Ugg just delivered an $877-million-quarter — and Deckers Brands’ largest label is just getting started.
It’s well known that Ugg, which saw sales jump 12.2% in the third quarter, has been a big winner during the pandemic. And its holiday-season quarter is always the most significant. But now there’s a bigger, more important story unfolding.
Deckers has spent the last several years transforming Ugg into a four-season brand that caters to a younger, more diverse consumer — and now those efforts are paying off big for the parent company.
“We are most encouraged by the continued acquisition of new, younger consumers to the Ugg brand that are buying at higher frequencies and shopping the broader non-classics assortment, both online and through newer partners such as Foot Locker,” wrote Camilo Lyon, managing director at financial services firm BTIG, in a note. “This bodes well for long term growth as it builds out its footwear assortment outside its classics business while also extending into adjacent categories like apparel, which was received well this holiday season.”
The strength of Ugg and rapid growth of Deckers’ other star brand, Hoka One One, helped the parent company top $1 billion in a single quarter for the first time. Here are some eye-popping stats shared by Deckers chief Dave Powers in the company’s third-quarter conference call that illuminate Ugg’s powerful story.
Over the past three years, the Ugg brand’s domestic business has added nearly $200 million to the third quarter alone.
Ugg has acquired more than 2 million new customers thus far in its fiscal year.
The Ugg customer is becoming younger and more diverse: During Q3, Ugg experienced a 44% increase in U.S. customers ages 18 to 34, which was the largest increase of any group and represented the largest percentage of total customers. “As Ugg continues to expand its audience with younger consumers, it has been critical to enhance the brand’s e-commerce engine and digital marketing expertise,” Powers said.
The evolution of the hot Fluff franchise, which features year-round product, helped the brand’s search interest increase 18% for the calendar year 2020.
Powers noted that the Fluff has also been “a compelling acquisition vehicle” for driving repurchase decisions in other categories. “Specifically, our data highlighted many consumers who purchased Fluff earlier this year returning to purchase the Classic Clear Mini this fall,” the CEO said. Over the last 9 months, Ugg has seen an 89% increase in repeat purchases as compared to the same period last year.”
The brand’s own e-commerce is fueling some of the heat, but wholesale is still booming at a time when many footwear brands have seen their wholesale business shrink significantly. Pairs sold at Ugg’s domestic wholesale partners during the fall season increased 42% versus last year. “Given the strength of our sell-through at our wholesale partners this fall, Ugg experienced very little promotional activity, and season-ending inventories in the market are at a historically low level,” Powers noted.
While the brand’s European business is in transition — over the last year, Ugg has exited approximately 20% of wholesale accounts in Europe and reduced its core product in the market— margins continue to approve even with pandemic challenges. Fiscal year-to-date online consumer acquisition increased 97% over last year.