Hoka, the athletic footwear brand, is on track to become a $2 billion brand in the near future, according to Deckers CEO and President Dave Powers during an earnings call on Thursday, May 25, 2023.
Powers emphasized the potential for Hoka to expand its global awareness further and explore opportunities for category expansion, highlighting the presence of untapped market potential.
“Momentum with younger consumers in the U.S. helped drive these increases as Hoka more than doubled the number of purchasers aged 18 to 34 years old,” Powers said. “[W]e’re in this sort of long game, and we feel like we have a very special, very, very strong brand with a lot of runway ahead of it.”
Enhancing global awareness has played a crucial role for the Hoka brand, as evidenced by the launch of its inaugural global marketing campaign in June 2022. The “Fly Human Fly” campaign coincided with the introduction of the Mach 5 sneaker. According to Powers, the campaign successfully increased brand recognition in several key markets, including France, the U.K., China, and Germany.
Deckers has a strong focus on long-term growth in its direct-to-consumer (DTC) segment, which Powers highlighted as the company’s most profitable channel. However, Deckers is not diminishing its efforts in the wholesale sector as it seeks to expand its DTC business. Instead, the company maintains a balanced approach, recognizing the importance of both channels in driving overall growth.
Powers clarified that Deckers does not intend to retreat from the wholesale sector, as the company recognizes the value of maintaining positive partnerships with reputable wholesale partners.
He also emphasized that Deckers aims to have a strong presence in wholesale and DTC channels. However, he noted that in the current year, both the Hoka and UGG brands are expected to experience faster growth in the DTC segment compared to wholesale. The strategic approach allows Deckers to maximize growth opportunities across multiple channels while prioritizing DTC expansion.
According to the company, Hoka witnessed a notable surge in net sales during the fourth quarter, with a year-over-year (YoY) increase of 40.3% to reach $397.7 million. Powers informed analysts that Hoka’s DTC channel experienced remarkable growth of 85% throughout the year. Furthermore, this marks the fourth consecutive year in which Hoka achieved revenue growth surpassing 50%. For the entire fiscal year, the brand’s net sales skyrocketed by 58.5%, amounting to $1.4 billion.
Net sales across its portfolio recorded a 7.5% increase during Q4, reaching $791.6 million. Although wholesale sales experienced a slight decline from $448.8 million to $448.4 million, DTC sales grew significantly by 19.5% to $343.1 million. The company observed a net income rise for the entire year and the last quarter. However, the gross margin for fiscal year 2023 dropped from 51% to 50.3%.
Photo credit: HOKA
