Shoe Brands’ Secret to Success? Going Slow
Trendy shoe brands such as Hoka, On and Birkenstock are taking a page out of luxury’s playbook
3 min
Hoka sneakers, On shoes, Ugg boots and Birkenstock sandals don’t look very much alike, but they do have one thing in common: They have all been flying off the shelf. What are they doing right?
Getting a shoe’s comfort, performance and style right is important. But these brands also have taken a page out of luxury brands’ playbook by being choosy about where they make their shoes available and pacing growth.
Deckers Outdoor , which owns both Hoka and Ugg, has seen healthy growth at both brands. Sales at Ugg, its largest brand, rose 16% last fiscal year and are expected to grow by a further 7.4% in the current fiscal year. Revenue at Hoka, its second-largest brand, has managed an impressive compound annual growth rate of roughly 50% over the last four years, while its competitor, On, averaged compound growth of more than 65% over the comparable period. Revenues for both On and Hoka are expected to expand by some 25% this year. Sandal brand Birkenstock is set to increase revenue by a double-digit percentage in each of the next few years.
Industry analysts say Deckers stands out for the meticulous way it allocates inventory. The company learned its lesson through Ugg boots, which were popular in the early 2000s before fizzling out. The company made a decision in 2016 to stop distributing through certain retailers, pulling back from some 200 stores. Instead, it narrowed its distribution through larger partners such as Amazon and Macy’s. That effort, alongside buzzy, limited supply launches of some styles—such as the Ultra Mini Platforms—helped boost brand cachet.
Deckers applied those learnings to Hoka, which it acquired in 2012. The company has been introducing Hoka to retail partners at a “slow, deliberate pace,” and has been picky about the stores it works with, according to Joseph Civello, equity analyst at Truist Securities. The brand is also intentional about the styles it introduces by store: For example, putting performance-driven sneakers at running specialty stores while prioritising style-forward shoes at locations like Foot Locker to attract sneakerheads, according to Civello.
Hoka rival On has opted for a selective strategy, too, though it made some mistakes along the way. The company has stopped selling at discount shoe seller DSW in the U.S. and at stores it classifies as “comfort” shoe retailers in Europe, where the brand wasn’t reaching the right audience. Its current retail partners include specialty running stores such as Fleet Feet and upscale department store Nordstrom .
Birkenstock is another example: The brand typically ships retailers about 75% of what they would like to order, according to a research note from Evercore. In a September industry conference, Birkenstock Americas President David Kahan said the scarcity model drives consumers’ “urgency to buy.” “Nobody is buying the product and price comparing—[asking], can I get it cheaper someplace else?” he said.
The selective strategy is clearly showing up on these companies’ bottom lines: Deckers Outdoor, On and Birkenstock all boast gross margins exceeding 55%. On’s 60% gross margins are closer to luxury behemoth LVMH’s than to Nike ’s.
Getting the quantity of inventory right is important, but so is achieving the right mix of where it is sold. These brands would make more profit if they started channeling more sales through their own stores and websites. But as Nike learned the hard way, companies can also shoot themselves in the foot by trying to abandon middlemen too quickly . Sneaker upstarts like Hoka probably benefited from Nike’s decision to abruptly exit retail stores, notes Paul Lejuez, equity analyst at Citi. Deckers Outdoor, On and Birkenstock are increasing the share of shoes sold directly, but they are doing so slowly. Retail partners still account for about 60% of sales at all three companies.
Retail is littered with examples where brands’ desire for rapid growth backfired. Under Armour , for example, was the subject of an accounting probe a few years back, after it was accused of trying to inflate quarterly sales numbers by urging retailers to take products early and redirecting goods to off-price chains like T.J. Maxx in the final days of a quarter. The company settled those claims without admitting or denying wrongdoing. Whether or not those claims were true, Under Armour’s overexposure to discount sellers cheapened the brand’s image, which it is still trying to recover .
VF Corp., which acquired popular streetwear brand Supreme in 2020, failed to keep the brand’s street cred going, possibly because it made products too available . It sold Supreme to EssilorLuxottica earlier this year.
Publicly listed companies are prone to short-term thinking because they are beholden to investors who want to see growth quarter to quarter. That isn’t the case for European luxury conglomerates, which are publicly traded but are still family controlled and, thus, can put the brakes on short-term revenue growth in favour of long-term cachet.
To keep the streak of success going, investors of these popular shoemakers might need to adopt the patience of luxury-conglomerate families.
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The lunar flyby would be the deepest humans have traveled in space in decades.
4 min
It’s go time for the highest-stakes mission at NASA in more than 50 years.
On April 1, the agency is set to launch four astronauts around the moon, the deepest human spaceflight since the final Apollo lunar landing in 1972.
The launch window for Artemis II , as the mission is called, opens at 6:24 p.m. ET.
National Aeronautics and Space Administration teams have been preparing the vehicles to depart from Florida’s Kennedy Space Center on the planned roughly 10-day trip. Crew members have trained for years for this moment.
Reid Wiseman, the NASA astronaut serving as mission commander, said he doesn’t fear taking the voyage. A widower, he does worry at times about what he is putting his daughters through.
“I could have a very comfortable life for them,” Wiseman said in an interview last September.
“But I’m also a human, and I see the spirit in their eyes that is burning in my soul too. And so we’ve just got to never stop going.”
Wiseman’s crewmates on Artemis II are NASA’s Victor Glover and Christina Koch, as well as Canadian Space Agency astronaut Jeremy Hansen.
What are the goals for Artemis II?
The biggest one: Safely fly the crew on vehicles that have never carried astronauts before.
The towering Space Launch System rocket has the job of lofting a vehicle called Orion into space and on its way to the moon.
Orion is designed to carry the crew around the moon and back. Myriad systems on the ship—life support, communications, navigation—will be tested with the astronauts on board.
SLS and Orion don’t have much flight experience. The vehicles last flew in 2022, when the agency completed its uncrewed Artemis I mission .
How is the mission expected to unfold?
Artemis II will begin when SLS takes off from a launchpad in Florida with Orion stacked on top of it.
The so-called upper stage of SLS will later separate from the main part of the rocket with Orion attached, and use its engine to set up the latter vehicle for a push to the moon.
After Orion separates from the upper stage, it will conduct what is called a translunar injection—the engine firing that commits Orion to soaring out to the moon. It will fly to the moon over the course of a few days and travel around its far side.
Orion will face a tough return home after speeding through space. As it hits Earth’s atmosphere, Orion will be flying at 25,000 miles an hour and face temperatures of 5,000 degrees as it slows down. The capsule is designed to land under parachutes in the Pacific Ocean, not far from San Diego.
Is it possible Artemis II will be delayed?
Yes.
For safety reasons, the agency won’t launch if certain tough weather conditions roll through the Cape Canaveral, Fla., area. Delays caused by technical problems are possible, too. NASA has other dates identified for the mission if it doesn’t begin April 1.
Who are the astronauts flying on Artemis II?
The crew will be led by Wiseman, a retired Navy pilot who completed military deployments before joining NASA’s astronaut corps. He traveled to the International Space Station in 2014.
Two other astronauts will represent NASA during the mission: Glover, an experienced Navy pilot, and Koch, who began her career as an electrical engineer for the agency and once spent a year at a research station in the South Pole. Both have traveled to the space station before.
Hansen is a military pilot who joined Canada’s astronaut corps in 2009. He will be making his first trip to space.
Koch’s participation in Artemis II will mark the first time a woman has flown beyond orbits near Earth. Glover and Hansen will be the first African-American and non-American astronauts, respectively, to do the same.
What will the astronauts do during the flight?
The astronauts will evaluate how Orion flies, practice emergency procedures and capture images of the far side of the moon for scientific and exploration purposes (they may become the first humans to see parts of the far side of the lunar surface). Health-tracking projects of the astronauts are designed to inform future missions.
Those efforts will play out in Orion’s crew module, which has about two minivans worth of living area.
On board, the astronauts will spend about 30 minutes a day exercising, using a device that allows them to do dead lifts, rowing and more. Sleep will come in eight-hour stretches in hammocks.
There is a custom-made warmer for meals, with beef brisket and veggie quiche on the menu.
Each astronaut is permitted two flavored beverages a day, including coffee. The crew will hold one hourlong shared meal each day.
The Universal Waste Management System—that’s the toilet—uses air flow to pull fluid and solid waste away into containers.
What happens after Artemis II?
Assuming it goes well, NASA will march on to Artemis III, scheduled for next year. During that operation, NASA plans to launch Orion with crew members on board and have the ship practice docking with lunar-lander vehicles that Elon Musk’s SpaceX and Jeff Bezos’ Blue Origin have been developing. The rendezvous operations will occur relatively close to Earth.
NASA hopes that its contractors and the agency itself are ready to attempt one or more lunar landing missions in 2028. Many current and former spaceflight officials are skeptical that timeline is feasible.
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