Deckers Brands (NYSE:DECK) shares slipped 3.5% in premarket trading on Friday despite the footwear company reporting record first-quarter revenue, beating earnings expectations and raising its full-year profit outlook.
Investors appeared to focus instead on the company’s unchanged revenue guidance, which came in slightly below Wall Street forecasts and tempered enthusiasm following the otherwise strong quarterly performance.
Record first-quarter revenue tops $1 billion
Deckers generated more than $1 billion in first-quarter revenue for the first time in its history.
Adjusted earnings came in at $0.94 per share, exceeding analysts’ consensus estimate of $0.87 per share.
Quarterly revenue increased 5.7% year-on-year to $1.02 billion, broadly matching market expectations as growth in international markets and direct-to-consumer (DTC) sales continued to support performance.
HOKA and UGG continue to drive growth
The company’s two flagship brands remained the primary growth engines during the quarter.
HOKA delivered a 7.7% increase in net sales to $703.5 million, while UGG recorded a 4.9% rise to $278.0 million.
Direct-to-consumer revenue climbed 13.0% to $352.8 million, reflecting continued consumer demand across the company’s digital and retail channels.
International markets also outperformed domestic operations, with overseas sales rising 8.4% to $502.1 million compared with domestic growth of 3.2%.
Gross margin improved by 60 basis points to 56.4%, compared with 55.8% a year earlier.
“Deckers delivered a solid start to the fiscal year, surpassing $1 billion of first quarter revenue for the first time,” said Stefano Caroti, President and CEO. “This performance reflects the continued strength of HOKA and UGG, with growing global demand as both brands extend their reach through compelling product innovation.”
Analysts take mixed view following results
Following the earnings release, Bank of America maintained its Neutral rating while reducing its price target to $105 from $115.
The bank said the move reflected “as the below historical P/E is balanced by our view for a more tempered earnings revision cycle and slower Hoka DTC growth.”
Stifel adopted a more constructive stance, saying it “remain encouraged by the GARP thesis and view brand portfolio favorably, with HOKA marketplace dynamics healthier than last year, and UGG driving steady MSD% growth through a diversified product offering.”
The brokerage nevertheless lowered its price target to $133 from $144 “to reflect our lowered revenue estimates and assigned multiple.”
Guidance update leaves investors wanting more
Deckers increased its full-year earnings guidance, forecasting adjusted earnings per share of between $7.35 and $7.50, with the midpoint broadly in line with market expectations.
However, the company left its full-year revenue outlook unchanged at between $5.86 billion and $5.91 billion.
The midpoint of that range remains slightly below analysts’ consensus forecast of $5.91 billion, a factor that appeared to weigh on investor sentiment despite the stronger quarterly earnings performance.
Deckers Outdoor Corporation stock price
