Deckers Outdoor Corporation (DECK) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
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.
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Operating Highlights
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.
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Risk or Challenges
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.
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Guidance & Outlook
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.
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Shareholder Return Plan
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.
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Key Q&A
Q:Can you talk about the second quarter guidance for HOKA, including wholesale versus DTC channel performance and inventory status for Bondi 8 and Clifton 9?
A:The 10% growth guidance for HOKA considers international timing on wholesale distributor orders fulfilled in Q1. Q2 is expected to show more balanced growth between wholesale and DTC channels, with wholesale growing slightly faster. Inventory for Bondi 8 and Clifton 9 is largely cleared, while Arahi 7 inventory is moving fast and not impacting the performance of Arahi 8, which is performing well.
Q:Can you provide details on HOKA's innovation pipeline and upcoming product launches?
A:The innovation pipeline includes products like Mafate X and Rocket X 3, which are performing well. Upcoming launches include Mafate 5 in August, Mach 3, Skyward lace-less, and Transport hike GTX Gore-Tex in the back half of the year. Early next spring, updates to Mach 7, Gaviota, and Speedgoat are planned, with strong bookings for these styles.
Q:What is the outlook for HOKA's DTC growth and store expansion globally?
A:HOKA's DTC growth is expected to improve incrementally, with a focus on international growth due to brand awareness. The company currently has 48 owned and operated stores globally, with plans to open new stores in Berlin and Milan. A new Global Head of Retail, Jessica Boer, has been appointed to lead retail expansion.
Q:What is the framework for HOKA and UGG growth, and what factors could lead to reinstating full-year guidance?
A:The framework includes mid-teens growth for HOKA and mid-single-digit growth for UGG. Reinstating full-year guidance depends on clarity around tariffs and consumer reactions to them. Q1 performance has increased confidence in the framework.
Q:What is the strategy for price increases across products, and how is it expected to impact margins?
A:Price increases are selective and staggered, targeting specific products and franchises. Some increases were implemented in July, with more planned for spring. Margins are expected to face pressure due to tariffs and inflation, with no gross margin expansion anticipated in the back half of the year.
Q:Can you elaborate on HOKA's international performance and growth drivers?
A:HOKA's international growth is driven by revenue outpacing door expansion and strong sell-through rates. Partnerships with INTERSPORT, Sport 2000, JD Group, and Sport Chek have contributed to growth. Record reorders and strong performance in China are also key drivers.
Q:What are the key areas of SG&A spending, and how is the company managing these investments?
A:SG&A spending focuses on building global brand awareness, localization of content, and commercialization capabilities for HOKA. Investments are also being made in distribution, warehousing, and IT. These investments are managed in proportion to business growth.
Q:How are HOKA and UGG stores performing compared to e-commerce?
A:Retail stores are performing better than e-commerce, reflecting a trend of consumers preferring in-store experiences. However, the company's smaller retail footprint limits the overall impact on DTC performance.
Q:What is the outlook for promotional activity and its impact on gross margins?
A:Promotional activity is expected to increase this year compared to last year, which had exceptional full-price selling. The company assumes a more normalized level of promotion, with potential upside if trends align with Q1 performance.
Q:What are the insights driving HOKA's focus on capabilities and product launches in a competitive market?
A:HOKA is adding capabilities in innovation, design, and engineering to maintain leadership in a competitive market. Key learnings include spacing out style launches, aligning flow with commercial moments, and creating more segmentation and differentiation for DTC.
Q:What is the company's approach to share repurchases and cash management?
A:The company is leveraging its healthy cash position for share repurchases, especially when it feels undervalued. The Board continues to evaluate opportunities for buybacks.
Q:What are the building blocks of HOKA's international growth in Q1, and how are they expected to evolve?
A:International growth in Q1 was driven by strong sell-through rates, record reorders, and partnerships with major retailers. Growth is expected to continue with healthy order books for the back half of the year and spring/summer '26.
Q:What is the outlook for HOKA's DTC growth in the U.S.?
A:HOKA's DTC growth in the U.S. is expected to improve incrementally, with sequential improvements seen in Q1. The focus remains on managing wholesale expansion while building DTC performance.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the percentage of products with price increases, the exact performance metrics for retail stores versus e-commerce, and the breakdown of inventory growth related to tariff costs. Additionally, they did not provide full-year guidance due to uncertainties around tariffs and consumer reactions.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Bank
Fasching Chief
Lowmel
Relations Corporate
Research Division
SGA dollar
UGG channel
brand team
channel brand
city world
collection consumer
consumer environment
consumer interest
cost
demand brand
design
dynamic opportunity
environment ability
fall
favorability
feedback
film
following
framework
franchise upgrade
good
heat
increase effect
price increase
region DTC
reminder
reorder sell
shipment UGG
shopping preference
story
style consumer
tariff
timing onetime
world UGG
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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