Investments in Apparel for HOKA, UGG on Horizon
Deckers’ senior executives, intent on making HOKA a $1 billion brand and expanding the UGG universe, have their collective sights on apparel. But there will be no instant revenue uptick from any product line expansions.
“We do believe longer-term that this (apparel) is a significant opportunity for us,” Deckers’ CEO and President Dave Powers told analysts last week. “But you’re looking two to three years out before it as a real meaningful impact. We want to do it right. We want to make sure that we do hire the right design talent…that we have the operational and distribution tactics tin place to be able to do it in a quality way.”
In its fiscal third quarter ended Dec. 31, 2020, HOKA paced segment topline growth at the company, rising more than 40 percent to nearly $101 million in sales. Meanwhile, the Direct-To-Consumer segment experienced a 26 percent sales increase to nearly $520 million and UGG revenues jumped 3 percent to nearly $409 million.
Within UGG, Deckers is encouraged by the brand’s younger and more diverse customer base, pointing out that the 18- to 34-year old set was the driving factor behind the brand’s Neumel style becoming a top global style during the period and suggesting distribution into retailers such as Journeys’ parent Genesco and the Foot Locker Group offer an opportunity to reach new customers with new UGG styles. During the third quarter, the brand experienced “very little promotional activity” and had “historically low” holiday season end inventories.