In the dynamic world of athletic footwear, a new challenger is making waves, potentially threatening the supremacy of industry giants like Nike. Jim Cramer, the well-known CNBC personality, recently highlighted Deckers Outdoor as a disruptive force within the industry. On a recent episode of “Squawk on the Street,” Cramer praised the company’s impressive performance, particularly pointing to its brands UGG and Hoka, which have seen remarkable success.
The Unstoppable Rise of Hoka and UGG
Following a robust quarterly earnings report that exceeded expectations, Deckers’ stock soared to an all-time high, climbing more than 14.5% in a single day and closing at nearly $1,037 per share. This significant increase pushed the company’s year-to-date gains to over 50%, starkly outpacing the S&P 500’s 11% rise over the same period.
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What makes Deckers’ success particularly noteworthy is the performance of its Hoka running shoes and UGG fashion brand. “It’s very rare that you have not one but two different shoes doing really well,” Cramer observed. He was especially impressed by the company’s ability to maintain high levels of full-price selling, a challenging feat in today’s discount-driven consumer market. “You usually get some discounting — there’s no discounting going on,” he added, emphasizing the strong consumer demand and robust gross margins that UGG continues to enjoy.
A Cautious Outlook Amidst Stellar Growth
Despite the optimism surrounding Deckers’ current performance, the company’s management has provided a conservative forecast for fiscal 2025. They anticipate a 10% revenue growth, aligning with Wall Street expectations but predict softer margins moving forward.
This conservative outlook contrasts sharply with the company’s current momentum, particularly when compared to Nike, which has experienced fluctuating demand in the U.S. and a slowdown in China. Although Deckers’ overall sales volume is smaller than Nike’s, the momentum behind its brands, especially Hoka, suggests they are more than just viable competitors.
Cramer pointed out the general sentiment at Nike regarding the rise of Hoka, noting, “The people I know who work at Nike are not scared about Hoka because it’s not a big company.” However, he quickly countered this complacency with a warning, “I think you should be scared about anyone who has that level of momentum. The shoe business has historically been a momentum business.”
Deckers Outdoor: Reshaping the Footwear Industry
As Deckers continues to impress with its strong financial performance and strategic brand positioning, the footwear industry may be witnessing the rise of a new leader. While Nike remains a formidable player, the success of Hoka and UGG underlines the ever-evolving nature of market competition and consumer preferences. For now, Deckers Outdoor is not just on the radar; it is actively reshaping the landscape, challenging established norms and setting new benchmarks for success in the footwear industry.
