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    A fast-growing rival is a big problem for Nike

    msmarkBy No Comments4 Mins Read

    While not every corner of the retail industry seems to be in growth mode, the sports-apparel space has never been more competitive.

    That rivalry has sharpened particularly in recent years, with new and upcoming brands gaining more access to fans and market share.

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    Top brands like Nike  (NKE) , Lululemon  (LULU)  and Adidas  (ADDYY)  still reign supreme in many cases. You’d be hard-pressed to visit a gym, fitness boutique or yoga studio where at least half the clientele wasn’t wearing one of these three brands. 

    But smaller brands with firepower (and impressive and growing social-media followings) have been nipping at the giants’ heels. 

    And there seems to be no better time to take on these giants. Brands like Nike are scrambling to maintain relevance as sales slip and enthusiasm eases.

    Some CEOs have even called out Nike; JD Sports CEO Régis Schultz claimed the brand “stopped…bringing in new stuff,” adding that “shoppers get bored very quickly” and urging Nike to step up its creative efforts. 

    Top growing brand making a big impact

    One such brand ready to take aim at large incumbents is Hoka, the now fashionable running and walking sneaker brand. 

    Founded in Annecy, France, by two athletes in search of a shoe that made running feel more like flying, the brand was scooped up several years later by Deckers  (DECK)  in 2013 and has been a high-flying addition to the portfolio ever since. 

    Hoka began its ascent largely in suburban neighborhoods, beloved by dog walkers, weekend warriors practicing for their upcoming 10k, and busy parents who needed the extra support. Chances are you’ve got a pair or you’ve certainly noticed them out and about — they’re hard to miss. 

    Most Hokas are available in a wide range of bright colors but are best known for their large foot base and support system. The most popular models are the Clifton and Bondi running sneakers, which offer several dozen millimeters of lift and support. Its recent Skyward X model made waves in April, promising the “plushest ride on the road,” with a 48-millimeter stack height.

    The extra lift may seem excessive, but people have flocked to Hoka for years for that “forgiving impact and ride.”

    Hoka promises success for Deckers

    Hoka One One, its proper name (which comes from from the New Zealand Māori language phrase meaning “to fly over the earth”), has been something of a bright spot in Deckers Outdoor’s portfolio, which also holds Ugg, Teva, Sanuk and Koolaburra. Deckers saw a wildly successful holiday shopping quarter, reporting earnings per share of $15.11 on revenue of $1.56 billion. 

    Q4 ended March 31 was no different. Deckers reported net income of $4.95 a share, up 43% from a year earlier, as revenue rose 21% to $959.8 million.

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    Much of that success can be attributed to Hoka. Net sales of the sneaker brand in the fourth quarter rose 34% to $533 million. They’d risen 22% in the previous quarter. Hoka’s net sales for the year ended in March rose 28% to $1.81 billion.

    Deckers Chief Executive Dave Powers called Hoka and Ugg “two of the strongest and most in-demand brands in the footwear space.”

    “For the year, Hoka growth was driven by increased brand awareness with the U.S. rising to approximately 40% and international regions on average reaching just over 20%,” he told analysts on the earnings call.

    And the brand is focusing on bringing Hoka to new regions. 

    “Just a few weeks ago, Hoka opened its second European retail store in Paris,” Powers said, adding, “Though only open for a short time, we have been very encouraged by the consumer feedback, conversion and broad product adoption.”

    Given that the Summer Olympics, which kick off in Paris in July, are just a couple of months away, Deckers expects “to see high traffic” during the event as renewed enthusiasm for running and athletics drives growth for the business.

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