Hoka One One once again presented standout results in Deckers’ Thursday Q1 earnings report.
The parent company of the Ugg, Hoka One One, Teva, and Sanuk brands, reported a revenue increase of 78.2% to $504.7 million for Q1 of fiscal year 2022. With Hoka’s overall revenue increasing 95% to $213.1 million, the fast-growing running brand accounted for nearly 40% of the company’s total revenue. It also surpassed Ugg’s revenue for the first quarter ever.
Throughout the pandemic, Hoka has been the rising star in Deckers’ portfolio of brands, with more people, notably women, taking on running and walking for the first time. As such, Deckers sees potential to turn Hoka into a billion dollar brand and analysts believe that goal is attainable.
“Demand for Hoka continues to accelerate,” Williams Trading analyst Sam Poser wrote in a note. “Over time, Hoka will become a multi-billion dollar brand, led by digital, according to management.”
Deckers CEO, President and Director Dave Powers said in a call with investors that Hoka’s category mix of trail and road running, outdoor hiking, and lifestyle shoes will help the brand continue to take market share from competitors. Hoka is also focusing on expanding apparel offerings. In June, the company tapped Evie Moe as the brand’s first-ever senior director of apparel.
“What we find is when people hear about the brand and they try it, they’re hooked and they’re in,” Powers said, adding that brand awareness among runners is still only mid-20%, and even lower among non-runners. “So our job now is just continue to increase awareness and adoption of the brand in the existing distribution plan globally.”
While Hoka’s DTC sales led its growth in Q1, the brand is still focused on strategic wholesale accounts such as Nordstrom and Dick’s Sporting Goods.
Hoka is also seeing rewards for its focus on comfort, performance, and recovery.
“In our business, form follows function,” said Hoka’s global VP of product Gretchen Weimer in a roundtable discussion on Wednesday presented by WWD Beauty Inc. and Footwear News.
Ugg is also charging ahead. Sales at the brand increased 70.8% to $213.0 in Q1, compared to $124.7 million in 2020. Like Hoka, analysts see opportunities for Ugg’s momentum.
“Both Ugg and Hoka have expanded into multiple categories with dominant franchises that have broad-based appeal and are resonating globally with existing distribution fueling future revenue trajectory,” Cowen analysts wrote in a note. “Customer acquisition during the pandemic gained younger and more diverse consumers that have been retained and are fueling repeat purchase along with broader category trial.”
The current challenge for Deckers, especially Hoka, is managing demand amid supply and shipping constraints.
“In terms of constraints, right now, it’s not demand, it’s product and getting product in quick enough to fulfill demand,” Deckers CFO Steven J. Fasching said in a call with investors. “There is demand out there for Hoka, and we’re just trying to meet that demand in a constrained environment.”
He added that Deckers is focusing on expediting air freight of Hoka merchandise to meet demand for consumers globally.