Deckers Outdoor Corporation — FY2024 Form 10-K
Reporting period: Fiscal year ended March 31, 2024. Amounts below are in U.S. dollars; financial figures are rounded to millions unless stated otherwise. The filing also reports fourth-quarter results for the three months ended March 31, 2024.
Business context
Deckers designs, markets, and distributes footwear, apparel, and accessories under UGG, HOKA, Teva, Sanuk, Koolaburra, and AHNU. It sells through wholesale partners and its direct-to-consumer (DTC) e-commerce and retail channels; production is outsourced to independent manufacturers, primarily in Asia.
Financial performance and liquidity
| Metric | FY2024 | FY2023 | Change |
|---|---|---|---|
| Net sales | $4,287.8m | $3,627.3m | +18.2% |
| Gross profit / margin | $2,385.5m / 55.6% | $1,825.4m / 50.3% | Margin +530 bps |
| Operating income / margin | $927.5m / 21.6% | $652.8m / 18.0% | +42.1% |
| Net income | $759.6m | $516.8m | +47.0% |
| Diluted EPS | $29.16 | $19.37 | +50.5% |
| Cash from operations | $1,033.2m | $537.4m | +92.2% |
| Cash and cash equivalents at year-end | $1,502.1m | $981.8m |
- Wholesale sales increased 12.6% to $2,432.3m; DTC sales rose 26.5% to $1,855.5m. Domestic sales grew 16.8% and international sales 21.1%; international represented 33.2% of revenue.
- UGG sales rose 16.1% to $2,239.1m, and HOKA sales rose 27.9% to $1,806.7m. Teva sales fell 18.9% to $148.5m and Sanuk sales fell 33.0% to $25.4m.
- Gross-margin gains reflected stronger full-price UGG selling, selective price increases, favorable freight costs and brand/product mix, and a greater DTC sales mix. Management said it expects a more normalized promotional environment in FY2025.
- SG&A rose 24.3% to $1,458.0m, including higher payroll and performance compensation, advertising and promotion, occupancy and credit-card costs, infrastructure spending, and impairments.
- Operating cash flow improved partly due to higher earnings and favorable working-capital movements, including timing of payments and receipts, tighter inventory management, and stronger sell-through. Investing cash outflow was $89.3m, including $89.4m of property and equipment purchases. Financing cash outflow was $417.7m, mainly reflecting $414.9m of share repurchases.
- Year-end current assets were $2,443.5m and current liabilities $720.0m. Inventory was $474.3m, down from $532.9m. The inventory write-down was $44.3m, versus $33.9m a year earlier.
- No borrowings were outstanding under the revolving credit facilities. Available borrowing capacity was approximately $399.0m under the primary facility and $41.5m under the China facility; the company reported compliance with facility covenants. Operating lease liabilities totaled $266.9m, with $303.9m of undiscounted future lease payments.
Fourth quarter: Net sales were $959.8m versus $791.6m a year earlier; net income was $127.5m versus $91.8m; diluted EPS was $4.95 versus $3.46.
Material changes, outlook, and notable items
- Management described growth led by UGG and HOKA, supported by brand marketing, product launches, international expansion, and DTC investment. It expects continued investment in distribution capacity and infrastructure, which may increase costs.
- FY2025 capital expenditures were estimated at $115m–$125m, primarily for distribution centers, retail stores, IT systems, and facilities. The filing does not provide a formal FY2025 revenue or EPS forecast.
- Deckers intends to divest Sanuk. It recorded an $8.2m impairment on the brand’s definite-lived trademark in Q4, citing lower-than-expected wholesale results. Sanuk wholesale operating results shifted to a $12.8m loss from $2.9m income.
- CEO and President Dave Powers announced his retirement effective August 1, 2024; Chief Commercial Officer Stefano Caroti was named as successor. Management noted leadership-transition risks.
- Seasonality remains significant: UGG and Koolaburra sales are concentrated in the September and December quarters, while Teva and Sanuk are more weighted to the March and June quarters. HOKA sales are more evenly distributed.
- Key risks include changing consumer demand and discretionary spending, competition and promotional pressure, inventory forecasting, reliance on Asian manufacturers and a limited number of key-material suppliers, freight and geopolitical disruption, foreign-exchange exposure, cyber and IT risks, and tax uncertainty. Two customers represented 31.2% of year-end trade receivables; the top ten customers accounted for 24.2% of annual sales.
- No material loss was considered probable and reasonably estimable for the ordinary-course legal matters described. KPMG issued unqualified opinions on the financial statements and internal control over financial reporting.
Important facts for investors to verify
- Whether UGG and HOKA demand, full-price selling, and DTC growth continue, and how margins respond if promotions normalize.
- Whether inventory levels and write-downs remain controlled as production and distribution capacity expand.
- Progress, timing, and financial effects of the planned Sanuk divestiture.
- Customer receivable concentration and the credit quality and payment behavior of the two customers representing 31.2% of receivables.
- FY2025 capital spending against the $115m–$125m estimate, and the effect of planned infrastructure and retail investments on expenses and cash flow.
- Execution of the CEO transition and any resulting changes to strategy or operating performance.