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Deckers (DECK) Thrives on Strong Direct-to-Consumer Business

Deckers Outdoor Corporation DECK is focusing on product innovations, store expansion 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.

It has been strengthening omnichannel 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, company’s direct-to-consumer net sales increased 18.7% and comparable DTC net sales increased 22.1% year over year. We note that direct-to-consumer net sales increased 35.3% and 15.4% in the second and first quarters, respectively.

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 increase in low 50% range for the fiscal year 2023. This demonstrates brand’s growth in 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 increased 8% year over year. In the said quarter, 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.

Wrapping Up

Deckers, which shares space with NIKE, Inc. NKE, Skechers U.S.A., Inc. SKX and Wolverine World Wide, Inc. WWW, has been focusing on its direct-to-consumer business by constantly developing e-commerce portals for its customers.

A Synopsis of Other Stocks

Nike’s second-quarter fiscal 2023 top and bottom lines not only surpassed the Zacks Consensus Estimate but also improved year over year. The company registered growth from brand strength, robust consumer demand and an innovative product pipeline. In the second quarter of fiscal 2023, Nike posted adjusted earnings of 85 cents a share, which surpassed the Zacks Consensus Estimate of 65 cents and increased from 83 cents reported in the prior-year quarter. Total sales of $13,315 million beat the Zacks Consensus Estimate of $12,606 million. Markedly, the metric rose from $11,357 million reported in the year-ago period.

Skechers registered a solid performance in the fourth quarter of 2022, wherein the top and bottom lines beat the Zacks Consensus Estimate and grew year over year. The company posted adjusted earnings of 48 cents a share, outperforming the Zacks Consensus Estimate of 38 cents. Sketcher’s sales of $1,878.8 million rose 13.5% year over year and surpassed the consensus mark of $1,776 million. The company witnessed strong wholesale sales.

Wolverine World Wide initiated its 100-days action plan, which focuses on inventory reduction, debt management, Keds sale and the creation of a Profit Improvement Office to grab savings to drive growth. Wolverine remains confident in accomplishing a 12% operating margin in 2024. The company revenues jumped 4.6% in the fourth quarter of 2022.

On a constant currency basis, Wolverine World Wide’s international revenues increased 31.9% and direct-to-consumer revenues increased 4.8%.

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Wolverine World Wide, Inc. (WWW) : Free Stock Analysis Report

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