Ugg and Hoka owner Deckers Outdoor's stock stays hot as upside earnings surprise marks latest victory for retiring chief executive

By Steve Gelsi

Ugg boots and Hoka running shoes drive company's record third-quarter results

Deckers Outdoor Corp.'s stock rallied to double-digit percentage gains on Friday after the retailer said success in its Ugg boots and Hoka running shoes drove it to the strongest revenue quarter in its history.

The surging stock price - which has risen a whopping 113% in the past year - came as longtime Chief Executive Dave Powers announced his retirement during a time of strength for the company.

In recent trading, Deckers Outdoor's stock (DECK) was up by 13.6%.

Deckers Outdoor also boosted its 2024 outlook after its third-quarter adjusted earnings of $15.11 a share soundly beat the FactSet consensus estimate of $11.49 a share.

Third-quarter revenue rose 16% to $1.56 billion, well above the analyst estimate of $1.45 billion. The company's Ugg brand booked a 15% sales jump to $1.07 billion and Hoka jumped 21.9% to $429.3 million, while Teva fell 16.2% to $25.6 million.

Truist Securities analyst Joseph Civello reiterated a buy rating on the company and lifted his price target to $983 a share from $859 a share.

"[Deckers] reported yet another meaningful beat as (1) Ugg demand remains white hot ... and (2) Hoka's robust trajectory continued (even as it lapped extremely tough comparisons)," Civello said. "We believe that both brands are poised to maintain momentum due to the strength of their product pipelines & customer relationships."

Deckers Outdoor also named insider Stefano Caroti, its current chief commercial officer, as chief executive officer, effective Aug. 1. Caroti counts 32 years in the industry and has worked at Deckers Outdoor for more than eight years, including as interim president of Hoka.

"We have experienced explosive growth driven by incredible - and still increasing - brand heat across Ugg and Hoka," said Powers, who joined the company 12 years ago.

Chair Mike Devine said Powers "has fostered each of our brands so that they have become consumer favorites, capitalizing on market trends and dramatically increasing shareholder value throughout his tenure."

Powers will remain on the company's board until its 2025 annual meeting.

Digging into its third-quarter results and outlook, Deckers Outdoor said it now expects 2024 earnings of $26.25 to $26.50 a share, ahead of the analyst estimate of $26.21 a share.

Deckers Outdoor also projected 2024 revenue of $4.15 billion, compared with the analyst estimate of $4.17 billion.

Third-quarter net income rose to $389.92 million, or $15.11 a share, from $290.75 million, or $10.48 a share, in the year-ago quarter.

The company reported results after the closing bell on Thursday.

Prior to Friday's stock moves, Deckers Outdoor's stock had risen by 86.5% in the past year, compared with an 18.6% jump by the S&P 500 SPX.

Deckers Outdoor was founded in 1973 by Douglas B. Otto.

-Steve Gelsi

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

02-02-24 1057ET

Copyright (c) 2024 Dow Jones & Company, Inc.