Deckers results show aggressive discounts from rivals are hitting premium brands
By Sanskriti Shekhar
Oct 22 (Reuters) - Deckers Outdoor DECK.N, the maker of UGG boots and Hoka sneakers, said aggressive discounting by rivals hurt its sales in the second quarter, highlighting challenges facing premium footwear brands as shoppers grow more selective.
Shares of the company fell 8% in extended trading after the results. Here are more details:
The footwear maker reported sales of $1.48 billion, missing analysts' estimate of $1.51 billion, but reported a 27% rise in profit for the quarter ended September 30
"In the US, we saw promotional activity increase throughout the quarter, particularly in athletic footwear, which weighed on our US e-commerce performance as we maintained full-price discipline," CEO Stefano Caroti said on the company's earnings call
Comparable direct-to-consumer sales fell 6.4% in the second quarter
"There is a heightened focus on revenues over margins," said Simeon A. Siegel, analyst at CFA
"Share declines were evident across every household income bracket, including higher-income consumers, highlighting the challenges facing even premium brands as shoppers become more selective," said Michael Gunther, analyst at Consumer Edge
Deckers continues to grapple with intense competition in the athletic footwear market, including from larger rivals such as Nike NKE.N
"Where we potentially lose share to others are the more compressed price points below $120, where the competition is greater," CEO Caroti said
"We will continue to prioritize margin preservation and long-term value over chasing potential incremental near-term revenue that could dilute our brands," he added
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