Deckers Outdoor Surpasses Expectations in Q2

(Reuters) – Deckers Outdoor beat Wall Street estimates for second-quarter results and raised its annual sales forecast on Thursday, driven by strong demand for its UGG boots and Hoka running shoes.

The company's shares surged nearly 10% after the bell, contributing to an approximately 35% gain year-to-date.

The footwear maker is capitalizing on consumers willing to spend on trendy and innovative shoes, including brands like New Balance and Roger Federer-backed On.

Strong innovation from Hoka and other emerging brands has also helped reduce market share for larger rival Nike (NYSE:NKE).

Earlier this month, Nike withdrew its annual revenue forecast as its new CEO takes charge amidst declining sales.

Deckers reported a nearly 35% increase in Hoka sales in the second quarter, while UGG saw a 13% rise.

The wholesale channels for both Hoka and UGG remain strong, with retailers like Dick's Sporting Goods (NYSE:DKS) and Nordstrom (NYSE:JWN) increasing shelf space. Amazon (NASDAQ:AMZN) is also expanding its product offerings online.

"Although we expect a more promotional environment during the peak holiday season, we're confident the UGG brand will maintain premium full-price sales," said CEO Stefano Caroti during a post-earnings call.

Gross margin for the quarter rose to 55.9%, compared to 53.4% a year earlier.

Deckers now expects annual sales to increase by 12% to $4.8 billion, up from a previously anticipated 10% rise to $4.7 billion.

For the quarter ended September 30, net sales for Deckers increased by 20% to $1.31 billion, exceeding the average analyst estimate of $1.20 billion, according to data compiled by LSEG.

The Goleta, California-based company also reported adjusted profits of $1.59 per share for the quarter, compared to the Street consensus of a $1.23 profit per share.