Deckers Q3 Earnings Beat on HOKA & UGG Strength, FY25 View Up

Core Insights - Deckers Outdoor Corporation (DECK) reported strong third-quarter results, exceeding expectations and raising its fiscal 2025 outlook, driven by the performance of HOKA and UGG brands [1][2] Financial Performance - Quarterly earnings reached $3.00 per share, surpassing the Zacks Consensus Estimate of $2.60 and up from $2.52 in the prior year [3] - Net sales increased 17.1% year over year to $1,827.2 million, exceeding the consensus estimate of $1,713 million; on a constant-currency basis, net sales grew 16.6% [4] - Gross margin expanded to 60.3% from 58.7% in the previous year, surpassing expectations of 55.5%, driven by higher-margin UGG products and increased full-price sales [5] - SG&A expenses rose 24.9% year over year to $535.3 million, representing 29.3% of net sales, an increase of 180 basis points from last year [6] - Operating income was $567.3 million, up from $487.9 million in the prior year, with an operating margin of 31% [6] Brand Performance - HOKA brand sales increased 23.7% year over year to $530.9 million, exceeding projections [7] - UGG brand net sales grew 16.1% to $1,244 million, surpassing estimates [7] - Teva brand sales declined 6% to $24.1 million, falling short of expectations [7] - Other brands, primarily Koolaburra, saw a 16.6% decline in net sales to $28 million [8] Sales Channels and Geography - Wholesale net sales increased 16.2% year over year to $815.8 million [9] - Direct-to-consumer (DTC) net sales advanced 17.9% to $1,011 million, with DTC comparable net sales surging 18.3% [9] - Domestic net sales rose 11.5% to $1,169 million, while international net sales increased 28.5% to $657.9 million [9] Future Outlook - The company anticipates a 15% increase in fiscal 2025 net sales, reaching $4.9 billion, with HOKA expected to grow by 24% and UGG by 10% [11] - Fiscal 2025 gross margin is projected to be at or slightly better than 57%, up from earlier estimates [11] - SG&A expenses as a percentage of net sales are expected to be 35%, indicating a deleverage of 100 basis points from last year [12] - The operating margin is projected to be approximately 22%, an increase from previous guidance [12] - Fiscal 2025 earnings are forecasted in the range of $5.75-$5.80 per share, up from $4.86 reported last year [13]