Deckers Brands’ footwear assortment has been dubbed ugly, bizarre, weird — but its signature silhouettes are clearly making a mark.

In 1973, the company was founded in Santa Barbara, Calif., by entrepreneurs Doug Otto and Karl F. Lopker. Since then, the company has grown from a single flip-flop to a house of powerful brands, led by Ugg and Hoka and joined by Teva, Sanuk and Koolaburra by Ugg.

Throughout the years, that same entrepreneurial spirit has continued and positioned the business to house not one, but two billion-dollar labels. For president and CEO Dave Powers, following the foundational values that were established in the early days of Deckers has been proven key to today’s success.

“In the company, we encourage risk-taking, out-of-the-box thinking. We embrace the fact that our footwear is odd to some people, but it’s very distinctive and ownable,” said Powers. “The values that were established in the early days, and over the years, are consistent and the elements of what made Deckers great 50, 40, 30 years ago is still true.”

Powers has his own long history with the company, having joined in 2012 to lead its DTC and omnichannel strategies, before taking the helm as CEO in 2016. Under his leadership, the business is red hot — thanks to Ugg’s consistent winning streak and Hoka’s massive gains.

In the third quarter of 2023, for instance, the firm reported net sales of $1.35 billion, an increase of 13.3% compared with $1.19 billion seen the same quarter last year. Hoka turned in the biggest gains, with net sales jumping 90.8% to $352.1 million, compared with $184.6 million in Q3 2022. Looking ahead, Powers said the brand will continue this momentum.

Other brands in Deckers offering is also finding its groove with consumers and retailers.

Said Mike Edwards, president of Famous Footwear: “We value our partnership with Deckers, particularly with their brands Koolaburra, Teva and Sanuk. These brands resonate strongly with our customer and continue to play an important role in our product assortment.”

Here, Powers reflects on how the company has become a global force in the footwear industry.

It’s been more than 10 years since you joined Deckers. How has the company evolved in that time?
DAVE POWERS: “We were a wholesale-driven company [then]. We were just getting started as I came in as the head of global DTC. And we were just getting into retail with Ugg — we had a strong, but small e-commerce business. And every process that we had in place was to serve wholesale. Ugg was 90% of our business then. We didn’t have Hoka, and all the other brands were kind of riding the coattails of Ugg. It was a great company then and it’s still a great company, but on a whole different level.”

You now have two billion- dollar brands — a big feat in the shoe industry. What are some of the pressures to staying and remaining on top?
DP: “We’re all in this business because we love the pressure, we love being competitive. Ugg is a heritage brand that has been around for a long time that is beloved and stronger than ever. And then Hoka, it’s on fire. What’s really challenging is to manage both. They’re very different brands. One is fashion, with steady, sustainable growth. And one is performance with high growth. So there are a lot of differences we need to be aware of. Some of the challenges that we have to face include where we allocate investment. Where do we put marketing and resources and infrastructure appropriately so that we’re doing what’s best for each brand? It’s hard, but the pressure motivates us. There’s no question. We are fortunate that we have some real world-class talent on the leadership team who know how to navigate these challenging environments, know how to protect and grow our brands in a healthy way. We’re not chasing business, we’re operating on a pull model. We’re protecting margins and full-price selling. That’s what you’ve got to do. We’ve been lucky in some ways, but most of it is just one good decision after another.”

With Hoka, how do you plan to sustain this growth? Is it sustainable?
DP: “We created a new category in the running space at a time where running was getting stagnant. We came in and solved a problem for consumers. It ended up being a lot bigger opportunity than we originally imagined, because it’s not just about runners, it’s about everyday people who want comfort and performance. At the same time, our model has been to authentically connect with consumers and align with their values. So having that combination of best-in- class, innovative product and connecting emotionally in a day-to-day, authentic way is the secret sauce here. I’ve never seen anything like it. The love for this brand is just unbelievable. Yes, running is critical. That is always going to be our epicenter, and then trail and hike, we’re authentic in those categories. But beyond that, the adoption across all demographics, in fashion and performance — that’s where we’re going to see some lasting opportunity. That’s why Nike is so big, right? That’s why Adidas is so big. They’ve been able to strike that balance with global consumers. For Hoka, customers don’t just like the brand because of how it looks; they love the brand because of what it does for them.”

And with Ugg, what does the future look like there?
DP: “We saw last fall that there is a big demand for some of our heavily evolved classics — platforms and things of that sort. It’s just the tip of the iceberg. Some of the dip [in sales] was planned because we had such growth coming after the last two years and we had to balance out the marketplace, but the brand consideration on a global level has never been higher. We’re seeing massive interest in younger fashion consumers in China and in Europe that we haven’t seen in the past. The opportunity now is connecting with this younger consumer who craves the brand and sees it as a fashion staple. And our efforts around showing up as a more authentically diverse brand — through marketing with diverse consumers and influencers — that’s resonating in a positive way. Then, we have a great opportunity with men’s, where we’re just getting started.”

Teva saw a sales jump last year in Q3. What is the biggest opportunity within this brand?
DP: “Over the last five or six years, we have been focusing our marketing investments on Ugg and Hoka. During that time, Teva has really cleaned up and elevated its assortment. The brand awareness is higher than ever and it’s going to have a record year. Teva is a big opportunity and it’s time for us to start investing in that again. We think of it as an internal acquisition. If you wanted to go buy a brand — that’s $150 million, you would overpay, it probably needs a lot of cleanup and it wouldn’t have the incredible awareness that a brand like Teva has. So it’s a gem in our portfolio that we have been holding on the sidelines. Over the next few years, you’re going see more around the Originals and Universal sandals, but getting into more closed toe, and leveraging our outdoor, watersports heritage.”

Sanuk and Koolaburra in comparison have seen some declines. How do you plan to boost these labels?
DP: “With Koolaburra, we’re going to make this more of a fast follower to Ugg and a more fashionable brand going forward. And Sanuk is doing the same [as Teva] — fine tuning its positioning, elevating its product, elevating price points, so we can go back at it in a more aggressive way. [Our products] are distinct. It’s a way to get noticed, differentiate yourself from other products in the marketplace and compete on something other than price.”

On your latest earnings call, you said that Deckers’ brand marketplace management actions and dedication to long-term strategic priorities has been key to growth. What does that mean exactly?
DP: “We are looking at the market holistically. When you do that, you decide which product is best for which channel at which time. You need to differentiate, you need to decide who are the best partners to work with. We’ve closed more accounts than we’ve opened over the last five years. By cleaning up the marketplace, being much more thoughtful around which products end up in which location, being tight on inventory — so controlling markdowns, limiting inventory in the marketplace — leveraging the marketing teams with events in connecting with the consumers, all those things are what we look at as marketplace management. We are willing to make the tough calls to maintain the health and safety of the brands for the long term. This pull model, we want
to have some scarcity in the marketplace and keep demand high, and that way it’s sustainable growth, not just up and then you comp it the next year. That’s when it gets sketchy.”

With many companies prioritizing e-commerce and direct-to-consumer, what are your thoughts on the role of brick-and- mortar?
DP: “There will always be a place for in-person shopping. We see this as a real strategic component. In the case of Hoka, there’s a technical side of it. We need to be able to explain to consumers which shoe is right from them and why. I also really believe that being good in retail makes us better at online and us better at online and wholesale. We get a lot of consumer insights and quick sell-through information, we can test storytelling. It’s a connection point for our consumer that we see as critical, but it’s also a lab for us to learn every single day. So we’re going to continue to invest in that. You’re going to see probably fewer stores [in exchange] for larger ones where we can show the full breadth of the line. [We’ll have] more pop-ups and more event spaces, like our Feel House that we did last fall for Ugg that we’re going to expand globally.”

Over the past decade at Deckers, where have you seen the biggest change?
DP: “Bringing in and upgrading talent along the way, building on success over the years from some of the previous leaders and then developing a financial model, leveraging our supply chain in our margin structure to be able to invest in people, in innovation and marketing has been critical. That’s been the game changer, to be able to expand our reach and awareness and acquisition and connecting with our consumers. That’s been the catalyst.”

As a leader, you’ve prioritized sustainability and DEI at the company. What has that journey been like for you as CEO?
DP: “When I first got to the company, we didn’t have the luxury of spending time in prioritizing sustainability and ESG to the level that we’ve been able to now. When I became CEO, I said, our first job is to fix the business and we’re going to do that, but on the sidelines, I said let’s start developing our philosophy around doing good and doing great, building on the work that we’ve already done around sustainability. The first few years of my tenure we were transforming the company. We focused on improving profitability and we did that. Then, we were slowly building our approach and our infrastructure around environmentally- conscious business practices that has also transpired into ESG and DEI. The one thing I’ve always said is if you don’t have a strong financial business, if you’re not performing to the level that you need to, you’re not going to be able to do those things, especially as a public company. Now, we are at the point where we can invest in it, we can rally our teams around it, we can do what’s best for our employees and the environment.”