Shares of Deckers Outdoor (DECK +0.26%), the maker of popular footwear brands like Hoka and Ugg, were surging today after the company leapfrogged past estimates in its fiscal second-quarter earnings report.
As of 11:56 a.m. ET, the stock was up 11.2% on the news.
Deckers shines again
Deckers stock has been a winner for years, riding the strength of its Hoka running shoe, and that momentum continued in the second quarter.
Overall revenue jumped 20% to $1.31 billion in the quarter ended Sept. 30, easily beating estimates at $1.2 billion. Hoka sales soared once again, accelerating from the previous quarter to grow 34.7% to $570.9 million. The performance from Ugg, which is still Deckers' biggest brand, was also strong, rising 13% to $689 million.
Deckers also posted strong margin expansion as gross margin improved from 53.4% to 55.9% as it benefited from a mix shift toward its highest-margin brand, Hoka, and higher-margin products within Ugg and Hoka. It also reduced closeouts in the wholesale channel. On the bottom line, Deckers' earnings per share (EPS) rose 39% to $1.59, well ahead of the consensus at $1.24.
New CEO Stefano Caroti said, "Hoka and Ugg produced outstanding second-quarter results driven by strong consumer demand for our innovative and unique products."
NYSE: DECK
Key Data Points
Can Deckers keep climbing?
Deckers did raise its guidance for the full year, but it seems to be taking a conservative approach ahead of the key holiday season.
The company is calling for 12% revenue growth to $4.8 billion, but that was short of the consensus at $4.82 billion. On the bottom line, it called for EPS of $5.15 to $5.25, which was below expectations at $5.35.
Given the fact that revenue grew 21% in the first half of the year, Deckers shouldn't have a problem beating that guidance. Trading at a reasonable valuation, the stock still looks like a good buy.
