Deckers Brands, the parent of Ugg and other footwear brands including the rapidly expanding Hoka One One, managed to reduce its net losses significantly in its first fiscal quarter ended June 30, down to $19.3 million, as compared to $30.4 million for the year-ago quarter. Revenues climbed by 10.5 percent to $276.9 million, or by 11.6 percent constant currencies, driven by gains from Ugg and Hoka One One.
Wholesale revenues rose by 10.7 percent to $196.6 million, while direct-to-consumer sales improved by 10.0 percent to $80.3 million including a gain of 16.2 percent in DTC comparable sales.
U.S. sales benefited from the expansion of Ugg and Hoka, and soared by 18.1 percent to $167.3 million. However, the international Ugg business was softer, and as a result, total international sales only inched up by 0.6 percent to $109.5 million.
Hoka One One was again the quarter's shining star, with sales rocketing by 69.2 percent to $79.5 million. Domestic and international sales were both strong. In international wholesale, the brand benefited from marketing campaigns for the Carbon X high-performance shoe, which features a carbon fiber plate to help propel runners, and sponsorships of Iron Man strength events in several countries.
The new Carbon X drew 800 million impressions around the world, and first-time customers accounted for 40 percent of the product's direct-to-consumer sales.
The Ugg brand's sales gained 2 percent to $138.5 million, with domestic sales increasing by high-teens, both in the DTC and wholesale channels, but international sales declined (more on this brand in Shoe Intelligence). Both Teva and Sanuk disappointed, with Teva's revenues down by 4 percent to $38.3 million and Sanuk dipping by 24 percent to $18.7 million, weighed down by sluggish sales in the Yoga Sling franchise and a strategic decision to exit the warehouse store channel.
Overall, the group's gross margin improved by 1.1 percentage points to 47 percent, thanks to a favorable product mix and fewer close-out sales, partially offset by currency headwinds and channel mix.
For the current financial year, the company raised its sales guidance and is now projecting sales of $2,100 to $2,125 million, instead of the previously expected $2,095 million to $2,120 million, with the gross margin forecast to reach 50.5 percent.