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01/11 11:06
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals a mixed outlook. Positive aspects include strong revenue growth, brand initiatives, and stock repurchase plans. However, the lack of formal guidance, expected margin decline, and increased costs due to tariffs temper enthusiasm. The Q&A section highlights innovation and international growth, but concerns about tariffs and promotional activity impact sentiment. Overall, the balanced positive and negative factors suggest a neutral short-term stock price movement.
Revenue Revenue grew 17% year-over-year to $965 million, driven by strong performance from HOKA and UGG brands. HOKA delivered record quarterly revenue of $653 million (up 20% YoY), and UGG achieved $265 million (up 19% YoY). Growth was attributed to strong international market performance and wholesale channel growth.
Diluted Earnings Per Share (EPS) Diluted EPS increased 24% year-over-year to $0.93. This growth was driven by higher revenue, better-than-expected gross margin performance, and disciplined SG&A expense management.
Gross Margin Gross margin was 55.8%, down 110 basis points from the prior year’s 56.9%. The decline was due to unfavorable channel mix (wholesale growing faster than DTC), increased promotions, and higher freight rates, partially offset by favorable product mix and foreign currency exchange rates.
SG&A Expenses SG&A expenses increased 11% year-over-year to $373 million, representing 38.6% of revenue (down from 40.9% last year). The increase in dollar terms was due to higher marketing spend, increased warehouse costs, and greater rent expenses from retail expansion.
International Revenue International revenue grew 50% year-over-year, driven by strong performance in EMEA and APAC regions for both HOKA and UGG brands. EMEA saw record wholesale reorders, and APAC growth was fueled by retail expansion in China.
Inventory Inventory increased 13% year-over-year to $849 million, reflecting higher stock levels to support growth and fulfill wholesale orders.
Cash and Equivalents Cash and equivalents stood at $1.7 billion, with no outstanding borrowings, showcasing a strong financial position.
HOKA product updates: Adjusting product life cycles to ensure steady and balanced introduction of new products, tightening marketplace inventory targets, and enhancing the HOKA DTC loyalty program.
UGG product launches: Introduction of new styles like PeakMod and seasonal collections such as the Golden collection and Lowmel franchise.
HOKA international growth: EMEA and APAC regions driving growth with record wholesale reorders and expansion in China through mono-brand and owned retail stores.
UGG international growth: EMEA and China contributing significantly to revenue growth, with a focus on men's footwear and versatile year-round styles.
Revenue growth: Total revenue increased by 17% to $965 million, driven by HOKA and UGG brands.
Wholesale channel performance: Wholesale channel outpaced DTC, reflecting strong sell-through and increased shipments.
Brand campaigns: HOKA launched 'Together We Fly Higher' campaign to strengthen community and brand identity.
Tariff mitigation strategies: Implemented selective price increases and cost-sharing measures to offset tariff impacts.
Macroeconomic Uncertainty: The company acknowledges ongoing macroeconomic uncertainty, including global trade policy changes and their potential impact on consumer behavior and purchasing patterns.
Tariff Increases: The company faces increased tariffs, particularly in Vietnam, which could lead to an unmitigated impact of $185 million on cost of goods sold in fiscal year 2026. This is an increase from the previously estimated $150 million.
U.S. Consumer Sentiment: Pressure in the U.S. market is noted, with consumer sentiment and preferences shifting towards in-store shopping, which has impacted the direct-to-consumer (DTC) online channel.
Promotional Activity: Increased promotional activity is expected to impact gross margins, particularly for the HOKA and UGG brands.
Freight Costs: Higher freight costs are anticipated to affect gross margins, especially when compared to the exceptionally low levels of the prior year.
Inventory Management: Challenges in managing marketplace inventory, particularly for outgoing models and product updates, have been identified as areas for improvement.
Execution Challenges: The company has faced execution challenges over the past six months, particularly in adjusting product life cycles and managing key franchise updates.
Dynamic Consumer Environment: The company must remain nimble to adapt to changes in consumer behavior, including the impact of higher prices on purchasing decisions.
Revenue Projections: For the second quarter of fiscal year 2026, revenue is expected to range between $1.38 billion to $1.42 billion. HOKA is projected to grow approximately 10%, while UGG is expected to increase at least mid-single digits.
Gross Margin Outlook: Gross margin for Q2 is anticipated to be between 53.5% to 54%, reflecting increased tariffs, higher promotional activity, and elevated freight costs, partially offset by initial price increases.
SG&A Expense Projections: SG&A expenses are expected to be approximately 33.5% of revenue for Q2, driven by investments in brand-building marketing.
Earnings Per Share (EPS) Guidance: Diluted EPS for Q2 is projected to range between $1.50 to $1.55, compared to $1.59 in the prior year.
HOKA Brand Growth: HOKA is expected to continue as the fastest-growing brand, with international markets and wholesale channels driving growth. Adjustments to product life cycles and enhanced loyalty programs are expected to improve consumer experience and facilitate growth.
UGG Brand Growth: UGG is strategically positioned for growth in the second half of calendar year 2025, with lean inventory management and new product launches, including the iconic design campaign and key product stories.
Tariff Impact Mitigation: The company anticipates a total of $185 million in unmitigated tariff impact for fiscal year 2026, with measures in place to recapture up to $75 million through price adjustments and cost-sharing with factory partners.
Long-Term Strategic Framework: Deckers plans to leverage its disciplined operating model and strong financial framework to navigate macroeconomic uncertainties, with a focus on long-term brand investment and market share growth.
Share Repurchase Program: During the first quarter, Deckers repurchased approximately $183 million worth of shares at an average price per share of $109.84. As of June 30, 2025, the company had approximately $2.4 billion remaining under its stock repurchase authorization.
The earnings call reveals strong financial performance with a 9% revenue increase and a 14% EPS growth, driven by HOKA and UGG brands. Despite tariff pressures, gross margins improved. Share repurchases indicate confidence in stock value. Positive guidance for HOKA and UGG, along with strategic inventory management and balanced DTC and wholesale growth, suggests a favorable outlook. While tariffs and consumer demand fluctuations pose challenges, the company's proactive measures and strong brand positioning support a positive sentiment, likely resulting in a 2% to 8% stock price increase over the next two weeks.
The earnings call reveals a mixed outlook. Positive aspects include strong revenue growth, brand initiatives, and stock repurchase plans. However, the lack of formal guidance, expected margin decline, and increased costs due to tariffs temper enthusiasm. The Q&A section highlights innovation and international growth, but concerns about tariffs and promotional activity impact sentiment. Overall, the balanced positive and negative factors suggest a neutral short-term stock price movement.
The earnings call reveals strong financial performance with a 16% revenue increase and a 30% EPS increase, supported by strategic share repurchases. Despite some concerns about tariffs and economic conditions, the company maintains optimistic growth expectations for its brands, particularly HOKA. The substantial increase in share repurchase authorization further boosts investor confidence. However, management's lack of clarity on specific growth expectations and the impact of tariffs tempers the sentiment slightly. Overall, the positive financial metrics and shareholder return plans outweigh the concerns, suggesting a positive stock price movement.
The earnings call reveals strong financial performance with 16% revenue growth, improved margins, and a 30% EPS increase. The shareholder return plan is robust with a significant share repurchase program. Despite some U.S. DTC pressure and tariff concerns, international growth and wholesale expansion are promising. Positive guidance and strategic initiatives like product launches and a balanced DTC-wholesale strategy further support a positive sentiment. The market is likely to react positively, especially with optimistic future revenue guidance.
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