HOKA’s Incredible Rise: Running Ahead of Competition
In what’s considered one of the smartest acquisitions in the footwear and apparel industry, Deckers acquired HOKA in 2012 for a modest $1.1 million. HOKA has since transformed into a powerhouse for the brand, especially noticeable in the most recent quarter. The brand’s revenue shot up 35% year-over-year, totaling $570.9 million, driving HOKA’s annual revenue to exceed $2 billion.
Key drivers for HOKA’s success include strong growth from the brand’s popular Clifton and Bondi running shoes, along with promising new releases like Skyflow and Mach X 2, both of which have received a strong response from customers. With a presence in major international cities such as Tokyo, Paris, London, and Shanghai, HOKA has effectively fueled its global awareness campaign, outperforming its domestic U.S. growth with significant international sales gains.
UGG Brand’s Steady Growth with Fresh Seasonal Touches
While HOKA is running ahead in growth, Deckers’ well-known UGG brand has seen its own resurgence. UGG sales increased by 13% year-over-year in Q2 of fiscal 2025, totaling $689.9 million. The success of UGG this season is largely attributed to new seasonal colors and silhouettes that appeal to a broad customer base. With demand driven by strategic inventory management and strong sales in international markets, UGG continues to be a high-performing staple in Deckers’ brand portfolio.
Impressive Financials Backing Deckers’ Strength
Deckers’ total revenue increased 20% in the recent quarter, reaching $1.31 billion. Earnings per share (EPS) surged by 39% to $1.59, surpassing analyst expectations of $1.24 EPS on $1.20 billion in revenue. Domestic sales were up by 14%, hitting $853.9 million, while international sales saw a 33% increase to $457.4 million. This success is also reflected in Deckers’ direct-to-consumer and wholesale revenue, both of which grew by approximately 20%.
Moreover, the company’s gross margin improved by 250 basis points to 55.9%, mainly due to a higher sales mix from HOKA’s high-margin products and strong sales from premium items within UGG’s lineup.
Deckers’ Strong Financial Position and Future Growth Strategy
Deckers’ balance sheet reflects its financial strength, with $1.23 billion in cash and equivalents and no debt. Inventory increased by just 7% to $777.9 million, showing a healthy and well-positioned brand ready to meet customer demand without risking oversupply.
Deckers recently raised its revenue forecast, projecting full-year sales to grow by 12% to around $4.8 billion, up from the previously estimated $4.7 billion. The company now expects a gross margin between 55% and 55.5%, surpassing its previous estimate of 54%. This upward revision also includes a projected EPS range of $5.15 to $5.25, a lift from the earlier $4.96 to $5.11, following a recent 6-for-1 stock split.
Is Deckers Stock Still a Buy?
HOKA’s phenomenal growth is setting the pace for Deckers, with plans to expand further into categories like trail running, fitness, and lifestyle. Upcoming upgrades to HOKA’s most popular styles, the Bondi and Clifton, are expected to keep interest high and drive future sales. As HOKA expands internationally, Deckers continues to capitalize on growing awareness for the brand.
UGG, meanwhile, remains a seasonal favorite. The brand’s classic boots, known for their durability and warmth, have become wardrobe staples, and Deckers has kept interest alive by regularly updating colors and silhouettes to match current trends. With demand strong and consistent, UGG sales are expected to see an additional boost in the holiday season, which is historically its most significant sales period.
Despite trading at a forward price-to-earnings (P/E) ratio of 27, just above Nike’s and below Lululemon’s, Deckers remains a compelling option. Deckers’ cash reserves provide it with the flexibility to reinvest in growth or consider stock buybacks, adding further value for shareholders.
With a track record of effective brand growth and a solid balance sheet, Deckers has positioned itself as a long-term winner, driven by the strength of its core brands and expanding global presence.
