Deckers Outdoor Corp (DECK) Posts Record Q3 FY 2024 Results with Substantial Growth in Revenue ...
Revenue: Increased by 16% to a record $1.56 billion in Q3 FY 2024.
Diluted EPS: Jumped 44% to a record $15.11 in Q3 FY 2024.
Gross Margin: Improved significantly to 58.7% from 53% in the prior year.
Direct-to-Consumer Sales: Grew by 22.7%, with comparable net sales up 21.8%.
Balance Sheet: Cash and cash equivalents stood at $1.651 billion, with no outstanding borrowings.
Stock Repurchase: DECK repurchased approximately 196 thousand shares for $99.7 million.
FY 2024 Outlook: Revenue guidance raised to approximately $4.15 billion, with diluted EPS expected to be between $26.25 and $26.50.
On February 1, 2024, Deckers Outdoor Corp (NYSE:DECK) released its 8-K filing, announcing a record-breaking third quarter for fiscal year 2024. The company, known for its portfolio of footwear and lifestyle brands including UGG, HOKA, Teva, and Sanuk, has demonstrated robust growth and operational prowess, leading to significant increases in revenue and earnings per share (EPS).
Deckers' success is attributed to its strategic focus on direct-to-consumer (DTC) sales, which saw a 22.7% increase, and its wholesale business, which also grew by 8.6%. The company's DTC comparable net sales rose by 21.8%, indicating strong consumer demand and brand loyalty. Geographically, both domestic and international sales experienced growth, with domestic net sales up by 15.6% and international net sales increasing by 16.7%.
Financial Highlights and Brand Performance
The company's gross margin saw a significant improvement to 58.7%, up from 53% in the previous year, reflecting Deckers' ability to maintain pricing power and manage costs effectively. Selling, general, and administrative (SG&A) expenses were up to $428.7 million, but this increase was proportionally less than the revenue growth, indicating improved operational efficiency.
Deckers' flagship brands, UGG and HOKA, were the primary drivers of this quarter's success, with UGG brand net sales increasing by 15.2% and HOKA brand net sales surging by 21.9%. However, the Teva and Sanuk brands experienced declines, which could indicate a need for strategic reassessment for these segments.
Robust Balance Sheet and Shareholder Returns
The balance sheet remains strong, with cash and cash equivalents totaling $1.651 billion, a significant increase from the previous year's $1.058 billion. Inventories were well-managed, decreasing to $539.0 million from $723.4 million, reflecting efficient inventory management and possibly strong sell-through rates.
Deckers continued to return value to shareholders through its stock repurchase program, buying back shares at an average price of $507.95. The company still has approximately $1.046 billion remaining under its stock repurchase authorization, which could provide future support for the stock price.
Outlook and Industry Positioning
Deckers has raised its full fiscal year 2024 outlook, now expecting net sales to be approximately $4.15 billion and diluted EPS to be in the range of $26.25 to $26.50. This optimistic outlook underscores the company's confidence in its brand strength and operational capabilities.
President and CEO Dave Powers highlighted the exceptional performance driven by the UGG and HOKA brands, emphasizing the global gains in awareness and consumer connections.
Our brands delivered Deckers' largest quarter in history, with record revenue and earnings as both HOKA and UGG drove exceptional performance in the quarter, led by our DTC channel and high levels of full price selling, said Powers.
He also noted the company's disciplined operating approach and strong balance sheet as key factors in Deckers' current and future success.
Deckers Outdoor Corp (NYSE:DECK) stands out in the Manufacturing - Apparel & Accessories industry for its ability to drive growth through brand strength and operational efficiency. The company's focus on DTC sales, innovative product offerings, and disciplined marketplace management positions it well for continued success in a competitive landscape.
Investors and potential GuruFocus.com members should take note of Deckers' impressive third-quarter performance and its raised guidance for fiscal year 2024, which signal the company's potential for sustained value creation.
For more detailed information, you can access the full earnings report and listen to the earnings call replay on Deckers' investor relations website.
Explore the complete 8-K earnings release (here) from Deckers Outdoor Corp for further details.
This article first appeared on GuruFocus.
