s share of the $68 million other brands segment in fiscal 2024.
Stay The Course
The primary task for new CEO Caroti is not to screw things up, which seems highly unlikely since he’s been in senior management positions with the company for nearly a decade and helped construct the strategy that has been so successful over the years.
“Deckers has an exciting future ahead as Stefano transitions into his new role as CEO,” Powers said. That looks certain since the past is often the best predictor of the future.
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