Deckers Outdoor Corporation (DECK) Q3 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary highlights strong financial performance, particularly with HOKA's growth and strategic product diversification. The Q&A section reinforces optimism with positive analyst sentiment, despite conservative guidance and some lack of specifics. Share repurchases and strong DTC performance contribute positively. However, the cautious U.S. consumer outlook and unmitigated tariff impact slightly temper enthusiasm. Overall, the sentiment is positive, suggesting a stock price increase in the 2% to 8% range over the next two weeks.
Key Financial Performance
Revenue $1.96 billion, representing a 7% increase versus the prior year. Growth driven by HOKA (18% increase) and UGG (5% increase). Reasons include strong global demand, balanced growth across DTC and wholesale, and effective marketplace management.
HOKA Revenue $629 million, an 18% increase versus last year. Growth attributed to broader consumer adoption, balanced growth across DTC and wholesale, and improved U.S. DTC performance.
UGG Revenue $1.3 billion, a 5% increase versus last year. Growth driven by improved global DTC performance, strategic product allocation to wholesale, and strong consumer demand.
Gross Margin 59.8%, better than expected due to lower-than-anticipated tariffs, pricing actions, and slightly lower promotions. Both UGG and HOKA maintained high levels of full price selling.
Diluted Earnings Per Share (EPS) $3.33, an 11% increase versus last year. Growth driven by strong gross margins, effective pricing strategies, and robust brand performance.
Year-to-Date Revenue 10% increase. HOKA revenue grew 16%, UGG revenue grew 8%, and diluted EPS increased 13%. Reasons include strong global demand and effective marketplace strategies.
Inventory $633 million, a 10% increase versus last year. Includes tariffs paid on inventory received this year.
Share Repurchase Approximately $349 million worth of shares repurchased in the third quarter at an average price of $92.36. Year-to-date repurchases total approximately 8 million shares, representing more than 5% of shares outstanding at the beginning of the fiscal year.
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Operating Highlights
HOKA Revenue Growth: HOKA revenue increased by 18% year-over-year to $629 million, driven by broader consumer adoption and innovative products.
UGG Revenue Growth: UGG revenue increased by 5% year-over-year to a record $1.3 billion, supported by strong DTC and wholesale performance.
New Product Launches: UGG introduced the Quill franchise, which was a standout success, and plans to launch new products like Minimel, Otzo, and Golden collection sandals in Q4. HOKA launched Gaviota 6 and Arahi 8 and plans to release Cielo X1 3.0, Mach 7, and Speedgoat 7.
International Expansion: HOKA and UGG collectively drove a 15% revenue increase in international markets, with HOKA expanding in Europe and Asia, including China.
U.S. Market Performance: HOKA and UGG achieved a 5% revenue increase in the U.S., with HOKA gaining market share in the road running category and UGG benefiting from improved DTC performance.
Gross Margin: Gross margin improved to 59.8%, supported by high levels of full-price selling and effective pricing actions.
Membership Programs: HOKA's revamped membership program enhanced consumer loyalty, driving higher revenue per consumer and multi-category purchasing.
Marketplace Management: Deckers maintained a pull model of demand, ensuring balanced growth across DTC and wholesale channels for HOKA and UGG.
Share Repurchase Program: Deckers repurchased $349 million worth of shares in Q3, contributing to shareholder value.
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Risk or Challenges
Tariffs and Global Trade Policy: The company faces a significant impact from tariffs, with an estimated unmitigated tariff impact of $110 million for fiscal year 2026. Although mitigated to $25 million, this remains a financial burden and could escalate if tariffs persist.
Foreign Currency Exchange Rates: Fluctuations in foreign currency exchange rates pose a risk to the company's financial performance, particularly in international markets.
Inventory Management: The company is managing higher inventory levels, which increased by 10% compared to the previous year. This could lead to potential challenges in inventory turnover and increased storage costs.
Consumer Behavior and Price Sensitivity: Changes in consumer behavior, including responses to price increases, could impact demand for the company's products, especially in a dynamic consumer environment.
Supply Chain and Distribution: The company is exposed to risks related to supply chain disruptions and the need for strategic adjustments in distribution, particularly as it expands internationally.
Regulatory and Compliance Risks: The company must navigate complex regulatory environments in various international markets, which could pose compliance challenges and increase operational costs.
Market Expansion Challenges: While expanding into international markets, the company faces challenges in building brand awareness and establishing distribution networks, particularly in regions like Europe and Asia.
Strategic Execution Risks: The company’s ability to execute its strategic plans, including product launches and marketing campaigns, is critical. Any missteps could adversely affect its growth trajectory.
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Guidance & Outlook
Revenue Expectations: Deckers has increased its full-year revenue expectations to a range of $5.4 billion to $5.425 billion for fiscal year 2026. HOKA is expected to deliver mid-teens revenue growth, while UGG is projected to increase revenue by mid-single digits, reaching the high end of prior guidance.
Gross Margin: Gross margin is now expected to be approximately 57%, which is 100 basis points above prior guidance, primarily due to lower-than-expected net impact from tariffs.
Operating Margin: Operating margin is projected to be approximately 22.5%, which is 100 basis points above prior guidance, maintaining a best-in-class profile.
Earnings Per Share (EPS): Diluted EPS is now expected to range between $6.80 and $6.85, representing a 7% to 8% increase over last year's record EPS.
HOKA Brand Growth: HOKA is expected to remain the fastest-growing brand, with significant potential for international expansion and consistent progress in the U.S. The brand is projected to deliver 13% to 14% growth in Q4, achieving its largest-ever quarterly revenue.
UGG Brand Growth: UGG revenue is assumed to be roughly flat in Q4 compared to last year due to earlier shipments in Q3. However, the brand is expected to continue driving growth across DTC and wholesale channels, supported by men's and 365 product initiatives.
Tariff Impact: The unmitigated tariff impact on fiscal year 2026 is estimated at $110 million, with a net impact of approximately $25 million after pricing actions and inventory timing benefits.
Future Investments: Deckers plans to continue making targeted investments to support long-term growth opportunities for UGG and HOKA, leveraging shared service synergies and maintaining a disciplined approach to portfolio management.
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Shareholder Return Plan
Share Repurchase Program: In the third quarter, Deckers repurchased approximately $349 million worth of shares at an average price of $92.36. Through the first 9 months of fiscal year 2026, the company has repurchased approximately 8 million shares, representing more than 5% of shares outstanding at the beginning of this fiscal year. As of December 31, 2025, the company had approximately $1.8 billion remaining authorized for share repurchases. Deckers is on track to repurchase more than $1 billion in total by the end of the fiscal year, which is expected to contribute more than $0.20 of diluted earnings per share improvement.
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Key Q&A
Q:What has driven the improvement in HOKA's business from last quarter to this quarter?
A:The improvement is attributed to learnings from last year, such as spacing out key franchise launches, tightening inventories of outgoing styles, and leveraging the DTC channel to move closeouts in a controlled manner. New product introductions like Gaviota 5, Arahi, Transport 2, and Cielo X1 3.0 have also performed well, and the trajectory is expected to continue.
Q:What is the projection for HOKA's lifestyle business and how has the product line diversification impacted the business?
A:The lifestyle category is seen as a huge opportunity for the brand, with early positive reads on products like Stinson 7, Bondi Mary Jane, and Speed loafer. The team has clarified line architecture, simplified designs, and hit more commercial price points. Diversification has shifted the mix from just Bondi and Clifton to a broader range of products.
Q:What is the channel strategy for the UGG brand in fiscal '27?
A:The strategy involves balanced growth across all channels, regions, and categories. The brand has delivered newness with products like Lowmel sneakers and classic offerings. The focus is on segmentation, differentiation, and managing increasing demand, with a shift towards DTC growth.
Q:What are the assumptions for DTC performance moving forward?
A:Improvements in DTC performance are expected to continue, driven by structural contributors like the HOKA membership program, which has improved revenue per customer, units per transaction, and multi-category purchases. The focus is on drawing more full-priced consumers and improving gross margins.
Q:Why is the HOKA guide of 13%-14% growth considered conservative?
A:The guide reflects a focus on long-term sustainable growth rather than quarterly comparisons. The strategy involves balancing wholesale demand and emphasizing DTC growth during key selling seasons. Strong consumer demand and early wholesale orders have also influenced the guide.
Q:What is the outlook for UGG and HOKA in fiscal '27?
A:UGG is expected to grow in fiscal '27, with strong demand globally. HOKA's order books for the first three quarters of fiscal '27 are encouraging, and the brand is expected to continue its growth trajectory.
Q:How has HOKA performed across different wholesale channels?
A:HOKA has performed well across all channels, with sell-through outpacing sell-in. Performance products have outperformed lifestyle products in athletic specialty spaces, and the brand is the #2 in certain athletic specialty retailers for December.
Q:What is the outlook for the U.S. consumer and its impact on brand growth?
A:While cautious about the economy and the U.S. consumer, the brands have shown strong performance, increasing optimism for growth in the U.S. next year.
Q:How did the domestic DTC business perform for HOKA and UGG?
A:Both brands performed well in the domestic DTC business, with sequential improvements and positive inflection in the U.S. market.
Q:How does the company define lifestyle products for HOKA?
A:Lifestyle products are defined as those created by the lifestyle category, but performance products are also treated in a lifestyle manner when adopted by lifestyle specialty distribution. The company is moving more aggressively into a lifestyle-defined category.
Q:What drove the positive inflection in HOKA's U.S. DTC performance in Q3?
A:The HOKA membership program improved revenue per customer, units per transaction, and multi-category purchases. A cleaner marketplace with less noise from outgoing styles also contributed to the positive inflection.
Q:Is there room for HOKA to take pricing higher?
A:Yes, selectively and strategically. Price increases are implemented when products are upgraded, with some increases planned for spring and fall.
Q:What are the plans for DTC channel expansion and store openings?
A:Both retail and e-commerce channels performed well. The company plans to continue expanding DTC channels, but specific store opening plans were not detailed.
Q:How has the wholesale channel performed for UGG and HOKA?
A:Both brands have performed well across wholesale channels, with balanced performance across retailers like Journeys, Foot Locker, ESG, and run specialty channels. HOKA is a top brand in the run specialty channel.
Q:Review of Unclear Management Responses
A:Management avoided providing specific fiscal '27 guidance for HOKA and UGG order books, only stating that they are encouraged by the current trajectory. Additionally, they did not provide detailed regional DTC performance figures or specific store opening plans, and their response to pricing strategy lacked detailed numerical data.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Congratulations
Lowmel
Quill
SGA investment
UGG level
UGG presence
acceptance
access
adoption
ambassador
brand DTC
brand outlook
collaboration brand
collection
consumer channel
consumer connection
date
demand brand
destination
door
end
holiday season
initiative
launch brand
lifestyle category
membership program
model demand
offering
opportunity marketplace
priority
product collaboration
product consumer
region opportunity
season demand
segment brand
segment sporting
selling price
share expansion
specialty segment
synergy
timing inventory
value share
DECK Transcript
Deckers Outdoor Corporation (DECK) Q3 2026 Earnings Call Transcript
Positive1-29
The earnings call summary highlights strong financial performance, particularly with HOKA's growth and strategic product diversification. The Q&A section reinforces optimism with positive analyst sentiment, despite conservative guidance and some lack of specifics. Share repurchases and strong DTC performance contribute positively. However, the cautious U.S. consumer outlook and unmitigated tariff impact slightly temper enthusiasm. Overall, the sentiment is positive, suggesting a stock price increase in the 2% to 8% range over the next two weeks.
Deckers Outdoor Corporation (DECK) Q2 2026 Earnings Call Transcript
Positive10-23
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.
Deckers Outdoor Corporation (DECK) Q1 2026 Earnings Call Transcript
Unknown7-24
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.
Deckers Outdoor Corporation (NYSE:DECK) Q4 2025 Earnings Call Transcript
Positive5-23
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.
DECK Report
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