Deckers Builds Momentum Through Innovation & Customer-Focused Strategy
Zacks Equity Research
5 min read
Deckers Outdoor Corporation DECK is maintaining a strong growth trajectory, backed by the continued success of its UGG and HOKA brands, international expansion efforts and a heightened focus on direct-to-consumer (DTC) sales. The company’s strong brand equity and tight inventory controls continue to support solid demand and healthy profit margins.
A major contributor to Deckers’ performance is the rapid growth of its DTC business. This channel allows the company to maintain tighter control over its brand image, deepen customer engagement and benefit from higher margin sales. In the third quarter of fiscal 2025, DTC net sales rose 17.9% to $1.01 billion, with comparable sales up 18.3%.
Ongoing investment in e-commerce, omnichannel integration and loyalty initiatives, such as UGG Rewards, is strengthening customer acquisition and retention. Digital platforms and flagship store expansion have played a key role in this growth. These efforts are enhancing brand connections while positioning Deckers for sustained momentum in the DTC space.
DECK’s Brand Strength Across UGG & HOKA
Deckers continues to strengthen its portfolio with a balanced mix of lifestyle and performance products. UGG has kept its leading position in premium lifestyle footwear, while HOKA has emerged as a fast-growing player in high-performance footwear. In the fiscal third quarter, HOKA posted year-over-year growth of 23.7% and UGG followed with 16.1%.
Deckers’ ability to maintain full-price sell-through rates across both brands underscores its disciplined approach to inventory and the enduring strength of its brand equity. These results have contributed to another record-breaking quarter for the company.
Global Markets Drive Growth of Deckers
International markets are becoming increasingly important for Deckers, especially for HOKA, which continues to expand globally as consumer awareness grows. Carefully managed wholesale strategies and regional marketing are helping drive overseas demand.
UGG, too, is expanding its reach beyond traditional markets and categories. With a renewed focus on high-opportunity regions like China, Deckers is setting the stage for sustained international growth and long-term revenue acceleration.
Product Innovation - a Core Growth Strategy of DECK
Product innovation remains a central pillar of Deckers' strategy. The company continues to expand and evolve its offerings across both performance and lifestyle categories. HOKA’s latest releases, such as the Bondi 9 and Cielo X1, demonstrate its leadership in performance innovation.
At the same time, UGG is branching out beyond winter wear, tapping into new segments, including sneakers, hybrids and men’s styles. This expansion across categories reflects Deckers' ability to launch and scale new products effectively, helping to capture customer segments and stay ahead of evolving trends.
As of Dec. 31, 2024, the company reported a strong financial position, with $2.24 billion in cash and no debt. This solid foundation gives the company the flexibility to invest in growth and return capital to shareholders. In the fiscal third quarter, Deckers repurchased around 275,000 shares for $44.7 million, with $640.7 million remaining in its share repurchase authorization.
DECK’s ability to generate strong cash flow continues to support its strategic initiatives and shareholder returns, reinforcing confidence in its long-term outlook.
Deckers Eyes Strong FY25 Growth
DECK is well-positioned for a solid performance in fiscal 2025, supported by its expansion initiatives. Operating alongside industry peers such as Skechers SKX, Urban Outfitters URBN and Abercrombie ANF, Deckers forecasts a total year-over-year revenue rise of 15% to $4.9 billion, an upward revision from the earlier mentioned $4.8 billion. The company expects HOKA to deliver a remarkable 24% increase, while UGG is projected to grow 10%.
Deckers anticipates its gross margin to improve, now expected to meet or exceed 57%, compared with the previously mentioned 55-55.5%. This also reflects an increase over the 55.6% gross margin recorded last year. Further strengthening its outlook, management raised the fiscal 2025 earnings per share (EPS) forecast to $5.75-$5.80, suggesting growth from the $4.86 reported last year and up from the prior EPS estimate of $5.15-$5.25.
Synopsis of Other Stocks
Skechers is maintaining its focus on enhancing its DTC operations and expanding its international footprint. The company plans to open stores, strengthen its omnichannel capabilities and establish a second distribution center in China.
These initiatives are aligned with Skechers’ long-term strategy of improving operational efficiency and widening customer reach. For fiscal 2025, the company projects sales between $9.70 billion and $9.80 billion, indicating a rise from the $8.97 billion reported in 2024. It expects earnings per share of $4.30-$4.50, whereas the company reported $4.16 last year.
Urban Outfitters delivered a robust fourth-quarter performance in fiscal 2025, setting the stage for continued growth in fiscal 2026. The company is aiming for mid-single-digit total sales growth for both the fiscal first quarter and the full year, supported by the strength of its retail brands. Free People and Anthropologie are expected to maintain positive sales trends, while Nuuly is targeting double-digit revenue growth, fueled by a growing subscriber base.
URBN also anticipates gross margin improvements, driven by lower markdowns and enhanced efficiencies in occupancy and delivery costs. The company plans $240 million in capital investments, allocating 50% to store expansion, 25% to technology and logistics, and the remaining 25% to office infrastructure.
Abercrombie is on track to meet its fiscal 2025 goals of sustainable and profitable growth. The company is capitalizing on brand strength by focusing on delivering trend-right and high-quality assortments across regions and customer segments. Strategic investments in stores, digital platforms, and technology are expected to support Abercrombie’s long-term growth.
Backed by strong fiscal 2024 results, the company expects first-quarter fiscal 2025 net sales to grow 4-6% from the $1.02 billion posted a year earlier. For the year, Abercrombie projects a 3-5% increase from the $4.95 billion achieved last year, driven by broad-based growth across brands and regions.
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