Deckers Outdoor Stock Soars Past $1,000 on Ugg & Hoka Boom

Fashnopsis:

• Deckers Outdoor stock surges on strong earnings, Ugg and Hoka sales boom.
• Deckers capitalizes on high EPS growth and caters to changing consumer tastes.
• Upstart brands like Deckers win as retailers favor innovative products over established giants.
• Hoka and Ugg’s strong sales drive analyst upgrades and bullish sentiment.
• Deckers’ future looks bright with continued Ugg success and growing Hoka awareness.

Deckers Outdoor stock surged as high as 14% on Friday, breaking the $1,000 mark for the first time. This jump comes after the footwear company reported strong fourth-quarter results, fueled by the continued popularity of Ugg boots and Hoka sneakers among American consumers.

The company’s stock has been on a steady rise, up 35% year-to-date and a whopping 67% in 2023. This stands in stark contrast to footwear giants like Nike, which has seen its stock price drop 15.2% so far this year.

Analysts credit Deckers’ success to its ability to maintain high earnings per share (EPS) growth and cater to evolving consumer preferences. “The positive sentiment surrounding the stock is likely to continue as the company demonstrates its ability to sustain high EPS growth,” commented UBS analyst Jay Sole.

Upstarts Capitalize on Changing Retail Landscape

Unlike established brands facing challenges, upstarts like Deckers and On Holding are thriving. Wholesale retailers are increasingly allocating shelf space to these companies’ innovative products. This shift comes at a time when giants like Nike and Adidas are struggling to adapt.

Deckers CEO David Powers, in a post-earnings call, highlighted the strength of Hoka and Ugg, stating they’ve become two of the most in-demand brands in the footwear industry.

Hoka and Ugg Drive Revenue Growth

Hoka’s net sales saw a significant 34% jump in the fourth quarter, contributing to over half (nearly 56%) of Deckers’ total revenue. Ugg also performed well, with a 14.9% sales increase, accounting for nearly 38% of the company’s overall sales.

These impressive sales figures prompted at least 14 analysts to raise their price targets on Deckers stock. Analysts like Barclays’ Adrienne Yih believe the success of Ugg’s pull-model strategy and the growing awareness of Hoka will continue to drive growth for the company. She also sees significant potential for further brand awareness development.

Analyst sentiment remains positive, with the average rating from 22 analysts being “buy” and a median price target of $1,039, according to LSEG data. Wedbush analyst Tom Nikic even referred to Deckers as “one of the fundamentally strongest names” in their coverage.

While some analysts believe Deckers’ annual forecasts might be slightly conservative, the overall outlook for the company remains bullish.

Image Source: Deckers Outdoor