Editor’s note: Read about Teva’s Q1 performance and a new strategy for the brand in our separate Teva story here.

High-growth running brand Hoka continued its strong performance in the first quarter for parent company Deckers Brands – so much so that the company boosted its full-year revenue outlook based on Hoka’s results despite every other brand it its portfolio recording first quarter sales declines.

For the quarter ended June 30, Hoka’s sales grew 27% to $420 million. It was the first time Hoka’s revenue eclipsed $400 million in a single quarter.

Hoka’s direct-to-consumer business was the standout, increasing 63% and accounting for two-thirds of the revenue growth, according to Deckers executives.

For the full year, Hoka revenue is now expected to grow 20%, with most of the growth coming from DTC. That’s on top of 58% revenue growth the previous year.

Hoka DTC a Priority – Managing Wholesale Tightly

When it comes to wholesale, Deckers is managing Hoka’s inventory closely because it is focused on full-priced selling and does not want excess inventory in the channel.

It also wants to push extra demand to Hoka DTC, executives said.

“We continue to tightly manage the marketplace inventory and closely monitor Hoka’s key performance indicators in the channel to ensure the brand maintains its premium positioning across its ecosystem of access points,” CEO Dave Powers said on an earnings call with analysts Thursday afternoon. “As excess consumer demand materializes, we prefer that Hoka satisfies upside through the brand’s DTC business, which is what we saw happen this quarter.”

Hoka Store Plan

Hoka currently operates 18 company-owned stores, which have exceeded revenue and profit expectations.

Going forward, the company will continue to deploy a Hoka pop-up store strategy to test permanent location possibilities.

Hoka Product Expansion

The new Hoka Transport lifestyle shoe has sold surprisingly well, Deckers executives said. Photo courtesy of Hoka.

The brand is seeing success in newer categories such as hiking and lifestyle, and plans to continue to expand in new areas.

“On the hike side of things, that business is still very strong. In places like REI, we’re the No. 1 running brand, and also in hike,” Powers said. “And then in the international regions, particularly in China, we have a very strong hike business. So, we’re going to continue to go after that.”

The company also sees a huge opportunity in the lifestyle market and was taken by surprise by the success of the new Transport model, which is described as the intersection of lifestyle and performance.

“I was actually a little bit skeptical about how that was going to be received in the marketplace,” Powers said. “It’s not necessarily positioned as a performance shoe, although I do run in it and work out in it, so it’s very versatile. But I think it’s showing us that there is more aperture and appetite for Hoka to be meaningful in the lifestyle space, whether that is color ups or fabric changes or design details on some of our franchise styles.”

New Lifestyle Brand Planned

The company sees so much opportunity in the lifestyle market, it plans to launch a new brand in the space, Powers said.

“We think that there is emerging opportunity in lifestyle,” he said. “It’s not just people wearing a running shoe anymore, they want shoes made for all day wear that feel like running shoes, but have a little bit of a different aesthetic, and we see a massive opportunity there not only within the Hoka brand, but we are working on launching a new brand actually in the spring time frame to go after some of that opportunity as well.”

Deckers’ Q1 Financial Results

Company-wide, Deckers Brands’ net sales totaled $675.8 million, up 11.1% in constant currency. Company-wide net income increased to $63.6 million in the quarter from $44.8 million a year ago.

Hoka’s better-than-expected direct-to-consumer business prompted Deckers to boost its company-wide full-year net sales guidance to about $3.98 billion from $3.95 billion.

Here’s how other brands in Deckers’ portfolio performed:

Ugg – sales of $195.5 million, down 6% from a year ago due to U.S. retailers receiving product later than in the past few years.

Teva – sales decreased 18.8% to $48.4 million.

Sanuk – sales fell 32.3% to $9.6 million.

Koolaburra – sales dropped 33.9% to $1.8 million.