Deckers Brands President and CEO Stefano Caroti reported Thursday evening that the parent of the Hoka, Ugg and Teva brands delivered an outstanding third quarter performance, underscored by a strong composition of results that demonstrate robust global demand for the company’s brands, fueling an increased outlook for fiscal year 2026.

Caroti said that global Hoka and Ugg performance was “exceptional” during the quarter, with each brand delivering balanced growth across DTC and Wholesale.

That assessment and much more came during the company’s fiscal third quarter conference call with analysts to discuss the results for the three-month holiday quarter ended December 31, 2025.

Net sales for the quarter increased 7.1 percent to $1.96 billion, compared to $1.83 billion in the prior-year fiscal Q3 period. Net sales increased 6.8 percent on a constant-currency basis.

“Deckers produced record revenue and earnings per share in the third quarter, driven by the significant global demand for Ugg and Hoka,” Caroti in an earlier earnings release. “Our strategic marketplace management fueled balanced growth in DTC and Wholesale, inclusive of continued international momentum as well as healthy growth in the U.S. across both channels.”

“This result exceeded our expectations for both brands,” Caroti shared. “Importantly, it was achieved while maintaining high levels of full price selling and demonstrated resilient price elasticity.”

The result was said to be the preservation of strong gross margins, which contributed to a double-digit increase in DECK’s third quarter diluted earnings per share.

“As I reflect on our progress this year and our focus to build brands for long-term sustainable growth, I’m extremely pleased with our performance over the first nine months of this fiscal year, which contributed to total company revenue increasing 10 percent, Hoka revenue growing 16 percent, Ugg revenue growing 8 percent and diluted earnings per share increasing 13 percent,” Caroti continued.

Caroti also noted on the call that Ugg and Hoka each achieved high levels of full-price selling, which also led to stronger gross margins.

“We are on track to deliver another incredible year, with profitable growth at two premium and differentiated brands that operate in expanding segments of the global marketplace,” he added.

Brand Sales

Hoka brand net sales increased 18.5 percent year-over-year (y/y) to $628.9 million. See below for more detailed and expansive coverage of the Hoka brand business and outlook.

Ugg brand net sales increased 4.9 percent y/y to $1.31 billion.

Other Brands‘ net sales, which include Teva, decreased 55.5 percent y/y to $23.2 million. The segment total was impacted by the phase-out of Koolaburra brand standalone operations.

Channel Sales

Wholesale net sales increased 6.0 percent y/y to $864.6 million, reflecting the phase-out of Koolaburra brand standalone operations.

DTC net sales increased 8.1 percent y/y to $1.09 billion. DTC comparable net sales increased 7.3 percent year-over-year. In the U.S., the Hoka DTC business was said to have returned to “healthy” growth in the quarter with a “meaningful improvement” of new consumer acquisition online compared to what Hoka experienced earlier in the fiscal year.

“In addition, as we look ahead to future product transitions, we see an opportunity to more effectively utilize our higher-margin DTC channel to strategically manage end-of-season inventory in a controlled manner as we tightly manage Wholesale marketplace inventories to ensure a clean environment for future launches.” Caroti suggested.

Region Sales
From a regional perspective, Hoka and Ugg collectively drove third quarter revenue increases of 15 percent in International markets, reflecting continued momentum from the first half, and 5.0 percent growth in the domestic U.S. market. Caroti said this demonstrated positive inflection relative to the first half based on the company’s marketplace management initiatives.

Domestic net sales increased 2.7 percent y/y to $1.20 billion, reflecting the phase-out of Koolaburra brand standalone operations.

International net sales increased 15.0 percent y/y to $756.7 million.

Profitability and Expenses
Gross margin for the third quarter was 59.8 percent of net sales, which was said to be better than expected for the quarter, primarily due to a lower-than-expected impact from increased tariffs, reflecting the timing of inventory flows, and the mix of inventory sold through during the quarter, benefiting from lower tariff inventory in the pipeline.

“Larger benefits from our pricing actions, primarily attributable to the Ugg brand and though above last year, we had slightly lower promotions than planned for the quarter,” CFO Fasching explained. “In achieving this result, both Ugg and Hoka maintained a very healthy level of full price selling with each achieving an average selling price slightly above the prior year and Hoka delivering gross margin expansion in the quarter, contributing to our better-than-expected result.”

Fasching said SG&A dollar spend in the third quarter was $557 million, up 4 percent versus last year’s $535 million as the company continued investing in key areas of the business. As a percentage of revenue, SG&A was 28.5 percent, which is 80 basis points below last year’s rate of 29.3 percent with leverage said to be primarily driven by favorable impacts from foreign currency exchange rate re-measurement.

Operating income was $614.4 million in Q3, compared to $567.3 million in the year-ago Q3 period.

The company’s tax rate for the quarter was 23.3 percent, which compares to 21.8 percent for the prior year.

Resulting diluted EPS amounted to $3.33 per share for the fiscal third quarter, which was 33 cents above last year’s $3.00 diluted earnings per share – representing EPS growth of 11 percent year-over-year.

Balance Sheet Summary

  • Cash and cash equivalents were $2.09 billion at quarter-end, compared to $2.24 billion on the comparative date in fiscal 2025.
  • Inventories, including the impact of incremental tariffs, were reported at $633.5 million at quarter-end, compared to $576.7 million at quarter-end last year.
  • The company had no outstanding borrowings at quarter-end.

Share Repurchase Program
In the third quarter, DECK repurchased approximately $349 million worth of shares at an average price of $92.36 per share. Through the first 9 months of fiscal year 2026, the company has repurchased approximately 8 million shares, representing more than 5 percent 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. And given strong cash flow and cash balance and in consideration of the current market valuation, Fasching said they remain committed to continue returning value to shareholders through the share repurchase program.

“In fiscal year 2026, we are on track to repurchase more than $1 billion in total by the end of the year, which is expected to contribute more than 20 cents of diluted earnings per share improvement,” he stated.

Outlook
Deckers Brands increased its full year revenue expectations to a range of $5.400 billion to $5.425 billion.

“For Hoka specifically, we’ve raised our expectation now reflecting mid-teens revenue growth versus last year,” Fasching shared. Ugg revenue is expected to increase in mid-single digits versus last year, which is at the high end of prior guidance.

Gross margin is now expected to be approximately 57 percent, which is 100 basis points above prior guidance, primarily due to lower than previously anticipated net impact from tariffs.

SG&A is still expected to be approximately 34.5 percent of revenue as DECK continues to make investments that support the long-term growth and opportunities ahead for Ugg and Hoka.

Operating margin is now expected to be approximately 22.5 percent of net sales, which is 100 basis points above prior guidance.

DECK still expects an effective tax rate of approximately 23 percent for the year.

“These updates and the continued benefits from both year-to-date and projected fourth quarter share repurchase result in a raise to our expected diluted earnings per share, which is now in the range of $6.80 to $6.85, representing a 7 percent to 8 percent increase over last year’s record EPS,” Fasching said.

“Regarding tariffs, based on the robust pricing power of our brands, which has not materially impacted demand to date, combined with a lower-than-expected blended tariff rate in Q3, we now expect the unmitigated tariff impact on fiscal year 2026 to be approximately $110 million,” Fasching estimated. “As a result of our better-than-expected price action benefits and the favorable timing of inventory sold, we now estimate a net tariff impact of approximately $25 million.”

Fasching noted that this estimate does not represent a full year impact if tariffs remain in place moving forward.

The increased full year 2026 guidance includes the following assumptions for the fourth quarter:

  • Hoka is expected to deliver 13 percent to 14 percent growth, representing the brand’s largest ever quarterly revenue based on the momentum from International regions and continued U.S. growth with both contributing to global market share gains.
  • Ugg revenue is assumed to be roughly flat to last year as some orders previously planned for Q4 shipped earlier in Q3 with the total of both quarters contributing to the brand’s increased outlook for the year.

“Our implied gross margin assumes an approximate 200 basis point headwind, the entirety of which is expected to come from the net pressure from tariffs,” Fasching said.

The CFO noted that, “this is projected to be our largest quarterly net impact from tariffs in fiscal year 2026 on a rate basis as we anticipate the full 20 percent burden in Q4 and slightly more deleverage in our SG&A spend in the quarter as we continue to make investments while taking advantage of our overall improved outlook. We believe these targeted variable investments will help us continue to carry momentum into FY ’27.”

Fasching closed by saying the company has a high degree of confidence in the company’s brands to continue delivering exceptional results into next fiscal year.

“Specifically, we believe Deckers has the ability to continue delivering meaningful revenue growth paired with a top-tier operating margin beyond this year, through operating a pull model of demand, maintaining a well-managed global marketplace that drives high levels of full price selling, utilizing shared service synergies across brands as we invest to add capabilities and remaining disciplined in our approach to portfolio management, focusing on investments in areas that we see the highest long-term returns,” he concluded.

Image courtesy Hoka

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See below for additional detailed and expansive Hoka brand coverage for the fiscal third quarter.

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