Deckers Outdoor Shares Surge as Hoka and UGG Brands Boost Profit

Deckers Outdoor shares soared as much as 17% on Friday, reaching a one-month high of $980, following multiple brokerages raising their price targets.

The increase was driven by the company’s focus on full-price sales of its popular Hoka running shoes and UGG boots, leading to an optimistic annual profit forecast.

If gains hold, the stock is on track for its best day in nine months. Shares of competitors like On Holding, backed by tennis star Roger Federer, and Nike also saw 6.2% and 1.7% increases, respectively.

Product Appeal and Consumer Spending:

Brands like Hoka and On, known for models like the Clifton 9 and Cloudmonster 2 with extra cushioning and durability, have gained significant traction among customers, especially in the running category.

Truist Securities analyst Joseph Civello noted that even in a challenging macroeconomic environment, consumers are willing to spend on products they care about, highlighting the strong appeal of these brands.

He praised Hoka for its “incredibly designed shoes” and the brand’s growing fashion following, which is driven by the latest color releases.

Retail Expansion and Sales Growth:

Retailers such as Dicks Sporting Goods and Nordstrom have responded to the growing demand by offering more shelf space for Hoka and UGG products while scaling back on Nike’s offerings, which have lagged in innovation and customer appeal.

Deckers reported a nearly 30% rise in Hoka sales in the first quarter, fueled by strong demand in wholesale channels. The UGG brand also experienced a 14% increase in sales.

Revised Profit Forecast and Analyst Commentary:

Following the positive market response, Truist Securities raised Deckers’ price target to $1,225 from $1,200, the highest on Wall Street.

Wedbush analyst Tom Nikic observed less discounting with the UGG brand, noting it seems to be gaining market share in the sandal segment.

Deckers now expects annual profit to range between $29.75 and $30.65 per share, from its previous forecast of $29.50 to $30.