Deckers Outdoor Corporation (NYSE:DECK) is well positioned for sustained growth with a clear focus on strategic initiatives, strong direct-to-consumer (DTC) and wholesale channels, and the expansion of its flagship brands, UGG and HOKA. The company’s efforts to tailor product development, marketing efforts and omnichannel distribution to align with consumer preferences have produced significant results, improving near-term operational performance and advancing the brands’ long-term strategic objectives.
DTC net sales increased 21% year over year to $415.2 million in the fourth quarter of 2024, while DTC comparable net sales increased 20.5%. This impressive growth underscores Deckers’ success in engaging directly with consumers through a variety of channels. The company expects DTC revenue to increase 17.9% in fiscal year 2025.
Deckers’ focus on product innovation is evident in the successful launch of its latest styles and collections, reflecting its deep understanding of consumer preferences and market trends. The company’s efforts to capture consumer attention through brand activations, collaborations and social listening efforts highlight its commitment to building meaningful connections and increasing brand loyalty.
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Wholesale Channel: A Key Element
Deckers’ wholesale business is a key revenue driver and a significant contributor to the company’s overall growth trajectory. Despite market volatility, the wholesale division demonstrated commendable performance, particularly in key regions such as the United States and Europe. Fourth quarter wholesale revenue increased 21.4% year over year to $544.6 million, reflecting the strength of the channel and its ability to drive sales growth.
This success highlights the strength of Deckers’ brand portfolio and its ability to forge lasting partnerships with retailers. The wholesale channel has become a key vehicle for expanding the company’s market reach and increasing brand awareness on a global scale. With a strong wholesale network and strategic collaborations, Deckers continues to capitalize on new opportunities, driving incremental revenue growth and solidifying its position as a major player in the footwear industry. The company expects wholesale revenue to increase 5.2% in fiscal 2025.
Zacks Rank and Estimate Revision
Deckers has been performing well on the stock market over the past six months, as the company’s shares have outperformed the Zacks Retail Apparel and Footwear industry due to its focus on profitable markets, product innovation, store expansion and strengthening e-commerce capabilities. During this period, shares of this Zacks Rank #3 (Hold) company have risen 43.4% compared to the industry’s growth of 15.8%.
The favorable view on Deckers is reflected in the upward revision of the Zacks Consensus Estimate for earnings per share. Over the past 30 days, analysts have raised their earnings estimate for the current fiscal year by 16 cents. The consensus estimate is $30.59 per share. Estimates for the next fiscal year have also been raised by 19 cents to $34.37 per share.
The way forward
Deckers expects net sales to grow 10% to $4.7 billion in fiscal 2025. HOKA is expected to grow 20% driven by increased consumer adoption in DTC channels, expansion into strategic partners and growth in international markets. UGG is expected to grow in the mid-single digits driven by international expansion and maintaining a healthy U.S. market.
Earnings for fiscal 2025 are expected to be between $29.50 and $30.00 per share, compared to $29.16 last year. Capital expenditures are expected to be between $115 and $125 million, with a focus on supply chain, warehouse capabilities, IT projects and retail updates. For the first quarter of fiscal 2025, Deckers expects revenue growth in the high teens and gross margins slightly above its full-year guidance rate. Net sales for fiscal 2025 are expected to increase 10.7% year over year, with earnings per share of $30.00.
Key Pick
The top-ranked brands in the retail industry are: Gap Inc. (NYSE:GPS), Abercrombie & Fitch Co. (NYSE:ANF) and Canada Goose (NYSE:GOOS).
Gap is a leading international specialty retailer offering a wide range of clothing, accessories and personal care products and is currently carrying a Zacks Rank #1 (Strong Buy).
The Zacks Consensus Estimate for Gap’s fiscal 2024 earnings and revenue suggest growth of 21.7% and 0.2%, respectively, from the reported figures for fiscal 2023. Gap’s average earnings surprise over the past four quarters is 202.7%.
Abercrombie is a specialty retailer of upscale, high-quality casual apparel and is currently sporting a Zacks Rank #1. ANF delivered surprising results with revenue growth of 28.9% in the last quarter.
Abercrombie’s consensus estimates for fiscal 2024 earnings and sales indicate growth of 47.3% and 10.4%, respectively, from fiscal 2023 levels. ANF’s average earnings surprise over the past four quarters is 210.3%.
Canada Goose is a global outerwear brand. It is currently ranked #1 on the Zacks Rankings.
The Zacks Consensus Estimate for Canada Goose’s earnings and revenue for fiscal 2025 suggests growth of 13.7% and 5.2%, respectively, from the prior-year period’s actual results. GOOS’s average earnings estimate for the past four quarters is 70.9%.
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