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Deckers Brands (DECK +8%) is stepping higher with a big gain today after reporting Q1 (Jun) results last night. The footwear company reported a huge EPS beat while revenue rose a robust 22.1% yr/yr to $825.3 mln, nicely ahead of analyst expectations. Of note, this was the last quarter for CEO Dave Powers, who is retiring August 1. Stefano Caroti, the company's Chief Commercial Officer, will take the helm.

• We had concerns going into this report given Nike's (NKE) recent revenue miss and lowered outlook for FY25. Even though Q1 is historically DECK's smallest revenue quarter of the year, it was important for the company to show that it's not suffering from the same problems as Nike. And we think they accomplished that with flying colors.
• The knock on DECK has been a one trick pony, with just the Ugg brand. However, Hoka (running shoes) has been emerging as that long-awaited second star in DECK's arsenal and helps smooth out DECK's seasonality (Ugg in winter, HOKA in summer). It is now DECK's second largest brand and its fastest grower. Growth at its other brands has been more modest: Teva (sandals, boots), Sanuk (sandals) and Koolaburra (sheepskin footwear).
• HOKA was the main revenue growth driver in Q1, with sales up 30% yr/yr to a quarterly record $545 mln. HOKA says it benefitted from a compelling product assortment, including new launches, which experienced strong demand. Top styles like the Clifton and Bondi continued to experience healthy growth while emerging franchises like the Mach, Transport and Kawana drove outsized gains. New styles like the Skyward X, Cielo X1 and Skyflow brought incremental volume and attention.
• UGG sales rose a respectable 14% yr/yr to $223 mln. DECK was encouraged by the consumer demand for UGG in Q1 as it reflects continued progress in creating year-round excitement for the brand. This was most evident by the continued year-round adoption of the Tasman franchise (sheepskin slippers) as well as growth from an expanded Golden Collection.
• Gross margin also stood out. It jumped to 56.9% from 51.3% a year ago. Margins benefited from favorable brand/product mix, higher levels of full-price selling, particularly with the UGG brand which was more promotional last year, and lower freight rates.

Overall, we think investors are breathing a sigh of relief. Many footwear stocks have pulled back recently following Nike's brutal results/guidance. However, DECK's results seem to indicate it's not seeing the same issues. Also, HOKA keeps on impressing us with a record quarter and even Ugg showed respectable growth outside of winter. DECK is making progress in terms of Ugg becoming a year-round brand. With the new CEO being an insider, we are not expecting big changes. Finally, recall that DECK recently announced a 6-for-1 stock split. It will begin trading on a split-adjusted basis on September 17, assuming shareholders approve.