Sales of Hoka surged in the December quarter as parent Deckers Brands looks to maintain tight control of the running shoe company’s distribution.
Hoka, which first hit $1 billion in sales for the trailing 12 months in the June quarter, once again passed another milestone in Deckers’ fiscal third quarter ended Dec. 31 with revenue surpassing $1 billion in the last nine months.
“We’ve got a brand that’s red hot that continues to perform well,” Deckers CFO Steve Fasching told analysts Thursday during the company’s quarterly update call.
Adding $450 Million in Annual Revenue
The Hoka business is expected to end the fiscal year up in the low-50% range, which equates to more than $450 million in revenue growth from the previous year.
The brand generated global revenue for the December quarter of $352 million. The total represents a 91% jump from the year-ago period and is also the largest percentage revenue increase of any Deckers brand for the quarter.
Hoka, along with a revenue increase at Teva, helped net sales for Deckers Brands rise to total $1.3 billion in the December quarter. The results were dragged down by declines in sales of Deckers’ largest brand, Ugg, along with Sanuk and Koolaburra.
Deckers’ net income in the quarter totaled $278.7 million, which was up from $232.9 million in the year-ago period.
Growing with Existing Retail Partners
Part of Hoka’s growth was attributed to increases seen at existing retail accounts.
Deckers has been careful in managing Hoka’s distribution at retail, with the company “hyper focused” on the core, Deckers President and CEO Dave Powers told analysts.
Hoka grew market share at run specialty stores by 5 percentage points in the quarter, compared to a year ago, according to Powers.
“I would say on a global scale, we are very selective about who we sell Hoka to in wholesale,” Powers said. “We’re always prioritizing the run specialty channel. That’s our bread and butter, and the authenticity of the brand.”
Even with that focus, Hoka is also sold in retailers such as REI, where it did well in the third quarter. It also saw some door expansion at Dick’s Sporting Goods and is in what Powers said are a “handful” of Foot Locker locations.
“Right now, we’re not really looking to expand to many more doors,” Powers said. “In wholesale, we’re focused on healthy sell-through and expanding categories.”
Increasing Popularity with Younger Consumers
Increased awareness of the brand helped it to make headway among 18- to 34-year-olds in the U.S. and Europe, Middle East, and Africa (EMEA) markets, with the demographic helping drive the largest year-over-year increase of any age group for Hoka in the quarter.
“On the Hoka side, we’re very happy with these results,” Powers said. “I think in the early days of Hoka, we were selling to core runners and beyond, and then some people were using it for comfort and longevity reasons. And the younger consumers weren’t really adopting it as part of their own yet. But we’ve seen that shift dramatically in the last year or so. And the 18- to 34-year-old category was our fastest-growing consumer segment.”
Collaborations with brands such as Free People were also called out by the CEO as helping win market share, in addition to more teens transitioning away from other athletic brands over to Hoka.
“So it’s working as we planned,” Powers said. “Probably a little better than we planned.”