Deckers Brands, the parent company of Hoka, Teva and other brands, is currently forecasting revenues of $3.03-3.06 billion for the full financial year ending March 31, indicating a growth of between 19 and 20 percent. It expects to book a gross margin of less than 51.5 percent for the year, marking a predicted net income of around $410 million.
In the seasonally important third quarter, which ended Dec. 31, the group’s net sales rose by 10 percent to a record level of $1.19 billion. Still, net income slid by 8.8 percent to $232.9 million, as higher shipment costs led to a drop in the gross margin of 4.7 percentage points to 52.3 percent. DTC revenues accounted for 50 percent of the topline versus 48 percent a year earlier and 44 percent in the corresponding period of 2019.
Deckers continues to see Hoka marching closer to an annual $1 billion topline. In Q3, the brand’s revenues rose by 30.3 percent to $185 million – nearly double the volume of two years ago – despite delivery delays that caused stock-outs in specific markets. Hoka’s global DTC sales increased by 13 percent, and the company has been testing brick-and-mortar formats for the brand in the U.S. and China before a global rollout.
Deckers prioritizes the fulfillment of the demand for the brand’s products while extending its reach toward younger consumers, notably with its enlarged Rincon and Mach franchises. Hoka is also expanding distribution with key wholesale partners.
Ugg’s revenues rose by 7.9 percent year-over-year to $946 million in the quarter, while for Teva, sales grew by 31.4 percent, reaching $20.6 million in the quarter. They fell by 13.4 percent at Sanuk and 16.6 percent for the group’s other brands.
Deckers’ senior management confirmed that the company continues to navigate a difficult logistics environment, forcing it to spend upwards of $100 million in air freight during the current financial year and carry more inventories than usual. To help offset the additional costs, it has implemented price adjustments on some Hoka models for the spring season. It plans to do the same for Ugg in the fall.
The company noted that the most significant impact of supply chain disruptions is extended transit lead times and cost pressures related to container shortages, port congestion and trucking scarcity that have caused delays and higher usage of air freight.
“The full effect and duration of disruptions and delays are not yet known, and there are no indicators signaling material improvement near-term,” the company pointed out in a statement.
Deckers stressed that some distribution centers are experiencing operational challenges that may cause further delays and cost pressures in the future. Meanwhile, some of its wholesale partners and third-party logistics providers are also experiencing capacity constraints and labor shortages, affecting its operations.