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| Additionally, we saw a double-digit increase in average selling price as a result of a greater mix of HOKA, higher full-price selling for UGG combined with a focus on fewer proven SKUs and more favorable foreign currency exchange rates |
| This upside comes from the continued strength of global brand heat driven by robust early demand |
| Our direct-to-consumer business was the fastest growing component of revenue growth in the second quarter, increasing nearly 40% versus last year, with HOKA growing 46% and UGG increasing 38% as both brands experienced a greater than 30% global increase in consumer acquisition |
| Our global wholesale business also put up strong revenue growth in the second quarter, increasing 19% versus last year, again driven by our two largest brands, UGG and HOKA |
| Our wholesale accounts also continue to see incredible heat and momentum for our key styles across both brands |
| With this strong consumer demand, selling for wholesale in the quarter included some accelerated fall seasonal shipments, benefiting our first-half results, and increasing our confidence to achieve our outlook for the fiscal year |
| As we continue to focus on our strategic marketplace management, we are pleased to have captured this strong momentum of demand early in the year, particularly with these products capturing high levels of full-price selling across all channels |
| We closed out a record first-half for Deckers, with total portfolio revenue across all channels growing 19% versus last year driven by HOKA revenue increasing 27% from global strength across its ecosystem of access points, UGG revenue increasing 18% primarily from gains across international regions and global DTC, total portfolio global DTC acquisition and retention increasing 29% and 27% respectively, and international revenue across all brands increasing 23% versus last year |
| We're big believers that our culture is one of our secret sauce component, so to speak, and that we have incredibly motivated and collaborative teams that are fired up to win |
| The brand heat is improving |
| And it's really exciting to see |
| This impressive result reflects the HOKA brand's successful marketplace management execution, which is driving more business to DTC in conjunction with market share gains from high full-price sale through at our existing points of wholesale distribution |
| We have a powerful innovation pipeline that we want to continue to bolster that supports all of our brands |
| This was aided by global increases in brand awareness according to Deckers proprietary brand tracker study consumer acquisition, which is up 47% versus last year, and consumer retention, which is up 52% versus the prior year, HOKA experienced significant growth in awareness across all major markets, with the U.S |
| growing to approximately 30%, and international regions, on average, rising to mid teens with much more room to grow |
| Specific to our gains in DTC in the first-half, consumer acquisition in EMEA DTC nearly doubled to help achieve a 75% year-over-year increase in channel revenue for the region |
| We have incredibly powerful campaigns and activations across the franchises in the brand |
| And though DTC remains a relatively small percentage of its total revenue, we see this expansion as a positive indictor that HOKA is increasingly resonating with the European consumer |
| As we have demonstrated in the U.S., thoughtfully building brand awareness through marketing activations and strategic marketplace presence served as a catalyst to DTC acceleration as the brand begins to take hold with the local consumer |
| To that end, HOKA recently opened its first European flagship store in Covent Garden, in London, giving the brand a powerful presence in one of the most influential footwear markets around the world |
| In the U.S., HOKA continues to deliver exceptional growth |
| DTC revenue increased nearly 50% versus last year for the first-half, with strong growth among 18 to 34-year-old retained consumers, which increased 70% |
| And the new product is resonating extremely well across the board, but particularly with younger consumers there |
| Brand loyalty among this group is especially exciting given the increased potential lifetime value of repeat purchases |
| The HOKA marketing teams have done an exceptional job building global brand awareness through compelling Fly Human Fly campaign content, connecting with consumers at HOKA-sponsored events, and highlighting the incredible performances of HOKA athletes |
| And then on UGG International, similar to what Steve was saying in HOKA, UGG is an international, particularly in Europe, is at the point where UGG was a couple of years ago, really healthy, strong growth |
| That's super exciting |
| But I think, across the board, we feel really confident that we have a breadth of product across many silhouettes that are performing well |
| High level of full-price sales, strong turns, scaling market share, run specialty stores where we have a number one position there that we're fighting every day to maintain and we want to build out in that position |
| Our portfolio experienced DTC strength relative to last year across consumers with acquired and retained increasing 29% and 27% respectively, brands with HOKA and UGG revenue increasing 54% and 26% respectively, regions with international and domestic revenue increasing 48% and 34% respectively, and channels as consumer demand was robust in stores and online |
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| And we have reduced our expectation for Teva due to softening macro backdrop |
| Second, seeding the fall global UGG campaign earlier in the quarter, reminding consumers of the scarcity that took place in the prior year, which created brand heat and demand for those same popular styles that sold out quickly last year, driving earlier consumer purchasing this year |
| And Q3, as people are talking about the fact that it may be really tough, we haven't quite seen that just yet |
| We still expect full-year HOKA revenue growth of above 20%, with third quarter percentage growth anticipated to be slower due to this year's timing of product launches being weighted towards the fourth quarter |
| And Steve, if I could just ask one follow-up on the financial guidance for the year, if I look at the implied second-half performance, it looks like you're implying operating margins down maybe close to a couple hundred basis points year-over-year, and EPS flat to down slightly |
| We know there's a lot of competition out there that's over inventory |
| Additionally, our guidance assumes no meaningful deterioration of current risks and uncertainties, which include but are not limited to changes in consumer confidence and recessionary pressures, inflationary pressures, geopolitical tensions, labor shortages, and fluctuation in foreign currency exchange rates |
| It appears to slow down very much |
| We're mindful of the fact that this could be a challenging marketplace, so we're not naïve to that fact, but we are prepared for it |
| Sam Poser Okay, and then with the way this is flowing in the back half, was there a lot of pull forward in the UGG Wholesale business? I mean, should we expect UGG Wholesale, especially in the third quarter, to be down given how much came in in Q2? Steve Fasching Yes, so again depending on your model, because we haven't guided the quarter |
| So, comping that door growth last year could have a little bit of an impact on the wholesale performance, too |
| And third, an increased level of demand for the brand during the back-to-school period, which signaled some wholesalers to desire shipments on an accelerated timeframe relative to our original plan |
| We don't want to lose that dominant position in the category that we created |
| But as we said, we're heading into an unknown macro environment that's hard to say what it's going to look like |
| As a percentage of revenue, SG&A was 32.8% versus 33.6% in the prior year, 80 basis points lower than last year |
| Some of that was a little hard |
| Last year we shared that we did not fully capture demand on several key styles |
| There is a lot of activity, obviously, from competitive brands going in that direction, some good, some bad |
| Inventory was $726 million, down 21% versus the same point in time last year, and during the period we had no outstanding borrowings |
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