Why Deckers Brands Is the 2020 FN Company of the Year
On Dec. 8, Deckers Brands will be honored as the Company of the Year at the first virtual FN Achievement Awards. Below is an article from the magazine’s Dec. 7 print issue about the honoree.
A distinctive brand portfolio, powerful e-commerce business, robust balance sheet and innovative product pipeline led Deckers Brands to a stellar 2020 — but it took several years to get to this point, according to executives.
“The pandemic has been a bit of a catalyst,” said president and CEO Dave Powers, “but if we hadn’t been doing the work we were doing over the past four years — rebuilding and repositioning our brands, elevating marketing and e-commerce, improving innovation — we wouldn’t be in the situation we are in now.”
Since he took the helm in 2016, Powers has navigated intense challenges at the Goleta, Calif.-based firm, from activist investor activity to the California wildfires. Now, he is battling the coronavirus pandemic, which led to widespread store closures, limited product availability and delayed shipping times across the group’s brands.
Still, Deckers has managed to outperform quarter after quarter. For the latest period ended Sept. 30, it logged earnings per share of $3.58, versus the prior year’s $2.71 — beating analysts’ predictions of $2.63. Revenues also rose 15% to $623.5 million, compared with forecasts of $553.6 million. All of the company’s banners, save for Sanuk, posted sales growth.
“These brands have a strong digital footprint and a great brand story,” said Susquehanna Financial Group analyst Sam Poser. “Certainly, there are macro issues that have helped them — they’re easy to slip on, they fit the stay-at-home theme — but their brands have more intention in these times.”
Its largest revenue driver, Ugg, saw a 2.5% gain in sales to $415.1 million. Within the past six months, the sheepskin bootmaker partnered with “it” handbag designer Telfar Clemens, entered the ready-to-wear space and launched adaptive versions of its popular Classic Short and Neumel silhouettes with Zappos.
Then, in mid-November, Ugg debuted a flagship store on New York City’s famed Fifth Avenue. The multilevel, 12,800-square- foot location is the first from the label that showcases both footwear and apparel offerings.
“I have an allergic reaction when people talk about us as just a comfort brand,” said Andrea O’Donnell, president of Deckers’ fashion lifestyle division, which includes Ugg and Koolaburra. “When you look at what’s selling and what’s resonating with consumers, it’s a combination of both cozy and fashion. With our Fluff franchise, for example, you can’t argue that’s anything but bold and provocative. It’s been embraced in the U.S. and increasingly more globally, and it’s driving a lot of our success in the moment.”
Deckers’ performance lifestyle brands have had wins: Although Sanuk dipped 11.4% to $9.5 million, the label recorded its second consecutive quarter of robust direct-to-consumer growth, fueled by a 40% surge in customer acquisition, and is set to introduce new product innovations in the coming months. Meanwhile, Teva saw a 20.5% sales spike to $27.7 million, helping it maintain its position as the top outdoor water sandal brand in the U.S. in terms of market share, per The NPD Group.
What’s more, rising star Hoka One One delivered a whopping 83.2% surge in revenues to $143.1 million, as novice runners, first-time 5Kers and elite athletes alike turned to the outdoors to stay active amid safety restrictions.
Even A-listers like Kanye West, Pippa Middleton and Reese Witherspoon have been spotted in Hoka, which also debuted highly anticipated collaborations with labels like Opening Ceremony and Outdoor Voices, as well as introduced updates to several of its key franchises like the Clifton and Rincon.
“This brand is just getting started,” said Wendy Yang, president of Deckers Brands’ performance lifestyle group. “We see a billion dollars in Hoka’s future over the course of the next three years.”
Behind those successes is a well-oiled omnichannel engine: In Q2, Deckers’ wholesale business advanced 1.8% to $451.6 million. It also logged a 74.2% spike in DTC revenues to $171.9 million. The numbers serve as proof that the strategy the company implemented years ago — which included expanding its global footprint, accelerating its e-commerce capabilities and upgrading in-store and online experiences — is working.
“Today, we’re less dependent on one channel,” said president of omnichannel Stefano Caroti. “We continue to invest in our omnichannel performance, and this year, within the first nine months, we’ve been able to acquire more than 1 million new customers to the Ugg brand and half a million to the other brands in the portfolio — more customers than over the 12 months of last year.”
Amid all the revenue growth, though, senior leadership said that what’s really top of mind for them is the wellbeing of its employees. Last month, Deckers raised the minimum wage for all 700-plus employees in its retail stores across the U.S. to $15 an hour — a 20% premium from the industry average and more than double the federal minimum wage of $7.25.
For 34 years, the annual FN Achievement Awards — often called the “Shoe Oscars” — have celebrated the style stars, best brand stories, ardent philanthropists, emerging talents and industry veterans. The first virtual FNAAs will air online on Dec. 8 at 6 p.m. ET and are presented in partnership with The Style Room Powered by Zappos, and sponsors FDRA, Deckers Brands, Soles4Souls and Foot Locker.
RSVP here for the biggest night in shoes!
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