Deckers(US:DECK) Guohai Securities·2024-07-30 13:31Investment Rating - Buy (maintained) [1] Core Views - Revenue and EPS exceeded expectations, with significant improvement in profit margins [1][3] - FY2025Q1 revenue was $830 million, up 22% YoY, and OP was $130 million, up 87.8% YoY [1] - Net profit was $120 million, up 81.9% YoY, with a net margin of 14%, up 4.6pct YoY [1] - Diluted EPS was $4.52, compared to $2.41 in the same period last year [1] - HOKA brand revenue grew 29.7% YoY to $545 million, driven by strong sales of core products and new product launches [3] - UGG brand revenue increased 14% YoY to $223 million, with wholesale revenue up 18% due to replenishment demand [3] - The company raised its FY2025 revenue guidance to $4.7 billion, up 10% YoY, and adjusted its EPS guidance to $29.75-$30.65 [3][6] Financial Performance - FY2025Q1 GPM was 56.9%, up 5.6pct YoY, driven by higher-margin products and increased full-price sales [1][3] - OPM improved to 16.1%, up 5.6pct YoY [1] - Inventory at the end of the quarter was $750 million, up 1.7% YoY, reflecting healthy inventory levels [3] - US revenue grew 23% YoY to $516 million, while international revenue increased 20.8% YoY to $310 million, with strong performance in China and EMEA [3] Brand Performance - HOKA's DTC revenue grew 33% YoY to $210 million, and wholesale revenue increased 28% YoY to $330 million [3] - UGG's DTC revenue rose 8% YoY to $80 million, while wholesale revenue surged 18% YoY to $143 million [3] - Teva revenue declined 4.3% YoY to $46 million, and Sanuk revenue fell 28.4% YoY to $6.9 million [3] - Other brands, including Koolaburra, saw revenue increase 123.5% YoY to $4 million [3] Future Outlook - The company expects FY2025 revenue to grow 10% YoY to $4.7 billion, with GPM guidance raised to 54% [3][6] - OPM guidance is revised to 19.5%-20%, and SG&A expense ratio is expected to be 34%-34.5% [6] - HOKA is projected to grow 20% YoY in FY2025, while UGG is expected to grow in the mid-single digits [6] - Sanuk brand is set to be divested in August 2024, and a new CEO will take over on August 1, 2024 [6] Valuation and Forecast - The company is expected to achieve revenue of $4.79 billion, $5.29 billion, and $5.81 billion in FY2025, FY2026, and FY2027, respectively, with YoY growth of 11.8%, 10.3%, and 9.8% [7] - Net profit is forecasted to be $788 million, $882 million, and $965 million for FY2025, FY2026, and FY2027, respectively [7] - Diluted EPS is projected to be $30.2, $33.9, and $37.0 for FY2025, FY2026, and FY2027, respectively [7] - The stock's P/E ratio is 30.7x, 27.4x, and 25.0x for FY2025, FY2026, and FY2027, respectively [7]