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Deckers Reopens Footwear Distribution Center but Faces Potential Hit in E-Commerce Sales

As it resumes operations at its footwear distribution center, Deckers Brands is facing a potential hit in its e-commerce sales due to state-mandated restrictions to help slow the spread of the coronavirus.

In a statement today, the Ugg and Hoka One One parent announced that it was reopening its facility in Moreno Valley, Calif. However, it could resume only “modified operations” at a “limited capacity” following California Gov. Gavin Newsom’s statewide “shelter-in-place” order, which was put in place five days ago and led Deckers to temporarily shut down the center a day later.

According to Deckers, safety protocols such as “social distancing” among its workers as well as additional precautions have been implemented to keep its workers safe.

“The company will continue to assess the appropriate scope of operations and allocation of resources within this facility, as well as others, in response to the dynamic business environment,” it added in today’s press release.

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On March 19, Newsom ordered California’s nearly 40 million residents to stay at home, restricting all activity to “essential needs.” Deckers faced limited product availability and delayed shipping times due to the closure of the Moreno Valley center. Although the online platforms for both Ugg and Hoka One One remained open for business, domestic orders for Teva, Sanuk and Koolaburra were temporarily suspended. All three brands’ businesses currently remain on hold.

The California-based distribution center is one of two warehouses that services Deckers’ operations in the country. A third-party logistics provider is still operating as usual in Pennsylvania.

Last week, Deckers joined dozens of retailers in announcing store closures amid the continued spread of the coronavirus, which has sickened more than 48,000 people in the United States. The footwear maker confirmed last Tuesday that it was temporarily shuttering its Ugg stores in North America and the Sanuk store in Orlando, Fla., through the end of the month. Retail employees at those locations will continue to receive pay and benefits during the two-week period that ends March 31.

During the third quarter reported Jan. 30, Deckers posted Q3 earnings of $7.41 per share, surpassing consensus bets of $6.55 a share. Sales also jumped 7.4% to $938.74 million, compared with Wall Street estimates of $900.43 million. Hoka One One outshone its sister labels, reporting sales that shot up 63.6% to $93.1 million, while Ugg still raked in the lion’s share of Deckers’ revenues, increasing 2.6% to $781.1 million.

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