In fact, this marked its eighth straight quarter of beating the Street's top and bottom-line estimates, often by a significant margin.
This quarter, it posted EPS of $0.85, crushing the $0.06 consensus, on revenue of $394.1 mln, also ahead of the $378.8 mln expectation.
Click here to access its earnings press release.
DECK's strong performance is driven by a combination of demand-related drivers and cost management efforts.
On the revenue side, the company benefited from earlier-than-anticipated wholesale shipments for its UGG brand this quarter as summer and spring products were delivered into the marketplace ahead of schedule. This amounted to a $15 mln benefit for the quarter.
The success of its newer HOKA footwear brand has been a major catalyst over the past several quarters. HOKA is its performance product line, including footwear tailored for running and hiking.
Since DECK purchased HOKA in 2013, it has steadily become a larger portion of its total revenue, helping to diversify its business away from the UGG lines. To put that into perspective, a year ago HOKA accounted for about 12% of revenue, compared to 17% now.
In Q4, sales for HOKA jumped by 33%, following growth of 79% last quarter. DECK has aggressively invested in this brand, expanding into new product categories, which has helped smooth out seasonality issues.
At just $225 mln in annual sales, the company believes there is plenty of room for growth, especially in overseas markets in Europe and APAC.
Another key part of DECK's story is the expansion in gross margin, which improved to 51.6% from 48.0% last year. Throughout this earnings season, a common issue that management teams have lamented about has been rising transportation and supply chain costs.
But, DECK commented during its earnings call last night that part of the gross margin improvement was due to continued improvement in its supply chain efforts. Rewinding back to last quarter, it stated that it was using less airfreight than typical, providing a bump to margins.
Similar to last quarter, it also benefited from more full-price sales as it exited Q4 will low levels of inventory in the wholesale channel.
Lastly, DECK implemented some strategic actions two years ago to streamline its cost structure, optimize its retail fleet, consolidate its factory base, and to realign its brands. The ultimate goal was to reach sales of $2 bln while achieving an operating margin of at least 13% in FY20.
With the company generating $2.02 bln in sales this year, while achieving operating margin of 16.2%, it reached these goals a full year ahead of schedule.
While DECK's Q4 results were impressive, its Q1 guidance was less than spectacular, expecting a loss per share of ($1.25)-($1.15) vs. the ($1.00) consensus on revenue of $250-$260 mln vs. the $268 mln expectation.
This weak guidance isn't hitting the stock, though, as shares are trading higher by 5% in early morning trading.
There are a couple reasons for this. First, DECK has a history of issuing conservative guidance and then easily exceeding its outlook. For 4Q19, 2Q19, and 1Q19, it issued EPS guidance that was well below expectations, only to issue a blowout EPS number when it reported results.
Furthermore, the company has telegraphed that it plans to ramp up its investments this year in order to build out its HOKA brand, expand its UGG men's and women's categories, and improve its e-commerce capabilities. Therefore, its downside EPS guidance shouldn't come as a huge surprise.
Key Takeaways: The same catalysts that have been responsible for DECK's resurgence were at the center of its strong Q4 results. Namely, stable sales for its core UGG brand, continued momentum for its up-and-coming HOKA brand, and solid inventory and supply chain management.
On the surface, its outlook suggests a substantial deceleration in business in Q1. Investors have become accustomed to DECK putting forth a low bar to hurdle when it comes to its guidance.
Investors are also aware of its ambitions to invest in certain growth initiatives, further easing any concerns related to its downside guidance.