Latest news with #DanaTelsey
Business of Fashion
a day ago
- Business
- Business of Fashion
Why Hoka Is Slowing and On Keeps Growing
In the race to become the next sneaker giant, Hoka's pace is flagging while On shows no signs of slowing. The two European brands are regularly mentioned in the same breath as the challengers shaking up the running market and putting a scare in behemoths like Nike and Adidas. Hoka was born in the French Alps in 2009, On in the Swiss Alps in 2010. Both are known for their distinctive midsoles — an exaggerated, stacked platform in Hoka's case, and an array of tubular segments in On's — and just as importantly, for their runaway growth over the past several years. But recently, their paths have diverged. Last week, Hoka-owner Deckers Group reported that Hoka's sales increased just 10 percent in the quarter through March 31, with growth in its direct-to-consumer channels of 23 percent. Those numbers would be welcome to many companies, but they signalled a significant deceleration from Hoka's typical growth rates, sending Deckers' stock down more than 19 percent since, as investors wonder whether the brand is losing momentum and seeing performance more typical of a mature brand. On, meanwhile, reported 43 percent year-on-year growth in the same period, beating Wall Street's expectations. Sales in its DTC channels grew 45.3 percent. Hoka and On's growth rate diverged this earnings season. (Lei Takanashi /Business of Fashion) 'Overall, Hoka has had tremendous growth, but there is increasing competition, and the need to constantly update and innovate is required to continue to maintain the growth metrics,' said Dana Telsey, chief executive of Telsey Advisory Group, which downgraded Deckers' stock after its recent results. The question now is whether the slowdown is temporary. Deckers' leadership attributed Hoka's results to slower acquisition of new customers due to macroeconomic uncertainty; high levels of promotion for outgoing product models as the brand introduces new ones; and shoppers opting to move towards wholesale accounts to try on and buy new products, which hit its DTC sales. It expressed confidence that performance will pick up as it moves through these issues. Both Hoka and On, however, are looking for their route forward as they strive to maintain their growth, and they could see different levels of success in their strategies. For Hoka, a brand that built its customer base around performance-running, it's working to reach a new lifestyle consumer, evident through actions such as its first luxury collaboration with Marni this year. For On, which has long-established wholesale relationships with fashion and lifestyle retailers around its CloudTec sneakers, as well as an ongoing collaboration with Loewe, the brand is shifting gears to emphasise more innovative performance-focussed products, like its Cloudboom Strike sneakers made with LightSpray technology that podiumed the Kenyan distance runner Hellen Obiri at this year's Boston Marathon. The Hoka-Marni Bondi 3LS was released on April 4 in four colorways. (Hoka) Victor Diaz, founder of the fashion-forward specialty running retailer Renegade Running, believes both brands have achieved recent wins with their respective strategies. Diaz currently finds that the best middle and long-distance elite runners today are running for On rather than Adidas or Nike. And when it comes to high-heat lifestyle sneaker releases, he believes Hoka has quickly come up to speed with collaborations and can rival larger brands such as New Balance. But On's current streak of innovation around supershoes could leave Hoka in the dust. 'Hoka hasn't crossed that threshold yet. They're still struggling to find their racing shoe or their fast shoe,' said Diaz. Strengths and Weaknesses Diaz said that Hoka and On are both strong brands that customers continue gravitating towards for different reasons. When it comes to who's currently winning in regards to selling high-priced innovation, he finds that his 25 to 35-year-old customer base is paying up for On's premium supershoes, such as its $330 Cloudboom Strike LS sneakers or its $220 Cloudmonster Hyper. Hoka has lagged behind on innovation in his view, and while it continues to resonate with trail runners, it's still catching up to On in the lifestyle market. However, he feels both brands are losing grip of a middle-market they once dominated and allowing larger players to grab a hold, pointing to shoes such as Adidas' Adizero EVO SL and Asics' Novablast. 'There are shoes [by Asics, Nike and Adidas] that just feel more lively than anything that Hoka and On are doing in that middle-range, $140 to $160 price point,' said Diaz. Hoka is hoping to reassert its grip with recent updates to franchises like the Bondi 9 and Clifton 10, but its rollouts for these products haven't gone as smoothly as planned. The brand has only had limited colour assortments upon release, while discounted pairs of older styles have remained widely available through wholesale channels, eating away Hoka's DTC sales. On, meanwhile, has been able to mitigate any competitive challenges with a more diversified offering that includes products for tennis, hiking and training. These categories also open up more avenues for future growth. 'New categories build a broader positioning for the brand as it grows into a perceived white space in the premium segment of the market,' wrote William Blair consumer research analyst Dylan Carden in a recent research note. 'Power of the brand in turn opens new categories, where the company will follow a similar playbook, building performance credibility from which it can offer broader lifestyle products.' Setting a New Pace But analysts who are still bullish on Deckers believe Hoka's slower growth this quarter wasn't about cooling demand. UBS analyst Jay Sole, for instance, said in a recent note that he anticipates Hoka's growth will improve with more colours arriving for its best-selling franchises, old products being cleared out and other new product launches coming down the pipeline. 'I'm not really seeing the demand erosion,' said Sam Poser, a Williams Trading equity analyst. 'My guess is in their next quarter, we're going to see some kind of a flip where the domestic DTC business in the US inflects positively and is better than wholesale.' Hoka is also gaining ground outside of the US as it builds awareness globally. Deckers shared on its recent earnings call that Hoka's international sales now represent 34 percent of its total revenue, with chief financial officer Steven Fasching adding that 'internationally [Hoka] would outpace what we're seeing in the US.' Deckers' chief executive Stefano Caroti shared that Hoka was 'moving up brand rankings' with specialty partners in the UK, Germany and Italy, and that it was 'increasing its partner footprint in key cities' in China. The brand is approaching international growth in a meticulous and cautious way by focussing on sell-ins rather than sell-throughs, according to Poser. And even with brands like Nike and Adidas putting out new running styles that are clicking with shoppers, Hoka remains a well-known — and trusted — name in the running world. 'Very serious runners, because of the risk of injuries, like to stick to products they already know,' said Cole Townsend, founder of the running-fashion newsletter and online directory Running Supply. For that reason, many runners will still gravitate towards Hoka for daily trainers. On, meanwhile, still has work to do to win over legions of more serious runners, though Townsend does believe the brand is making inroads with professional runners. Granted that lifestyle is a segment On has a stronger footing in, analyst Telsey believes that Hoka's authenticity and connection to customers such as Townsend will move them to try new offerings from Hoka, in running and beyond. 'They're going through a period of transition a bit given the new product that's being introduced,' said Telsey.
CNBC
2 days ago
- Business
- CNBC
Top retail analyst Dana Telsey talks GAP earnings as stock tanks in extended trading
Dana Telsey, Telsey Group CEO, joins 'Closing Bell Overtime' to talk the recent slate of retail earnings.
Yahoo
2 days ago
- Business
- Yahoo
Capri Holdings' Leaner Portfolio After Versace Sale Support FY26 Inflection: Analyst
Telsey Advisory Group analyst Dana Telsey reiterated the Market Perform rating on Capri Holdings Limited (NYSE:CPRI), raising the price forecast from $17 to $20. On Wednesday, the firm reported a fourth-quarter adjusted loss of $4.90 per share, missing the Street view of a 14-cent loss. Quarterly sales of $1.035 billion (down 15.4% year over year) outpaced the analyst consensus estimate of $986.57 million. On a constant currency basis, total revenue decreased 14.1%.Telsey writes that results were mixed, with a smaller-than-expected sales decline balanced by a more significant drop in gross margins. Since reporting Q3 FY25 in February, Capri has made several notable announcements, including long-term brand-specific targets at its Investor Day, the departure of longtime CFO/COO Tom Edwards, and the $1.375 billion sale of Versace to Prada. Telsey considers these significant developments for a company navigating a delicate phase following the failed acquisition attempt by Tapestry, Inc. (NYSE:TPR) in late 2024. Management has reaffirmed its goal of stabilizing operations through FY26, with a return to growth anticipated in FY27. However, Telsey points out that substantial effort is still required, particularly at Michael Kors, Capri's largest brand, which has posted ten straight quarters of revenue declines. While the company absorbed a sizable loss on its Versace investment, the sale is expected to enhance margins, improve the balance sheet, and create room for potential share buybacks. Still, the analyst notes that the macro environment remains difficult for the remaining MK and Jimmy Choo brands, and Capri has considerable work ahead as it seeks to reset its brand portfolio and rebuild momentum over the next two years. Telsey notes that for fiscal 2026, most of Michael Kors' production will be sourced from Vietnam, Cambodia, and Indonesia, while Jimmy Choo will continue to rely largely on manufacturing in Italy. As a result, only about 5% of Capri Holdings' total U.S. production volume is tied to China. Under current tariff assumptions, 10% general and 30% for imports from China, the company expects an unmitigated cost impact of approximately $60 million, which could reduce gross margin by around 100 basis points. At the same time, recent weakness in the U.S. dollar is projected to offer slight benefits to both sales and operating expenses in FY26, Telsey adds. Telsey now projects the company's FY26 revenue to drop by 24.3% to $3.36 billion, a sharper decline than the previously projected 7.7% fall. Despite the steeper top-line decline, Telsey has raised the FY26 EPS estimate to $1.33, up from the prior $1.02 forecast. For FY27, Capri Holdings anticipates a return to revenue growth, supported in part by operating margin expansion. Telsey attributes this expected margin improvement to expense leverage stemming from ongoing cost-cutting initiatives, which should help the company rebuild profitability as it stabilizes its business. Price Action: CPRI shares are trading higher by 1.66% to $18.34 at last check Thursday. Read now:Photo by T. Schneider via Shutterstock Date Firm Action From To Mar 2022 Telsey Advisory Group Maintains Market Perform Feb 2022 Morgan Stanley Maintains Overweight Feb 2022 Credit Suisse Maintains Neutral View More Analyst Ratings for CPRI View the Latest Analyst Ratings Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? This article Capri Holdings' Leaner Portfolio After Versace Sale Support FY26 Inflection: Analyst originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved.
Fashion Network
3 days ago
- Business
- Fashion Network
Capri signals selective price hikes on Michael Kors handbags to counter tariff hit
Capri has narrowed its focus on the Michael Kors fashion brand, while jettisoning the underperforming Versace label to Italian rival Prada following a failed attempt to merge with rival and Coach parent Tapestry last year. At its largest Michael Kors brand, it aims to improve the retail stores through renovation and stabilize its wholesale revenue channel. Capri, which sources about 5% of its U.S. products from China, is also relying on diversifying its supply chain and working with its suppliers to absorb tariff-related costs over this year. However, a weakening consumer spending backdrop has led to cautious spending on high-end goods as shoppers worry over having to pay more in the coming months for all kinds of products, as tariff-related uncertainty weighs on global trade. "We continue to see meaningful work that needs to be done, particularly at its largest brand, Michael Kors, which has recorded 10 consecutive quarters of revenue declines," said Dana Telsey of Telsey Advisory Group. Capri expects total annual revenue in the range of $3.3 billion to $3.4 billion. The forecast, which excludes sales from the Versace brand, does not account for changes in global macroeconomic conditions, tariff rates, higher inflation or weakening consumer confidence, Capri said. For the quarter ended March 29, revenue dropped 15.4% to $1.04 billion, compared with analysts' average estimate of a 19.3% decline to $986.57 million, according to data compiled by LSEG. It posted a loss of 30 cents per share on an adjusted basis, compared to estimates of a loss of 15 cents.
Fashion Network
3 days ago
- Business
- Fashion Network
Capri signals selective price hikes on Michael Kors handbags to counter tariff hit
Capri has narrowed its focus on the Michael Kors fashion brand, while jettisoning the underperforming Versace label to Italian rival Prada following a failed attempt to merge with rival and Coach parent Tapestry last year. At its largest Michael Kors brand, it aims to improve the retail stores through renovation and stabilize its wholesale revenue channel. Capri, which sources about 5% of its U.S. products from China, is also relying on diversifying its supply chain and working with its suppliers to absorb tariff-related costs over this year. However, a weakening consumer spending backdrop has led to cautious spending on high-end goods as shoppers worry over having to pay more in the coming months for all kinds of products, as tariff-related uncertainty weighs on global trade. "We continue to see meaningful work that needs to be done, particularly at its largest brand, Michael Kors, which has recorded 10 consecutive quarters of revenue declines," said Dana Telsey of Telsey Advisory Group. Capri expects total annual revenue in the range of $3.3 billion to $3.4 billion. The forecast, which excludes sales from the Versace brand, does not account for changes in global macroeconomic conditions, tariff rates, higher inflation or weakening consumer confidence, Capri said. For the quarter ended March 29, revenue dropped 15.4% to $1.04 billion, compared with analysts' average estimate of a 19.3% decline to $986.57 million, according to data compiled by LSEG. It posted a loss of 30 cents per share on an adjusted basis, compared to estimates of a loss of 15 cents.
