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Deckers Outdoor (DECK) Banks on Strategic Endeavors for Growth
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Deckers Outdoor Corporation (DECK - Free Report) is targeting profitable and underpenetrated markets, and focusing on product innovations, store expansion and enhancing e-commerce capabilities. The company has made substantial investment to strengthen its online presence and improve shopping experience for its customers by constantly developing e-commerce portals and optimizing omni-channel distribution.
Let’s Delve Deeper
Deckers has been strengthening omni-channel solutions, expanding its customer reach and focusing on diversified product offerings to gain market share in direct-to-consumer (DTC) sales.
The company is moving toward its long-term goal of 50% mix of direct-to-customer business. Also, it is progressing toward building UGG as a recognized global lifestyle brand and HOKA ONE ONE into a multi-billion-dollar player.
HOKA builds its consumer base through combining discipline marketing approach and disruptive product innovation. From a dollar growth prospective, the brand’s DTC volume more than doubled in the third quarter of fiscal 2023 from its year-ago period. The company’s net revenues increased 90.8% in the said period. Management expects revenues from the HOKA brand to increase in the low 50% range for fiscal 2023. This demonstrates the brand’s growth in DTC business.
Coming to UGG, the brand delivered global gains in DTC across genders and categories demonstrating strong consumer demand in the third quarter. Although UGG’s DTC business was impacted by an unfavorable foreign currency exchange rate, it expanded 8% year over year. In the said quarter, the DTC mix increased to 52% from the year-ago quarter’s 50%, achieving the highest mix in any quarter.
Image Source: Zacks Investment Research
Impressive Q3
Deckers reported better-than-expected third-quarter fiscal 2023 results, wherein both the top and bottom line grew year over year. Strength in the HOKA ONE ONE brand contributed to the company’s performance.
In the said quarter, earnings of $10.48 per share surpassed the Zacks Consensus Estimate of $9.57 and increased from the year-ago quarter’s earnings of $8.42 per share. Net sales rose 13.3% year over year to $1345.6 million and outpaced the Zacks Consensus Estimate of $1,258 million. On a constant-currency basis, net sales grew 17.5%.
Management expects net sales for fiscal 2023 in the range of $3.50 billion to $3.53 billion, driven primarily by the HOKA brand. It projects earnings in the band of $18.00-$18.50 per share, which suggests an increase from earnings of $16.26 per share reported in the year-ago period.
Wrapping Up
Supply-chain issues, labor shortages and inflationary pressures are hurting Deckers’ performance for a while now. The company expects to witness significant headwinds from foreign currency exchange rates. Management expects currency headwinds to hurt revenues to the tune of approximately $100 million in fiscal 2023.
Nonetheless, upsides mentioned above will likely offer some respite amid such hurdles.
Shares of this Zacks Rank #3 (Hold) company have increased 11.1% in the past three months compared with the industry’s 0.4% growth.
KTB has an expected long-term earnings growth rate of 8% and a trailing four-quarter earnings surprise of 12.4%, on average. Kontoor Brands currently 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 Kontoor Brands’ current financial year sales and earnings suggests growth of 2.5% and 5.8%, respectively, from the year-ago reported numbers.
The Ralph Lauren is a major designer, marketer and distributor of premium lifestyle products. It currently carries a Zacks Rank of 2 (Buy). RL has a trailing four-quarter earnings surprise of 23.6%, on average.
The Zacks Consensus Estimate for Ralph Lauren’s current financial year sales suggests growth of 2.5% from the prior-year reported numbers.
NIKE, engaged in the business of designing, developing and marketing of athletic footwear, currently carries a Zacks Rank of 2. NKE has a trailing four-quarter earnings surprise of 24%, on average.
The Zacks Consensus Estimate for NIKE’s current financial year sales suggests growth of 8.9% from the corresponding year-ago reported figures.
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Deckers Outdoor (DECK) Banks on Strategic Endeavors for Growth
Deckers Outdoor Corporation (DECK - Free Report) is targeting profitable and underpenetrated markets, and focusing on product innovations, store expansion and enhancing e-commerce capabilities. The company has made substantial investment to strengthen its online presence and improve shopping experience for its customers by constantly developing e-commerce portals and optimizing omni-channel distribution.
Let’s Delve Deeper
Deckers has been strengthening omni-channel solutions, expanding its customer reach and focusing on diversified product offerings to gain market share in direct-to-consumer (DTC) sales.
The company is moving toward its long-term goal of 50% mix of direct-to-customer business. Also, it is progressing toward building UGG as a recognized global lifestyle brand and HOKA ONE ONE into a multi-billion-dollar player.
HOKA builds its consumer base through combining discipline marketing approach and disruptive product innovation. From a dollar growth prospective, the brand’s DTC volume more than doubled in the third quarter of fiscal 2023 from its year-ago period. The company’s net revenues increased 90.8% in the said period. Management expects revenues from the HOKA brand to increase in the low 50% range for fiscal 2023. This demonstrates the brand’s growth in DTC business.
Coming to UGG, the brand delivered global gains in DTC across genders and categories demonstrating strong consumer demand in the third quarter. Although UGG’s DTC business was impacted by an unfavorable foreign currency exchange rate, it expanded 8% year over year. In the said quarter, the DTC mix increased to 52% from the year-ago quarter’s 50%, achieving the highest mix in any quarter.
Image Source: Zacks Investment Research
Impressive Q3
Deckers reported better-than-expected third-quarter fiscal 2023 results, wherein both the top and bottom line grew year over year. Strength in the HOKA ONE ONE brand contributed to the company’s performance.
In the said quarter, earnings of $10.48 per share surpassed the Zacks Consensus Estimate of $9.57 and increased from the year-ago quarter’s earnings of $8.42 per share. Net sales rose 13.3% year over year to $1345.6 million and outpaced the Zacks Consensus Estimate of $1,258 million. On a constant-currency basis, net sales grew 17.5%.
Management expects net sales for fiscal 2023 in the range of $3.50 billion to $3.53 billion, driven primarily by the HOKA brand. It projects earnings in the band of $18.00-$18.50 per share, which suggests an increase from earnings of $16.26 per share reported in the year-ago period.
Wrapping Up
Supply-chain issues, labor shortages and inflationary pressures are hurting Deckers’ performance for a while now. The company expects to witness significant headwinds from foreign currency exchange rates. Management expects currency headwinds to hurt revenues to the tune of approximately $100 million in fiscal 2023.
Nonetheless, upsides mentioned above will likely offer some respite amid such hurdles.
Shares of this Zacks Rank #3 (Hold) company have increased 11.1% in the past three months compared with the industry’s 0.4% growth.
3 Key Picks
Some top-ranked stocks are Kontoor Brands, Inc. (KTB - Free Report) , Ralph Lauren Corporation (RL - Free Report) and NIKE, Inc. (NKE - Free Report) .
KTB has an expected long-term earnings growth rate of 8% and a trailing four-quarter earnings surprise of 12.4%, on average. Kontoor Brands currently 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 Kontoor Brands’ current financial year sales and earnings suggests growth of 2.5% and 5.8%, respectively, from the year-ago reported numbers.
The Ralph Lauren is a major designer, marketer and distributor of premium lifestyle products. It currently carries a Zacks Rank of 2 (Buy). RL has a trailing four-quarter earnings surprise of 23.6%, on average.
The Zacks Consensus Estimate for Ralph Lauren’s current financial year sales suggests growth of 2.5% from the prior-year reported numbers.
NIKE, engaged in the business of designing, developing and marketing of athletic footwear, currently carries a Zacks Rank of 2. NKE has a trailing four-quarter earnings surprise of 24%, on average.
The Zacks Consensus Estimate for NIKE’s current financial year sales suggests growth of 8.9% from the corresponding year-ago reported figures.