Decker Outdoors Corporation - history of the HOKA and UGG parent

Deckers Outdoors is a name that was introduced to me fairly recently. It’s a company that started as a brand and evolved into a holding company or aggregator of sorts. It was founded in 1973 by University of California, Santa Barbara alumni Doug Otto and Karl F. Lopker. In 1975, the company was incorporated in California under the name Deckers Corporation, selling a simple flip flop. However the company nowadays is better known for its other brands - namely UGG, Teva, Sanuk, Hoka One One and Koolaburra - some of which started in the outdoors, and others have morphed.

So, first, let’s start at the start again, and explore how they arrived at this point, from a very modest small business in California. Below is a snapshot of its share price since its public offering in October 1993.

Two years after that IPO, Deckers acquired UGG and soon after acquired Teva, Sanuk, HOKA ONE, and Koolaburra (by UGG). There is an interesting line on their website:

“Deckers Brands has grown each brand into a lifestyle leader through innovative design and passionate marketing.”

I say interesting as it’s one of the few brands that acknowledges the importance of marketing. Many play around it but focus on the innovation, as it tells a better story, but here we see it front and center.

Nowadays the HQ is in Goleta, outside of Santa Barbara, in keeping with their beginnings, although the decor has changed fairly immensely! And they do have one (and only one) Deckers Brands showcase store in Goleta.

As expected, their reach is now vastly beyond North America:

“Located in the United Kingdom and Europe is our London regional office, two distribution centers, a call center and numerous retail stores.”

The figures:

Their 2024 annual report opens with:

“Revenue and earnings per share have grown double-digits for four consecutive years, resulting in compound annual growth rates of 19% and 32%, respectively, over the four-fiscal-year period of 2020 to 2024. The successes of HOKA and UGG have propelled our portfolio of brands to deliver record revenue of nearly $4.3 billion and diluted earnings per share of $29.16 in fiscal year 2024, the latter of which increased 51% compared to the prior fiscal year.”

It continues:

“Our disciplined brand and omni-channel marketplace management, combined with a focused dedication to our long-term strategies have transformed Deckers into a leading portfolio of consumer-favorite brands. In fiscal year 2024, HOKA remained our fastest growing brand, increasing 28% versus last year to deliver $1.8 billion in revenue, now representing 42% of our total portfolio revenue. UGG also drove incredible growth, increasing 16% to deliver $2.2 billion of revenue. Reflecting the initiatives we outlined at the start of fiscal year 2024, both brands delivered outsized growth in the DTC channel, which increased Deckers' overall proportion of DTC mix year-over-year from 40% to 43%.”

So it’s clear to see that HOKA and UGG are the standard bearers. And that it must be a dream last report for Dave Powers (retiring Chief Executive Officer and President, who also joined Solo Brands’ board in 2022). And fair play to him.

Strategically they seem to be right on point. Feel free to delve further into the reports here:

https://ir.deckers.com/financials/annual-reports-proxies/default.aspx

Hoka was the company's main growth driver. The brand saw 30% year-over-year net sales growth from $420.5 million to $545.2 million in Q1. Ugg also saw net sales growth of 14% to $223 million from $195.5 million a year ago. Direct-to-consumer net sales rose 24% to $311 million, up from $250 million. Their hiking and trail footwear are receiving decent reviews.

It’s be interesting to watch as it seems like only yesterday that the brand launched. Wedbush’s analysts said that HOKA’s DTC performance reaccelerated, sustained by high brand momentum, while Ugg delivered solid growth and benefited from less year-over-year discounting and closeout selling.

Interesting times, when you consider Deckers Brands bought HOKA in 2012 for ~$1.1M. Exactly a decade later, the company had grown HOKA's revenue from less than $3M to over $1.4B (FY23). That's close to a 500x increase. ANd now they’re kicking on again. Let’s see when it goes next…