Deckers(DECK) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q3 2025 increased by 17% year-over-year to $1.83 billion, with gross margins improving to 60.3% [11][35][38] - Diluted earnings per share rose by 19% to$ 3, compared to $2.52 in the previous year [11][40] - Fiscal year-to-date performance shows significant revenue growth, with HOKA increasing by 29% and UGG growing by 15% [13][36] Business Line Data and Key Metrics Changes - UGG's global revenue in Q3 increased by 16% to$ 1.24 billion, with balanced growth across direct-to-consumer and wholesale channels [15][36] - HOKA's global revenue rose by 24% to $531 million, with DTC increasing by 27% and wholesale growing by 21% [26][36] - UGG experienced strong growth in both acquisition and retention of customers, with a 25% increase in UGG Reward members [16] Market Data and Key Metrics Changes - International markets for UGG rose by 28%, while the DTC and wholesale channels saw a balance increase of 19% [13] - HOKA's growth was particularly strong in the APAC region, with China contributing the largest incremental dollar revenue [26] Company Strategy and Development Direction - The company plans to phase out the Koolaburra brand to focus on more significant organic opportunities [24] - The strategy for HOKA includes building awareness and consideration while managing the marketplace for long-term growth [59][60] - The company aims to maintain a flexible operating model to support long-term brand health and profitability [34][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 15% revenue growth for fiscal 2025, marking the fifth consecutive year of mid-teens growth [14][42] - The company anticipates challenges in Q4 due to inventory limitations and a more promotional environment compared to the previous year [44][49] - Management remains committed to maintaining financial discipline and delivering top-tier profitability [52][50] Other Important Information - The company repurchased approximately$ 45 million worth of shares during the third quarter [41] - The updated guidance for diluted earnings per share is now in the range of $5.75 to$ 5.80 [48] Q&A Session Summary Question: Can you discuss the management of the HOKA brand and growth expectations? - Management emphasized the importance of building HOKA as a transformational brand with a focus on long-term sustainable growth, not just chasing numbers [59][63] Question: What is the reception of upcoming product launches like Clifton 10 and Arahi 8? - The reception has been positive, with both models booked well and meeting expectations [68][70] Question: How did the U.S. growth compare to expectations and what are the international growth prospects? - U.S. growth met expectations, and international growth is expected to outpace the U.S. in the future [86][90] Question: What are the opportunities to maintain or improve operating margins? - Management acknowledged that while maintaining high margins is challenging, the scarcity model and brand strength support margin levels [91][92] Question: Can you elaborate on the Clifton 10 launch and its impact on sales and margins? - The Clifton 10 will have a staggered launch, with some sales recognized in Q4 and some in Q1, and margin impacts from the closeout of Clifton 9 are anticipated [140][141]