Deckers Outdoor Corporation’s DECK growth initiatives and strong brand performance have positioned it for long-term success amid increased competition in the footwear industry. Deckers has demonstrated a deep understanding of consumer preferences and market dynamics by focusing on innovation, enhancing direct-to-consumer (DTC) capabilities and expanding its global footprint across multiple channels. 

Shares of this leading designer and producer of innovative, niche footwear and accessories have surged 69.5% in the past year, comfortably outpacing the Zacks Retail-Apparel and Shoes industry’s modest 35.8% growth. Also, growth initiatives enabled the company to outperform the broader Retail-Wholesale sector and the S&P 500 index’s rallies of 34.6% and 32.4%, respectively, during the same period.

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DECK Drives Growth With Brand Strength, Global Expansion

Deckers’ flagship brands, UGG and HOKA, continue to gain strong market traction, with plans to transform HOKA into a multi-billion-dollar brand and elevate UGG as a global lifestyle icon. In the second quarter of fiscal 2025, both brands achieved impressive sales growth, with HOKA growing 34.7% and UGG rising 13%. This success has been bolstered by an expanded product range and optimized distribution strategies, fueling the company’s growth trajectory.

A key factor behind Deckers' outperformance is its thriving DTC business, which saw a 19.9% rise in net sales to $397.7 million and 17% growth in comparable net sales in the quarter. Through enhanced digital capabilities and a stronger omnichannel presence, Deckers ensures seamless customer experiences and greater brand accessibility.

International expansion has also played a crucial role in DECK's growth, with international sales increasing 33% year over year in the fiscal second quarter. The strong global performances of UGG and HOKA, supported by targeted investments in new stores and retail locations, highlight the company’s expanding international presence.

Deckers’ Robust Wholesale Segment

DECK has been benefiting from a strong wholesale channel, driving revenue generation. This channel, combined with growing brand recognition, has significantly expanded the company’s market reach. In the fiscal second quarter, wholesale revenues rose 20.2% year over year to $913.7 million, highlighting the channel’s strength and ability to drive incremental sales.

This growth was primarily driven by strong performances of the HOKA and UGG brands. HOKA saw a 33% increase in wholesale revenues, whereas UGG grew 14%. The wholesale channel also benefited from early shipments, as retail partners sought to secure inventory ahead of peak seasons, reflecting strong consumer demand.

DECK’s Positive FY25 Outlook

Expansion has been a key factor in Deckers’ growth strategy, with a total revenue projection of 12% to $4.8 billion for fiscal 2025, up from the previously stated $4.7 billion. HOKA is expected to achieve 24% year-over-year growth, while UGG is anticipated to record mid-single-digit growth.

The company forecasts the gross margin to improve to 55-55.5%, up from the earlier stated 54%. Management raised its earnings per share (EPS) outlook to $5.15-$5.25 from the previously mentioned $4.96-$5.11, whereas DECK reported $4.86 in the previous year.

Estimate Revisions Favor Deckers Stock

Analysts have responded positively to Deckers’ prospects, which has been reflected in upward revisions in the Zacks Consensus Estimate for EPS. In the past 30 days, analysts have increased their estimates for the current fiscal year by 2 cents. The consensus estimate for earnings is pegged at $5.47 per share. 

The consensus estimate for earnings for the next fiscal year has been raised 6 cents to $6.20 per share. The Zacks Consensus Estimate for the current and next fiscal year’s sales is pegged at $4.87 billion and $5.35 billion, indicating year-over-year growth of 13.6% and 9.8%, respectively.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

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Wrapping Up

Deckers is a strong investment choice, driven by its robust brand portfolio, innovative products, and global expansion strategies. Its thriving DTC business and solid wholesale performance demonstrate a well-rounded approach to growth. With a proven record of adapting to market trends and delivering consistent results, Deckers is well-positioned for sustained success, making it an attractive option for investors seeking long-term value. The company currently sports a Zacks Rank #1 (Strong Buy).

Other Key Picks

Some other top-ranked stocks are The Gap, Inc. GAP, Abercrombie & Fitch Co. ANF and Steven Madden, Ltd. SHOO.

Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It presently flaunts a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Gap’s fiscal 2025 earnings and sales indicates growth of 40% and 0.8%, respectively, from fiscal 2024 reported figures. GAP has a trailing four-quarter average earnings surprise of 101.2%.

Abercrombie is a specialty retailer of premium, high-quality casual apparel. It carries a Zacks Rank of 2 (Buy) at present.

The Zacks Consensus Estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 67.5% and 14.8%, respectively, from the fiscal 2024 reported levels. ANF has a trailing four-quarter average earnings surprise of 14.8%.

Steven Madden designs, sources, markets and sells fashion-forward name-brand and private-label footwear. It currently has a Zacks Rank of 2. 

The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 8.6% and 13.4%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.8%.

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