Deckers Investment in R&D and Marketing
This is a third post of a series on Hoka's sales growth. The first one focused on putting that growth into perspective, the second one looked at understanding the impact of Direct-to-Consumer. And this one looks at Deckers's investment in research & development (R&D) and in marketing.
Deckers do not report their R&D and marketing investments on a per brand basis, that's why I have looked at those numbers together below.
Research & Development
Deckers do not report their R&D costs separately, but as part of the SG&A section of their P&L.
It is for Deckers as a whole, but still gives a view into the dollar value and into the growth rate of the R&D investments.
Related to that category, it's interesting to see the number of patents Deckers have at the end of each of the last four fiscal years.
Deckers have shared that their patents expire at different points in time, which explains why the number of registered patents has grown with just 6% (11 patents) over the last four years. The number of pending patents however grows much faster and more significantly (four times over four years), which clearly shows the active investment in innovation and new patent filings.
Advertising, Marketing, and Promotion
Similar to the R&D costs, Advertising, Marketing, and Promotion are also reported as part of the overall SG&A in Deckers's P&L.
Looking at the data, couple of things stand out:
- Advertising, Marketing, and Promotion expenses grow significantly - 36% ($67 million) just over the last year. Deckers have stated that that's driven primary by:
higher digital marketing and advertising development expenses for the Hoka and UGG brand
- It is ~25% of the total SG&A category.
Finally, while Deckers do not report those expenses for Hoka specifically, it is quite clear that they play a key role in Hoka's sales growth over the years. Product innovation has been called out as a factor for the expected continuous demand for Hoka products, as well as increased brand awareness and category extensions.
The last couple of years, since the Covid pandemic started have offered all kinds of supply chain challenges for any global business, so I will try to look at that for Deckers and Hoka in my next post.