Footwear and apparel conglomerate Deckers (NYSE:DECK) reported third-quarter 2024 results that beat Wall Street’s earnings expectations, with sales up 20.1% year-over-year to $1.31 billion. The company expects full-year sales to be about $4.8 billion, close to analysts’ expectations. GAAP earnings of $1.59 per share also exceeded analyst consensus estimates by 28.2%.
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Revenue: $1.31 billion, $1.20 billion (9% higher than analyst estimates)
EPS: $1.59, beat analyst estimates by $1.24 (28.2%)
The company raised its full-year revenue forecast to $4.8 billion, up 2.1% from the interim estimate of $4.7 billion.
The company also raised its full-year EPS outlook (taking stock split into account)
Gross profit margin (GAAP): 55.9%, up from 53.4% in the prior year period
Operating margin: 23.3%, up from 20.6% in the same period last year
Fixed currency sales increased by 20.4% compared to the same period last year (24.2% in the same period last year)
Market capitalization: $23.02 billion
“HOKA and UGG delivered strong second quarter results driven by strong consumer demand for our innovative and unique products,” said Stefano Carotti, President and CEO.
Founded in 1973, Deckers (NYSE:DECK) is a footwear and apparel conglomerate with a portfolio of lifestyle and performance brands.
Before the advent of the Internet, although styles changed, consumers primarily visited local brick-and-mortar shoe stores, department stores, and specialty stores to purchase shoes. Today, not only are styles changing more frequently as trends travel through social media and the internet, but the way consumers purchase products is also changing, favoring omnichannel and e-commerce experiences. While some footwear companies are making a concerted effort to adapt, slow-moving companies may fall behind.
A company’s long-term performance can give signals about the quality of its business. Even a bad business only shines for a quarter or two, but a top-notch business grows for years. Fortunately, Deckers’ sales have grown steadily at a compound annual growth rate of 17.4% over the past five years. This indicates successful expansion and serves as a starting point for analysis.
Deckers total revenue
Long-term growth is paramount, but within consumer discretion, product cycles are short and revenues can be driven by rapidly changing trends and consumer preferences. Deckers’ annualized revenue growth of 16.8% over the past two years is in line with the company’s five-year trend, suggesting stable demand.
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Deckers also reports sales results excluding currency fluctuations, which are outside of our control and are not indicative of demand. Over the past two years, sales at constant currency increased by 17.8% year-on-year. This figure is consistent with normal revenue growth, so we can see that Deckers’ exchange rate is stable.
Dekkers constant currency growth rate year over year
For the quarter, Deckers reported solid revenue growth of 20.1% year-over-year, and its $1.31 billion in revenue beat Wall Street expectations by 9%.
Looking ahead, sell-side analysts expect sales to grow 8.6% over the next 12 months, a slowdown compared to the past two years. This forecast is disappointing and indicates that the market believes there will be headwinds in demand for their products and services. At least the company has good results in other indicators of financial health.
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Although free cash flow is not a metric featured prominently in a company’s financials or earnings releases, we believe this number is meaningful because it accounts for all operating expenses and capital expenditures and is difficult to manipulate. Masu. Cash is king.
Dekkers has demonstrated superior cash profitability, allowing it to reinvest, return capital to investors, and stay ahead of its competitors while maintaining a sufficient cushion. The company’s free cash flow margins are among the highest in the consumer discretionary sector, averaging 24.2% over the past two years.
Deckers free cash flow margin
The company’s cash burn increased from a cash loss of $30.44 million in the year-ago period. These numbers deviate from long-term margins and are less focused on the short term, as investment needs are seasonal and can cause temporary fluctuations.
We’re impressed that Deckers significantly beat analyst fixed-exchange revenue estimates for the quarter. We were also excited that its earnings beat Wall Street expectations. The company also raised its full-year revenue and EPS guidance, capping off a strong quarter. Immediately after the news, the stock price rose 9.1% to $165.96.
Deckers may have had a strong quarter, but does that mean you should invest now? When making that decision, consider its valuation, the quality of its business, and what happened in its most recent quarter. Important to consider. We cover that in a practical full research report. You can read it for free here.
