Deckers Outdoor shares surge as full-price sales of Hoka, UGG footwear help raise FY profit forecast
July 26 (Reuters) -Deckers Outdoor DECK.N shares jumped 11% to $932 before the bell on Friday after the sportswear company raised its annual profit forecast, betting on full-price sales of its hot-selling Hoka running shoes and UGG boots.
Products from brands such as Hoka and Tennis star Roger Federer-backed On Holding ONON.N, like the Clifton 9 and Cloudmonster 2 that are known for their extra cushion and durability, have largely resonated with customers, mainly in the running category.
Retailers such Dicks Sporting Goods DKS.N and Nordstrom JWN.N have responded by offering more shelf space for those brands while trimming down on Nike's NKE.N products, which are lagging in terms of innovation and appeal to customers.
Deckers, which has poured money into product innovation, has launched various new styles under Hoka with franchises such as Mach and Transport, resulting in a nearly 30% rise in sales in the first quarter.
"Hoka remains focused on driving demand through model updates, special collaborations and limited-edition launches, which bring incremental demand and often sell out," Telsey Advisory Group analyst Dana Telsey said.
The UGG banner also had a 14% jump in sales. Wedbush analyst Tom Nikic wrote in a note that there has been less discounting with the brand and it appears to be taking a share in the sandal market.
Deckers now expects annual profit in the range of $29.75 to $30.65, compared with its previous forecast of $29.50 to $30.
"Continued full-priced selling should support both the top line and earnings, even while the company invests in top-of-funnel marketing to grow awareness and expand direct-to-consumer," Barclays analyst Adrienne Yih said.
In the first quarter, Deckers' net sales were $825.3 million, topping LSEG estimates of $807.9 million. Its earnings per share of $4.52 also beat expectations of $3.48.
Deckers and On have outperformed bigger sportswear rivals YTD https://reut.rs/3Whv5Bz
Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Krishna Chandra Eluri
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