Deckers Outdoor Corporation’s shares experienced a remarkable surge on Friday, climbing by as much as 17%, following a series of positive developments and favorable adjustments from several brokerage firms. This significant rise in Deckers’ stock price saw it reach a one-month high of $980, positioning it to achieve its best trading day in nearly nine months. The surge in Deckers’ shares is primarily attributed to the company’s strategic decision to focus on full-price sales of its highly popular Hoka running shoes and UGG boots, which led the company to revise its annual profit forecast upward.
The impressive performance of Deckers’ stock was not an isolated occurrence but part of a broader trend within the athletic and lifestyle footwear market. Shares of On Holding, a brand backed by tennis legend Roger Federer, also saw a notable increase of 6.2%, while Nike’s shares rose by 1.7%. These gains reflect a positive sentiment and growing consumer interest in athletic and lifestyle footwear brands.
Deckers’ success can be largely attributed to the strong consumer demand for its brands. The company’s Hoka running shoes, particularly models like the Clifton 9 and Cloudmonster 2, have garnered praise for their exceptional cushioning and durability. These features have resonated with customers, leading to substantial growth in sales. Truist Securities analyst Joseph Civello commented on the resilience of consumer spending, highlighting that despite a choppy macroeconomic environment, people continue to invest in products they value, such as Hoka’s innovative footwear. Civello also noted that Hoka’s designs, which include fashion-forward options, have further driven consumer interest and opened up new growth opportunities for the brand.
In response to Deckers’ strong performance, several brokerages have adjusted their price targets for the company. Truist Securities, for instance, raised Deckers’ price target to $1,225 from $1,200. This revised target is the highest among Wall Street analysts and reflects a high level of confidence in Deckers’ strategic initiatives and market position.
The retail landscape is also shifting in response to evolving consumer preferences. Retailers such as Dick’s Sporting Goods and Nordstrom have been expanding their shelf space for Hoka and UGG products while scaling back their inventory of Nike items. This shift indicates a growing consumer preference for Deckers’ brands over Nike, which is currently perceived as lacking innovation and customer appeal compared to its competitors.
Deckers’ financial results for the first quarter further underscore its success. The company reported a nearly 30% increase in sales for its Hoka brand, driven by strong demand through wholesale channels. Additionally, UGG sales saw a 14% boost, reflecting the brand’s growing appeal. A key factor in this success is the reduction in discounting practices for UGG products, which has helped the brand gain market share, particularly in the sandal segment.
As a result of these positive developments, Deckers has revised its annual profit forecast upward. The company now expects its annual profit to fall within the range of $29.75 to $30.65 per share, an increase from its previous forecast of $29.50 to $30. This upward revision is a testament to Deckers’ robust performance and optimistic outlook for the remainder of the year, driven by strong sales and strategic focus on high-margin, full-price products.