February 22, 2024

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Why Hoka One One Is the Crisis-Proof Running Brand Everyone Is Talking About

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When Deckers Brands revealed its fourth-quarter earnings late Thursday, there were two good stories to tell.

Importantly, the Ugg brand continues to be a go-to, with searches for the label up 73% versus a year ago, and new customers clicking in. While overall revenue at Ugg declined about 18% to $196.3 million during the company’s fiscal fourth quarter ending March 31, the tried-and-true name will be at the top of buyers’ lists through the rest of the year. “[It’s] essential for many retailers to carry to have a strong holiday season,” said Sam Poser, analyst at Susquehanna Financial Group.

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As Ugg continues to increase its influence, Hoka One One is firing on all cylinders for Deckers. The running brand has emerged as crisis-proof running brand everyone is talking about — and it’s paying off for the parent company, which is seeing shares rise 7% in trading today.

Hoka’s revenue for fiscal ’20 increased 58% compared with last year, to $353 million, while fourth-quarter sales alone were up 52% to $101.9 million — during a period when many footwear players saw sizable declines.

“The brand far outperformed our expectations from the outset of this year,” said Deckers President and CEO Dave Powers in a conference call. He noted that growth was balanced across domestic and international businesses, and wholesale and DTC channels. “Hoka has significant momentum, and while broader market trends may limit the brand’s incredible growth rate in fiscal year 2021, we’re going to continue investing in it to fuel our brand-led and consumer-informed marketplace strategy.”

Here are five ways the company is fueling Hoka’s impressive growth.

1. In the same way it has done with Ugg, Deckers is being careful to protect Hoka’s brand positioning and distribution strategy. “We see Hoka being a very important brand in the industry for a long time, and we’re taking a long-range approach to this,” Powers said on the call.

2. Hoka is staying flexible with its product flow and staggering launches as the coronavirus situation evolves. “What the team did is push out some of the launches, so that has allowed our partners and ourselves to sell through product that’s already in the pipeline — at full price,” Powers noted. “If you have paid attention to Hoka in the marketplace, you’ll see there’s little to no discounting. That’s because we’ve managed inventory tightly. There’s no reason to discount it, the margins are high and our partners are benefiting from that.” The CEO said there are several notable launches set to roll out over the next eight to 10 months.

3. It is seeing a big surge on its own e-commerce site — and acquiring new customers in the process. Powers said Hoka is the second most searched name in its core brand group.

4. Using new data tools, the Hoka team is carefully tracking the business healthy of its smaller accounts, which are more at risk right now. “They’re using some of the new analytical capabilities that we’ve created in the company to really take an assessment of each individual account based on their geographic location of where their states are [with closings and openings],” Powers noted. “And they’re making assumptions on which stores they think will thrive, survive and then not survive potentially…Some of them may not make it. But I think overall, it won’t be significant to the trajectory that the Hoka brand is on.”

5. Even as it carefully controls distribution, the company is expanding with the right partners. It recently opened Dick’s for the first time. “The test so far has been going well. We’re pleased with that, and we’re…primarily staying online and probably 10 stores, and expanding the assortment a little bit,” Powers explained. “But we’re pleased to see the reaction of the consumer, which tells us that awareness is growing dramatically. And in an environment like that, we’re competing head-to-head with some of the best brands out there.”

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