Ugg is back in business.
Shares of Deckers Brands, parent company of the popular sheepskin boot brand, are surging in after-hours trading — up more than 7 percent, to $93.51 — after a significantly better-than-expected third-quarter performance.
The company said its overall sales during the period increased 6.6 percent to $810.5 million, blowing past Wall Street’s forecast for sales of $748.4 million. Ugg — which has suffered softness in recent years following its heyday in the early 2000s — saw sales climb 4.3 percent to $734.7 million.
Still, it’s not just Deckers’ hero brand that’s advancing. Hoka One One — which has recently added a bevy of athlete endorsers and also unveiled a new women-focused marketing campaign — saw its sales for the third quarter skyrocket 65.7 percent to $31.8 million. Revenues at Teva increased 33.4 percent to $19.5 million while sales at Sanuk were flat year-over-year at $13.9 million.
Overall, Deckers’ Q3 reported profits saw gains of more than 100 percent, to $86.3 million, or $2.69 per diluted share. On an adjusted basis, profit advanced 20 percent year-over-year, to $159.2 million, or $4.97 per diluted share, besting estimates for diluted earnings per share of $3.82.
“Our third quarter results, which meaningfully exceeded expectations, underscore the progress we have made developing a stronger foundation to support profitable growth,” said Deckers president and CEO Dave Powers. “Our refined product strategies, enhanced consumer messaging and wholesale account optimization efforts resulted in much stronger full price selling for our brand portfolio during the key holiday season.”
With brisk temperatures in December giving way to a cold snap in January, Powers noted that favorable weather also had a hand to play in Ugg’s Q3 rebound.
Deckers spent much of the past year in a battle with activist investor Marcato Capital Management, which heavily criticized the firm’s management and board of directors as well as its overall handling of the Ugg brand. Marcato had sought to have Deckers’ entire board replaced with its own nominees but was unsuccessful at an annual meeting in December.
On the heels of a successful Q3, Deckers raised its outlook for the fiscal year and now expects sales in the range of $1.873 billion to $1.878 billion. Adjusted diluted EPS are expected to be in the range of $5.37 to $5.42.
“Looking ahead, I am confident that the successful execution of our profit improvement plan, combined with the recently passed tax reform, has Deckers in a great position to deliver increased value to our shareholders in the years ahead,” Powers said.”