Deckers Outdoor Corporation DECK is focusing on expanding brand assortments, bringing innovative line of products and enhancing e-commerce capabilities to capture incremental sales directly from customers. 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. In the third quarter of fiscal 2023, the company’s direct-to-consumer net sales increased 18.7% and comparable DTC net sales grew 22.1% year over year. Digging into the past, we note that DTC net sales increased 35.3% and 15.4% in the second and first quarters, respectively.
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Moving forward, the company is progressing toward building HOKA ONE ONE into a multi-billion-dollar player and UGG as a global lifestyle brand.
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 from its year-ago period. The company’s net revenues increased 90.8% in the said period. Management expects revenues from HOKA brand to surge in the low 50% range for fiscal 2023. This demonstrates the brand’s growth in the DTC business.
Coming to UGG, the brand delivered global gains in DTC across genders and categories demonstrating strong consumer demands in the third quarter. Although UGG’s DTC business was impacted by unfavorable foreign currency exchange rate, it expanded 8% year over year. In the said quarter, the DTC mix increased to 52% from 50% last year, achieving the highest mix in any quarter.
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 the earnings of $16.26 per share reported in the year-ago period.
Deckers is keeping up with the changing trend and is constantly developing its e-commerce portal to capture incremental sales. The company is also targeting profitable and underpenetrated markets.
Shares of this Zacks Rank #2 (Buy) company have increased 12% compared with the industry’s 3.5% growth.
3 Key Picks
Some top-ranked stocks are Inter Parfums IPAR, The Kroger Co. KR and NIKE, Inc. NKE.
IPAR has an expected long-term earnings growth rate of 15% and a trailing four-quarter earnings surprise of 36.2%, on average. Inter Parfums 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 Inter Parfums’ current financial year sales and earnings suggests growth of 10.5% and 0.8%, respectively, from the year-ago reported numbers.
The Kroger Co. operates in the thin-margin grocery industry. It currently flaunts a Zacks Rank of 1. KR has a trailing four-quarter earnings surprise of 9.8%, on average.
The Zacks Consensus Estimate for Kroger’s current financial year sales and earnings suggests growth of 2.5% and 6.2%, respectively, 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 8.8% from the corresponding year-ago reported figures.
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