Deckers’ scarcity model is driving full-price Ugg and Hoka sales

The insight: Deckers’ “scarcity model” for its Ugg and Hoka brands is allowing the company to sidestep the promotional environment, maximize full-price sales, and ensure sustainable long-term growth.

That’s evident from its record holiday performance.

• Net sales soared 17.1% YoY to $1.83 billion, far outpacing FactSet’s consensus estimate for $1.73 billion.
• Earnings per share (EPS) for Deckers’ fiscal Q3 came in at $3, handily beating expectations for $2.58.

The strategy: By keeping inventory levels lean, Deckers can maintain the desirability of its two flagship brands while commanding high margins.

• Gross margins in Q3 rose 160 basis points to 60.3%, far exceeding the 49.8% and 43.6% that adidas and Nike, respectively, achieved in their most recent reported quarters.
• But that strategy is not without risks: Ugg’s strong performance during the first three fiscal quarters has left Deckers with limited inventory, which will weigh on its Q4 performance.

Other positives: Hoka and Ugg are riding a wave of considerable momentum, boosted in the former’s case by its ability to capitalize on an opening in the performance running market and in the latter’s case by a growing roster of celebrity endorsements.

• Hoka’s investments in innovation are winning over consumers willing to pay top dollar for premium sneakers, while its brand heat is gaining it more distribution with wholesale partners such as Dick’s Sporting Goods and Foot Locker.
• Ugg is making considerable inroads with male consumers thanks to its growing popularity with professional athletes—a group that CEO Stefano Caroti noted “often shapes the future of fashion.” A Post Malone-fronted campaign and media placements on Amazon Thursday Night Football and ESPN are also boosting sales.

Our take: Despite considerable uncertainty in the retail landscape, Deckers’ Ugg and Hoka brands are well-positioned to continue their hot streak in 2025.

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