Shares of Deckers Brands(NYSE: DECK), which develops and sells innovative footwear, apparel, and accessories, jumped 13.6% in Thursday's after-hours trading session, following the release of a better-than-expected report for the second quarter of fiscal 2025 (ended Sept. 30).
Deckers has an impressive track record of strong growth that races by Wall Street's expectations, and its Q2 report kept that streak going. The quarter's revenue and earnings both crushed the analyst consensus estimates. Moreover, management increased its fiscal 2025 guidance on both the top and bottom lines. This marked the second consecutive quarter that it raised its annual earnings guidance.
Image source: Deckers Brands.
Deckers Brands' key numbers
| Metric | Fiscal Q2 2024 | Fiscal Q2 2025 | Change |
|---|---|---|---|
| Revenue | $1.09 billion | $1.31 billion | 20% |
| Operating income | $224.6 million | $305.1 million | 36% |
| Net income | $178.5 million | $242.3 million | 36% |
| Earnings per share (EPS) | $1.14* | $1.59 | 39% |
Data source: Deckers Brands. Fiscal Q2 2025 ended Sept. 30, 2024. *Adjusted for 6-for-1 stock split in September.
The quarter's gross margin was 55.9%, up from 53.4% in the year-ago period.
Deckers ended the quarter with cash and cash equivalents of $1.23 billion, up from $823.1 million in the year-ago period, and no long-term debt.
Revenue breakdown by brand, channel, and geography
| Brand | Fiscal Q2 2025 Sales | Change YOY |
|---|---|---|
| HOKA (athletic and performance brand) | $570.9 million | 35% |
| UGG (comfort/luxury brand) | $689.9 million | 13% |
| Teva (everyday lifestyle brand) | $22.0 million | 2% |
| Sanuk* | $2.8 million | (48%) |
| Other brands, primarily composed of Koolaburra | $25.8 million | (16%) |
| Total | $1.31 billion | 20% |
Data source: Deckers Brands. YOY = year over year. *Deckers sold Sanuk on Aug. 15, so it recorded sales for only half the quarter.
HOKA has been turbocharging Deckers' growth, as the brand's running shoes, in particular, have soared in popularity in recent years. UGG's higher-end sheepskin boots and slippers have been perennial favorites among consumers for some time.
| Distribution Channel | Fiscal Q2 2025 Sales | Change YOY |
|---|---|---|
| Direct-to-consumer (DTC) | $397.7 million | 20% |
| Wholesale | $913.7 million | 20% |
| Total | $1.31 billion | 20% |
Data source: Deckers Brands.
| Region | Fiscal Q2 2025 Sales | Change YOY |
|---|---|---|
| Domestic | $853.9 million | 14% |
| International | $457.4 million | 33% |
| Total | $1.31 billion | 20% |
Data source: Deckers Brands.
What management had to say
Here's CEO Stefano Caroti's statement in the earnings release:
HOKA and UGG produced outstanding second quarter results driven by strong consumer demand for our innovative and unique products. As I step into the CEO role, I'm committed to building on our proven foundation to support growth, guided by our consumer-first mindset, brand-led philosophy, innovation-forward products, and globally driven focus. Our dedicated teams' continued execution of Deckers long-term strategy has our company well-positioned to achieve an increased outlook for fiscal year 2025.
Annual guidance raised
Management's guidance for fiscal 2025, which ends on March 31, 2025:
- Revenue is now expected to increase 12% year over year to $4.8 billion. Prior guidance was for 10% growth.
- EPS is now expected to range from $5.15 to $5.25, which equates to growth of 6% to 8%. Prior EPS guidance was $4.96 to $5.11.
- (EPS guidance is adjusted for the company's 6-for-1 stock split in September.)
A stock worthy of being on your watch list
In short, Deckers turned in another robust quarter and signs point to its continued solid growth on the top and bottom lines.
Deckers stock is one of the best footwear stocks in the market and worth a place on growth investors' watch lists. It's been a notable outperformer relative to the broader market over the short and longer terms.
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Beth McKenna 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.
