Deckers Outdoor Corp Stock

Deckers Outdoor Corporation operates as a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories developed for both everyday casual lifestyle use and high-performance activities. The company markets its products primarily under five proprietary brands: UGG, HOKA, Teva, Sanuk, and Koolaburra.

The company sells its products through quality domestic and international retailers, international distributors, and directly to its global consumers through its Direct-to-Consumer (DTC) business, which consists of its e-commerce websites and retail stores. All of the company’s products are manufactured by independent manufacturers.

Products and Brands

UGG: The UGG brand is one of the most iconic and recognized brands in the company’s industry, which highlights its successful track record of building niche brands into lifestyle and fashion market leaders. With loyal consumers around the world, the UGG brand has proven to be a highly resilient line of premium footwear, apparel, and accessories with expanded product offerings and a growing global audience that appeals to a broad demographic. The UGG brand is sold globally, including in the U.S., Canada, Europe, the Asia-Pacific, and Latin America.

HOKA: The HOKA brand is an authentic, premium line of year-round performance footwear and apparel that offers enhanced cushioning and inherent stability with minimal weight. Originally designed for ultra-runners, the brand now appeals to world champions, taste makers, and everyday athletes. Strong marketing has fueled both domestic and international sales growth for the HOKA brand, which has quickly become a leading brand within the company’s run and outdoor specialty wholesale accounts and is growing within selective key accounts. The HOKA brand’s product line includes running, trail, hiking, fitness, and lifestyle. The HOKA brand is sold globally, including in the U.S., Canada, Europe, the Asia-Pacific, and Latin America.

Teva: The Teva brand was born in the Grand Canyon and for decades has served as a trusted companion for outdoor adventure seekers around the world. Today, Teva builds upon sport sandal leadership, authentic outdoor heritage, and a commitment to sustainability to drive growth through category expansion and a young, diverse, and adventurous consumer. The Teva brand’s product line includes sandals, shoes, and boots. The Teva brand is sold globally, including in the U.S., Canada, Europe, the Asia-Pacific, and Latin America.

Sanuk: The Sanuk brand originated in Southern California surf culture and has manifested into a lifestyle brand with a presence in the relaxed casual shoe and sandal categories, focusing on innovations in comfort and sustainability. The Sanuk brand’s use of unexpected materials and unconventional constructions, combined with its fun and playful branding, are key elements of the brand’s identity. The Sanuk brand is primarily sold in the U.S.

Other Brands: Other brands consist primarily of the Koolaburra brand. The Koolaburra brand is a casual footwear fashion line using plush materials and is intended to target the value-oriented consumer to complement the UGG brand offering. The company’s Other brands are primarily sold in the U.S. and Canada.

Sales and Distribution

The U.S. Distribution: In its wholesale channel, the company distributes its products in the U.S. through sales representatives, who are organized by account type or geographically and by brand. In addition to the company’s wholesale channel, it sells products directly to consumers through its DTC business and fulfill online orders through its DCs and retail stores. The company’s sales force is separated by brand, as each brand generally has certain specialty customers that expects a dedicated sales team with specialized knowledge of the brand’s product offerings.

The company distributes products sold in the U.S. through its DCs in Moreno Valley, California, and Mooresville, Indiana, as well as through a 3PL in Pennsylvania. The company’s DCs feature a warehouse management system that enables it to efficiently pick and pack products for direct shipment to customers. The company is further expanding its DCs and is in the early stages of building out a third the U.S. DC located in Mooresville, Indiana.

International Distribution: Internationally, in its wholesale channel, the company distributes its products through independent distributors and wholly owned subsidiaries in many regions and countries, including Canada, Europe, the Asia-Pacific, and Latin America, among others. The company also sells products internationally, particularly in China, through partner retail stores, which are branded stores that are wholly owned and operated by third parties. In addition, in certain countries the company sells products through its DTC business. For its wholesale and DTC businesses, the company distributes its products through a number of DCs managed by 3PLs in certain international locations.

Reportable Operating Segments and Geographic Areas

The company operates through six segments include the five strategic business units responsible for the worldwide operations of the wholesale divisions of its brands (UGG, HOKA, Teva, Sanuk, and Other brands), plus its DTC business (operating segments).

UGG Wholesale: The company sells its UGG brand products primarily through fashion lifestyle retailers, such as Urban Outfitters, domestic higher-end department stores, such as Nordstrom, Dillard’s, and Macy’s, streetwear and sports style partners, such as Footlocker and Journey’s, and online retailers, such as Amazon.com, Zappos.com, and Zalando.com. As the retail marketplace continues to evolve to reflect changing consumer preferences, the company continually reviews and evaluates its UGG wholesale distribution and product segmentation approach. For example, as the UGG brand continues to amplify its audience with younger consumers, the company’s distribution to these consumers is expanding faster through its lifestyle and sports style partners.

HOKA Wholesale: The company sells select HOKA brand footwear primarily through full-service domestic specialty retailers, such as Fleet Feet and Road Runner Sports, outdoor retailers, such as REI, select online retailers, such as Zappos.com, other strategic partners, such as DICK’s Sporting Goods and Running Warehouse, streetwear and sports style partners, such as Footlocker, and higher-end department stores, such as Nordstrom. The company continues to expand its HOKA brand wholesale distribution in international markets, including through strategic partners, such as Intersport and Sport 2000 in Europe and Xebio Group and Himaraya in Japan.

Teva Wholesale: The company sells its Teva brand footwear primarily through outdoor retailers, such as REI, fashion lifestyle retailers, such as Urban Outfitters, other strategic partners, such as DICK’s Sporting Goods, large national retail chains, such as Famous Footwear and DSW, higher-end department stores, such as Nordstrom, and online retailers, such as Amazon.com and Zappos.com. The company continues to expand its Teva brand wholesale distribution in international markets, including through strategic partners, such as United Arrows and ABC Mart in Japan.

Sanuk Wholesale: The company sells its Sanuk brand footwear primarily through domestic sports style partners, such as Journey’s, higher-end department stores, such as Dillard’s, larger national retail chains, such as DSW, and online retailers such as Amazon.com and Zappos.com.

Other Brands Wholesale: Other brands is primarily made up of the Koolaburra brand. The company sells its Koolaburra brand footwear primarily through larger national retail chains, including Kohl’s, DSW, Shoe Carnival, and Famous Footwear, certain higher-end department stores, such as Macy’s, and online retailers, such as Amazon.com and Zappos.com.

Direct-to-Consumer: The company’s DTC business consists of its e-commerce business, which it operates through various websites and platforms, and retail stores. The company’s websites and retail stores are largely intertwined and interdependent. In an omni-channel marketplace, many of the company’s consumers interact with both its retail stores and its websites before making purchasing decisions. For example, consumers may feel or try on products in the company’s retail stores and then place an order online later. Conversely, they may initially research products online, and then view inventory availability by store location and make a purchase in store. The company has observed a meaningful shift in the way consumers shop for products and make purchasing decisions, evidenced by decreases in consumer retail store activity as consumers accelerate their migration to online shopping. The company has optimized its digital marketing strategy to capitalize on these trends, which has accelerated global online consumer acquisition and retention rates. Although the company continues to see consumers migrate to online shopping, its DTC online and retail sales channels interact with each other and largely overlap to provide a fluid purchasing experience, which engenders brand loyalty while increasing product sales and improving its inventory productivity. Further, the company’s domestic and international consumer loyalty programs allow its consumers to earn points and awards across the DTC business, which has contributed to higher brand demand.

The company’s retail stores enable it to expose consumers to a more curated selection of products, directly impact its consumers’ experience with its brands, and sell its products at retail prices thereby generating larger gross profit as a percentage of net sales (gross margin). The company-owned mono branded retail stores are predominantly UGG brand concept stores and UGG brand outlet stores, as well as new openings of HOKA brand retail stores. Through its outlet stores, the company sells some of its discontinued styles from prior seasons, full price in-line products, as well as products made specifically for the outlet stores. The company continues to open outlet stores in key markets to further grow its brand presence and appeal to a broader consumer base. The company also has several UGG brand flagship stores and a HOKA brand flagship store, which are company-owned premium mono branded concept stores in key markets designed to showcase the UGG and HOKA brand products.

As of March 31, 2023, the company operated its e-commerce business through Company-owned websites and mobile platforms in 57 different countries and have a total of 164 global retail stores (including 18 HOKA brand retail stores), which includes 81 concept stores and 83 outlet stores.

Seasonality

The company’s business is seasonal, with the highest percentage of UGG and Koolaburra brand net sales occurring in the quarters ending September 30th and December 31st and the highest percentage of Teva and Sanuk brand net sales occurring in the quarters ending March 31st and June 30th. Net sales for the HOKA brand occur more evenly throughout the year (year ended March 31, 2023), reflecting the brand's year-round performance product offerings. Due to the magnitude of the UGG brand relative to the company’s other brands, its aggregate net sales in the quarters ending September 30th and December 31st have historically significantly exceeded its aggregate net sales in the quarters ending March 31st and June 30th. However, as it continues to take steps to diversify and expand the company’s product offerings by creating more year-round styles, and as net sales of the HOKA brand continue to increase as a percentage of its aggregate net sales, it has seen and expects to continue to see the impact from seasonality decrease over time. However, the company’s seasonality has been impacted by supply chain challenges and it is unclear whether these impacts will be minimized or exaggerated in future periods as a result of these disruptions.

Research and Development Costs

The company’s research and development costs are expensed as incurred. Such costs amounted to $38,657 for the year ended March 31, 2023.

Patents and Trademarks

The company holds trademark registrations for UGG, Teva, Sanuk, HOKA, Koolaburra by UGG, UGGpure, and other marks in the U.S., and for certain of the marks in many other countries, including Canada, China, the U.K., various countries in the European Union (EU), Japan, and Korea. As of March 31, 2023, the company hold 190 designs and inventions with corresponding design or utility patent registrations, plus 62 designs and inventions which are pending registration.

History

Deckers Outdoor Corporation was founded in 1973. The company was incorporated in 1975.