Index Investing News
Sunday, May 25, 2025
No Result
View All Result
  • Login
  • Home
  • World
  • Investing
  • Financial
  • Economy
  • Markets
  • Stocks
  • Crypto
  • Property
  • Sport
  • Entertainment
  • Opinion
  • Home
  • World
  • Investing
  • Financial
  • Economy
  • Markets
  • Stocks
  • Crypto
  • Property
  • Sport
  • Entertainment
  • Opinion
No Result
View All Result
Index Investing News
No Result
View All Result

Deckers Outdoor: HOKA Has Been A Growth Engine, But Stock Looks Pricey (NYSE:DECK)

by Index Investing News
July 15, 2023
in Stocks
Reading Time: 5 mins read
A A
0
Home Stocks
Share on FacebookShare on Twitter


Roman Tiraspolsky

HOKA has become a growth engine for Deckers Outdoor (NYSE:DECK), but the stock looks overvalued compared to its peers.

Company Profile

DECK designs and distributes footwear under a variety of brands. The company sells its products both through the wholesale channel, as well as direct to consumer through its e-commerce platform as well as through company owned retail stores.

The UGG brand is DECK’s largest and accounted for about 53% of its sales in FY23. The brand is known for its comfortable sheepskin boots. Some of the company’s products also use two types of propriety materials. UGGpure is made of repurposed wool woven into a durable backing, while UGGplush is repurposed wool and lyocell woven into a durable backing.

DECK’s second-largest brand and fastest growing is HOKA. The brand represented over 39% of its sales in FY23. HOKA is known for its well-cushioned and minimal weight running shoes. DECK acquired the brand back in 2013. The company also owns the Teva, Sanuk, and Koolaburra brands of footwear as well.

Opportunities and Risks

While long known for its UGG brand, HOKA has taken over as the growth driver for DECK. The brand grew its revenue a whopping 58% in FY23 (ended March) to $1.4 billion, and the brand has seen its sales increase by 50% or more for four straight years.

While the size of HOKA will make such robust growth more difficult to attain in the future due to the law of large numbers, DECK still has levers to pull to continue to grow the brand strongly. Chief among them is growing its DTC business and number of retail stores. At the end of March, DECK had 164 retail stores in 57 countries, but only 18 of those stores were HOKA brand stores. Thus, it has a pretty big runway to increase both its number of concept and outlet stores for the brand.

Improving brand awareness, category expansion, and increasing distribution and shelf space are other areas that can help the momentum of HOKA going. Last year, the company launched its first ever global marketing campaign to solid success, so there is more opportunity to push marketing and improve brand awareness. The company said its initial campaign increased the brand’s awareness by 40% in 3 important countries.

On the category expansion side, the company has done a good job of moving beyond its running roots to also offer trail and hiking shoes. The company has also recently expanded into the youth shoe market through its DTC channel and a few select wholesale partners. Last year, people who purchased multi-category HOKA shoes rose 79% in the U.S and 127% in EMEA, showing how category expansion is helping drive sales.

HOKA Shoes

Company Presentation

Getting into different types of shoes can also help the company gain shelf space and distribution in the wholesale channel, as can increased brand awareness. The company also noted that it will pay closer attention to segmentation with its increasing distribution, only offering some exclusive high-performance products at specialty running stores and its DTC channel.

Discussing HOKA on its FQ4 earnings call, CEO David Powers said:

“Importantly, HOKA continues to bring new consumers into the brand, while also retaining existing consumers, evidenced by a 78% increase in acquisition and an 81% increase in retention as compared to last year. Momentum with younger consumers in the U.S. helped drive these increases as HOKA more than doubled the number of purchasers aged 18 to 34 years old. As HOKA continues to expand, we are encouraged by the broader product adoption from consumers beyond the brand’s heritage running styles. We’ve seen this trend among DTC consumers and continue to gain category shelf space with wholesalers. Among DTC purchasers in the U.S. and EMEA, multi-category purchases increased 79% and 127% versus last year, respectively. Across all channels, HOKA more than doubled revenue on trail and hike products aided by the Speedgoat and Challenger updates as well as market share gains with the Kaha and Anacapa franchises, and fitness and recovery products benefiting from greater [ore] recovery, sandal adoption and the introduction of both the Solimar and Transport styles. With the success HOKA is experiencing across a variety of innovative products, we’re very excited to now offer a selection of our most popular items to the next generation of HOKA athletes with the brand’s recently launched first ever Youth collection through our DTC channel and with very select wholesale partners. We view the opportunity with kids as an avenue to further expose the brand to parents and younger athletes over the long term.”

The company guided for 20% growth in the HOKA brand this fiscal year, which while a big growth deceleration from year’s past, is still strong growth.

DECK’s largest brand, UGG, had a more difficult year in FY23, with sales falling nearly -3% to $1.93 billion, albeit up slight excluding currency impacts. Going forward, the company will mostly be focused on international expansion to drive sales, while removing inefficient SKUs and leaning into its core silhouettes and DTC to help with margins.

When it comes to risks, the macroeconomy remains front and center. DECK’s two main brands are higher end, so have a little less vulnerability, but they also aren’t at the top end of the luxury spectrum.

Fashion risks and fashion trends are another risk. This is particularly true with UGGs. While the brand has shown its lasting power and its comfort reduces its fashion risk, there have been periods where the brand has been less trendy. As for HOKA, its position as a high-end running shoe isolates it from fashion trends among its core running fans. However, as it has expanded its user base and gotten more into other categories, it adds an element of trend risk to the brand.

Valuation

DECK trades around 17.2x the FY24 (ending March) consensus adjusted EBITDA of $783.8 million and 15x the FY25 consensus of $900.5 million.

From an EV/EBITDAR perspective, it trades at 15.5x FY24 estimates.

It trades at a forward PE of 24.6x the FY22 consensus of $21.97. Based on FY25 analyst estimates of $25.70, it trades at 21x.

DECK is projected to growth its revenue nearly 10% in FY24 and about 11% in FY25.

Comparatively, fellow popular footwear brands Crocs (CROX) and Skechers (SKX) trades at a much lower multiple despite similar projected growth.

DECK Valuation Vs Peers

DECK Valuation Vs Peers (FinBox)

Conclusion

DECK has done a really good job of maintaining the popularity of its UGG brand, while helping turn HOKA into a growth machine. That said, it trades at a large premium valuation to its peers, and the outsized growth of HOKA will start to slow just given its sheer size now. I think overall the stock looks overvalued, and as such I will put a “Hold” rating on the name with a slight bearish bias.

In the footwear space, I much prefer CROX, which I upgraded to “Strong Buy” in early June. I think the very wide valuation gap between two stock looks unjustified in my view, and I could see them meet in the middle.



Source link

Tags: DeckersengineGrowthHOKANYSEDECKOutdoorpriceyStock
ShareTweetShareShare
Previous Post

Guardians’ Shane Bieber (forearm) will miss start

Next Post

Don’t Have 20% Down? Here’s How to Fund Your Next Investment

Related Posts

THW: Revenue Traders Probably To Face A Large Distribution Minimize

THW: Revenue Traders Probably To Face A Large Distribution Minimize

by Index Investing News
May 25, 2025
0

This text was written byObserveTrapping Worth is a crew of analysts with over 40 years of mixed expertise producing choices...

LRGF: Low-Charge Issue ETF With Convincing Efficiency Is A Purchase (NYSEARCA:LRGF)

LRGF: Low-Charge Issue ETF With Convincing Efficiency Is A Purchase (NYSEARCA:LRGF)

by Index Investing News
May 25, 2025
0

This text was written byObserveVasily Zyryanov is a person investor and author.He makes use of numerous methods to seek out...

TreeHouse Meals: Effectivity Beneficial properties Priced In, Truthful Valuation Helps Maintain (NYSE:THS)

TreeHouse Meals: Effectivity Beneficial properties Priced In, Truthful Valuation Helps Maintain (NYSE:THS)

by Index Investing News
May 24, 2025
0

This text was written byObserveI'm an enthusiastic fairness analysis and funding analyst with a powerful curiosity in making use of...

Seagate Know-how Holdings plc (STX) Seagate 2025 Investor and Analyst Convention – (Transcript)

Seagate Know-how Holdings plc (STX) Seagate 2025 Investor and Analyst Convention – (Transcript)

by Index Investing News
May 23, 2025
0

Seagate Know-how Holdings plc (NASDAQ:STX) Seagate 2025 Investor and Analyst Convention Name Could 22, 2025 9:00 AM ET Firm Members...

2 BDCs That Qualify For The Retirement Earnings League

2 BDCs That Qualify For The Retirement Earnings League

by Index Investing News
May 23, 2025
0

This text was written byObserveRoberts Berzins has over a decade of expertise within the monetary administration serving to top-tier corporates...

Next Post
Don’t Have 20% Down? Here’s How to Fund Your Next Investment

Don't Have 20% Down? Here's How to Fund Your Next Investment

How Susan Love changed medical care for patients with breast cancer

How Susan Love changed medical care for patients with breast cancer

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

RECOMMENDED

Grierson Belief Withdraws Asif Kapadia Patronage Over Israel X Posts

Grierson Belief Withdraws Asif Kapadia Patronage Over Israel X Posts

October 11, 2024
Ceasefire takes effect between Israel, militant group Islamic Jihad after Egyptian mediation

Ceasefire takes effect between Israel, militant group Islamic Jihad after Egyptian mediation

May 14, 2023
Iron Mountain: The Generative AI Hype Is Unstoppable (NYSE:IRM)

Iron Mountain: The Generative AI Hype Is Unstoppable (NYSE:IRM)

February 25, 2024
The #1 Crypto to Buy Before 2030

The #1 Crypto to Buy Before 2030

September 6, 2023
Inside unseen photos from John Wayne Gacy’s warped memento collection – & the unspeakable reason he kept items

Inside unseen photos from John Wayne Gacy’s warped memento collection – & the unspeakable reason he kept items

November 13, 2022
Crypto Whale Actions Speed up, XRP Pockets Transfers 40 Million Cash

Crypto Whale Actions Speed up, XRP Pockets Transfers 40 Million Cash

April 3, 2022
OpenAI countersues Elon Musk over alleged sabotage marketing campaign

OpenAI countersues Elon Musk over alleged sabotage marketing campaign

April 10, 2025
With rampant shoplifting, progressives are killing stores where people need them most

With rampant shoplifting, progressives are killing stores where people need them most

March 13, 2024
Index Investing News

Get the latest news and follow the coverage of Investing, World News, Stocks, Market Analysis, Business & Financial News, and more from the top trusted sources.

  • 1717575246.7
  • Browse the latest news about investing and more
  • Contact us
  • Cookie Privacy Policy
  • Disclaimer
  • DMCA
  • Privacy Policy
  • Terms and Conditions
  • xtw18387b488

Copyright © 2022 - Index Investing News.
Index Investing News is not responsible for the content of external sites.

No Result
View All Result
  • Home
  • World
  • Investing
  • Financial
  • Economy
  • Markets
  • Stocks
  • Crypto
  • Property
  • Sport
  • Entertainment
  • Opinion

Copyright © 2022 - Index Investing News.
Index Investing News is not responsible for the content of external sites.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In