Deckers Outdoor Corporation (DECK) Q2 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
Second Quarter Revenue $1.43 billion, representing an increase of 9% versus the prior year. Growth driven by HOKA and UGG brands, which increased 11% and 10% respectively.
HOKA Revenue (First Half) Increased by 15% versus last year. Growth driven by consumer-led updates to key franchises and international market expansion.
UGG Revenue (First Half) Increased by 12% versus last year. Growth driven by wholesale demand and earlier shipments.
Diluted Earnings Per Share (Second Quarter) $1.82, representing a 14% increase compared to $1.59 last year. Growth attributed to better-than-expected gross margin and pricing actions.
Gross Margin (Second Quarter) 56.2%, up 30 basis points from last year's 55.9%. Growth driven by price increases, favorable product mix, and foreign currency exchange rates.
International Revenue Growth (First Half) Increased by 38% year-over-year, driven by wholesale channel growth and brand-building marketing investments.
Inventory $836 million, up 7% versus the same point last year. Increase attributed to strategic inventory management.
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Operating Highlights
HOKA product updates: Consumer-led updates to the brand's 3 largest road running franchises: Clifton, Bondi, and Arahi. Expansion and evolution of the Mafate franchise. Introduction of the Mach 7 and Mach Remastered for spring '26.
UGG product updates: Launch of new products like the Zora Ballet Flat and Classic Micro. Men's footwear growth at twice the rate of the overall brand.
International expansion: HOKA and UGG international revenue grew 38% YoY. HOKA gained market share in Europe and China, with new store openings and strong consumer demand.
U.S. market dynamics: U.S. consumer sentiment under pressure, but HOKA and UGG are positioned for long-term success. Wholesale sell-through increased double digits.
Revenue growth: Total company revenue grew 12% in the first half of fiscal 2026. HOKA revenue increased by 15%, and UGG revenue rose by 12%.
Profitability: Diluted earnings per share grew by 17% in the first half. Gross margin for Q2 was 56.2%, up 30 basis points YoY.
Channel strategy: Focus on achieving a balance of 50% between direct-to-consumer and wholesale channels. Investments in marketing to build global brand awareness.
Brand positioning: HOKA positioned as a global performance brand. UGG focused on product evolution and maintaining cultural relevance.
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Risk or Challenges
Macroeconomic Environment: The U.S. consumer sentiment remains under pressure, which could impact demand for the company's products. Additionally, the macroeconomic environment is challenging, with shifts in consumer preferences towards multi-brand in-store shopping experiences.
Tariffs and Trade Policy: The company faces significant headwinds from increased tariffs, with an estimated unmitigated impact of $150 million for fiscal year 2026. Although mitigation efforts are in place, these tariffs could still adversely affect profitability.
Direct-to-Consumer (DTC) Business: The DTC segment has experienced a decline, particularly for the UGG brand, due to better in-stock positions with wholesale partners and shifts in consumer shopping habits. This could impact the company's ability to maintain a balanced revenue mix.
Supply Chain and Inventory Management: Earlier shipments and inventory management strategies have created pressures, particularly in the UGG brand's DTC business. Additionally, the company is transitioning to a third-party warehouse in Europe, which could pose operational risks.
Foreign Currency Exchange Rates: Fluctuations in foreign currency exchange rates remain a risk, potentially impacting revenue and profitability.
Geopolitical and Global Trade Risks: The company acknowledges risks from geopolitical tensions and global trade uncertainties, which could disrupt operations and supply chains.
Consumer Behavior and Pricing: Changes in consumer behavior, including responses to price increases, could impact demand. The company is also navigating a dynamic consumer environment with heightened preferences for multi-brand shopping experiences.
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Guidance & Outlook
Revenue Guidance: Total company revenue for fiscal 2026 is expected to be approximately $5.35 billion, with HOKA increasing by a low teens percentage and UGG growing in the range of a low to mid-single-digit percentage.
Gross Margin: Gross margin is projected to be approximately 56%, with anticipated headwinds from tariffs in the second half of the fiscal year, partially offset by mitigation strategies and normalized promotional levels.
SG&A Expenses: SG&A expenses are expected to be approximately 34.5% of revenue, reflecting investments in long-term brand opportunities.
Operating Margin: Operating margin is projected to be approximately 21.5%, maintaining a top-tier profitability level relative to peers.
Earnings Per Share (EPS): Earnings per share for fiscal 2026 are expected to range between $6.30 and $6.39.
International vs. U.S. Growth: International growth is expected to outpace U.S. growth, with global wholesale growth outpacing direct-to-consumer (DTC) growth for fiscal 2026.
Tariff Impact: The unmitigated tariff impact on fiscal 2026 is estimated at approximately $150 million, with mitigation efforts expected to offset $75 million to $95 million of this pressure.
HOKA Brand Projections: HOKA is expected to continue gaining market share globally, with a focus on driving healthy sell-through, leveraging the DTC loyalty program, and preparing for product updates in spring 2026.
UGG Brand Projections: UGG is expected to maintain strong demand globally, with a focus on new product launches, cohesive brand stories, and marketing campaigns to drive consumer engagement.
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Shareholder Return Plan
dividends: No specific mention of dividends or a dividend program was made in the transcript.
share repurchase: The company repurchased approximately $282 million worth of shares at an average price of $109.31 during the second quarter. As of September 30, 2025, the company had approximately $2.2 billion remaining authorized for share repurchases.
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Key Q&A
Q:Can you explain the revised guidance for HOKA and UGG growth expectations?
A:The guidance for HOKA has been revised to low teens growth for the back half of the year, reflecting the impact of tariffs and a cautious U.S. consumer. UGG growth is expected to be in the low single to mid-single digits. Management emphasized long-term sustainable growth over short-term gains.
Q:What is the expected performance of HOKA in the back half of the year?
A:HOKA is expected to see more pressure in Q3 with stronger growth in Q4, depending on consumer behavior during the holiday season. The brand is well-positioned to capture demand if the consumer shows up.
Q:What is the split between DTC and wholesale for Q3 and Q4?
A:DTC is expected to improve in Q3 and further in Q4. Wholesale growth was more prominent in the first half of the year, leading to a timing effect. The company anticipates a balance between DTC and wholesale in the long term.
Q:How is the company managing tariff impacts on margins?
A:Tariffs are causing margin pressure, particularly in the back half of the year and into FY '27. The company has mitigated some impacts through inventory management and pricing strategies but expects continued headwinds.
Q:What is the outlook for HOKA's product launches and growth opportunities?
A:HOKA is focusing on performance run, trail, hike, fitness, lifestyle, and apparel categories. Key product launches include updates to Gaviota, Mach, Transport, and Speedgoat, with a major update to Clifton in fall '26. The brand sees significant growth potential in the U.S. and internationally.
Q:What is the impact of price increases on consumer demand?
A:Price increases have not negatively impacted demand. Sell-through on key styles remains strong for both UGG and HOKA.
Q:How is the company addressing peaks and valleys in consumer demand?
A:The company is experiencing deeper valleys and higher peaks in demand, likely due to U.S. consumer uncertainty. Back-to-school was strong, and a strong holiday season is anticipated.
Q:What is the company's approach to wholesale and DTC balance?
A:The company is strategically expanding wholesale distribution to increase brand reach while maintaining a long-term goal of a 50-50 balance between wholesale and DTC. Wholesale growth is expected to slow as DTC picks up.
Q:What is the guidance for operating margins in the back half of the year?
A:Operating margins are expected to be in the low 20% range for the back half, primarily impacted by tariffs and some level of promotion.
Q:What are the learnings from HOKA's product transitions in 2025?
A:2025 is considered a transition year with too many product launches clustered in the first half. The company plans to space out launches more effectively in the future.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the specific impact of tariffs on HOKA's initial guidance and provided vague responses about the exact magnitude of tariff-related margin pressures. They also did not provide detailed breakdowns of the 'healthy order book' for spring/summer '26 or the specific financial impact of deeper valleys and higher peaks in consumer demand.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Chamonix
Classic Micro
DTC strength
Fashion Week
France
Mafate
Relations Corporate
SGA
UGG consumer
UGG season
UTMB
awareness UGG
benefit pricing
brand sell
consumer UGG
consumer engagement
consumer preference
consumer share
dimension peak
environment consumer
expectation tariff
goal
icon
marketplace brand
mitigation strategy
portfolio
pricing action
product consumer
product family
quality
rate brand
road
sell rate
share consumer
share region
shipment
shopping
store opening
success franchise
traction
DECK Transcript
Deckers Outdoor Corporation (DECK) Q4 2026 Earnings Call Transcript
Neutral5-21
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.
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