Why Deckers Brands Stock Popped Today

What happened

Shares of Deckers Brands (NYSE: DECK) jumped 12.6% on Friday after the footwear and apparel company delivered sales and profits that exceeded investors’ expectations.

So what

Deckers’ revenue surged 31.2% year over year to $736 million in its fiscal 2022 fourth quarter, which ended on March 31. The gains were broad-based, with wholesale net sales up 37.6%, to $448.8 million, and direct-to-consumer net sales up 22.2%, to $287.2 million.

Deckers’ most important brands enjoyed solid growth. UGG brand sales rose 24.7% to $374.6 million, while HOKA brand sales soared 59.7% to $283.5 million.

“We have delivered two consecutive years of exceptional revenue growth, with accelerating increases over the prior year of 23.8% and 19.4%, for fiscal years 2022 and 2021, respectively,” Chief Financial Officer Steve Fasching said in a press release.

Deckers’ causal clothing is proving popular among consumers. Image source: Deckers Brands.

Deckers did an admirable job of managing supply chain disruptions that have weighed on many retailers’ profitability. While rising costs drove its gross margin down to 48.7% from 53.2% in the prior-year quarter, its operating margin improved to 11% from 9.7%. Deckers’ operating income, in turn, leaped 49% to $81.3 million.

All told, Deckers’ earnings per share increased 113% to $2.51. That crushed Wall Street’s estimates, which had called for per-share profits of $1.25.

Now what

Looking ahead, management expects Deckers’ revenue to grow more than 10% to roughly $3.5 billion in fiscal 2023. The company also anticipates earnings per share of $17.40 to $18.25.

“With our in-demand brands, flexible operating model, and strong balance sheet, Deckers is well-positioned to drive continued top-line growth and high levels of profitability,” CEO Dave Powers said.

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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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