Deckers Brands (DECK), home to the Ugg, Hoka, and Teva brands, found itself in strange territory overnight on Thursday after a providing a weaker than expected outlook for the second half of the company’s fiscal year. Some on Wall Street saw the back half outlook as weakness while others hinted at some sandbagging or just downright misunderstanding the current market.

DECK shares were down in the low- to mid-teens in overnight and pre-market trading on Friday.

In comments and discussions with participants on a conference call with analysts on Thursday, October 23, company President and CEO Stefano Caroti said that while the first half of the fiscal year demonstrated the strength of the company’s two largest and fastest growing brands, Hoka and Ugg, the back half is expected to be affected by a more cautious consumer as the full impact of tariffs and price increases will be felt in the U.S.

“Having said that, our brands are well-positioned when the consumer shows up for the holidays,” Caroti said. “And as always said, we don’t manage our business month-to-month and quarter-to-quarter. We build brands for long-term profitable, sustainable growth.”

Caroti said that Deckers delivered outstanding second-quarter results that came in ahead of internal expectations on both the top and the bottom line. He said results closed out a solid fiscal 2026 first half that saw total company revenue grow 12 percent, with Hoka revenue increasing by 15 percent, and Ugg revenue rising 12 percent – driving a 17 percent increase in diluted earnings per share. For the second quarter, DECK saw revenue growth of 9 percent and a 14 percent increase in diluted earnings per share, clearly a moderation from the first quarter trend that was apparently a bit over-stimulated by front loading of new product.

“We probably have masked a few too many big product launches in the first half of the year, and we didn’t space them out enough. There are a few learnings from us in the transition to the model,” he offered.

The CEO, who came to HQ after managing the Europe business for Deckers, called out the International business as the key drive for the fiscal 2026 business.

“In the first half, our international regions remain the driving force behind Ugg and Hoka revenue growth, increasing 38 percent versus last year,” Caroti shared. “Year-over-year gains were led by the Wholesale channel, in part from earlier shipment timing, while DTC [direct-to-consumer] also delivered strong growth for the first half.”

He said management continues to see progress from the company’s brand-building marketing investments in these regions, helping grow Hoka awareness and expand Ugg mind share with consumers around the world.

“I could not be more pleased with how our teams are executing our strategy and connecting with consumers who are increasingly looking to Hoka and Ugg for innovation and newness,” he added.

In the U.S., Caroti said that consumer sentiment is still under pressure, but also noted that they are encouraged by the signs of progress in the business and have maintained focus to ensure Hoka and Ugg remain positioned for long-term success.

“The U.S. marketplace remains dynamic, with recent consumer trends indicating a heightened preference for multi-brand shopping experiences,” the CEO continued. “We believe Ugg and Hoka are prepared to acquire new consumers and gain share in this environment with consumers wherever they wish to interact with our brands as with strong brand partnerships with premium wholesalers, which help elevate our brands. Ugg resonates with consumers with high-quality distinctive products that provide a unique tactile experience,

The Ugg Business
Global Ugg revenue in the first half increased by 12 percent versus last year. The Ugg brand’s first-half performance stayed consistent, fueled by “key brand initiatives.”

Company CFO Steve Fasching said the Ugg brand drove robust Wholesale growth in the second quarter as well, led by the strength of International as the company prepares the global marketplace for the brand’s peak season. Ugg brand net sales increased 10.1 percent to $759.6 million in Q2, compared to $689.9 million in the prior-year Q2 period.

Ugg growth for the second quarter was reportedly driven by a 17 percent increase in the Wholesale segment, which was said to be partially offset by a 10 percent decline in DTC. Wholesale strength was reportedly driven by strong demand from retail partners, including earlier demand as well as European shipments that were pulled forward related to an upcoming third-party warehouse transition.

“Ugg DTC was softer than anticipated, as we have continued to experience pressures from better in-stock positions with our wholesale partners due to increased allocations delivered earlier in the year in an effort to match the demand that has continued to build in recent years,” Fasching continued. “A more challenging macroeconomic environment for the U.S. consumers with shifts in consumer preference toward multi-brand in-store shopping experiences.”

He said they believe these factors will continue to have an impact on Ugg growth in the second half.

First Half Ugg Product
Top-performing Ugg styles in the first half reportedly remained in line with the company’s 365 focus.

Men’s footwear reportedly achieved growth at twice the rate of the overall brand and the International regions accounted for the lion’s share of brand growth.

“We are especially encouraged by the consumer response to newer products and expanded franchises aligned to our men’s and 365 initiatives,” Caroti said. He highlighted the Mel franchise, which across sneaker, chukka and Chelsea silhouettes has more than doubled versus last year in the first half.

Caroti also highlighted the Classic Micro, which he called the brand’s “most versatile derivative to the original Classic boot,” reportedly debuted as a Top 5 style across DTC and Wholesale and also the Zora Ballet Flat, an unmistakable Ugg version of the timeless silhouette that is significantly outperforming our expectations in its first month since launch.

“While these products have driven positive sell-throughs, I would note that Wholesale sell-in was the driver for total Ugg brand performance in the first half, which includes benefits from earlier shipments that were carefully curated in alignment with our marketplace management strategy,” the CEO shared.

He said the shipments have provided greater opportunities for consumers to discover Ugg at Wholesale points of distribution, which he believes – in combination with the shifts to consumer shopping habits – has put pressure on the brand’s DTC business in the near term.

“From a regional perspective, as anticipated, International markets are leading our growth, but we have seen a very strong order book conversion across all regions,” Caroti added.

The CEO went on to tell the call participants that the consumer response to the Ugg Fall ’25 collection has been “very consistent” globally, with consumers gravitating towards fresh seasonal colors and transitional newness such as the Classic Micro, Astromel, PeakMod and Zora Ballet Flat.

“This [second] quarter, these styles saw gains as consumers preferred versatile buy-now, wear-now items,” he explained. “As we prepare to ignite Ugg season, our teams have created cohesive brand stories with our iconic style and iconic design global marketing campaigns, aiming to generate excitement and drive consumer engagement.”

Consolidated Deckers Results
Deckers reported consolidated fiscal second quarter revenue amounted to $1.43 billion, representing an increase of 9 percent year-over-year. Performance in the quarter was again said to be driven by Hoka and Ugg, with a small offset primarily from winding down stand-alone operations of smaller brands.

  • Hoka brand net sales increased 11.1 percent year-over-year (y/y) to $634.1 million .
  • Ugg brand net sales increased 10.1 percent y/y to $759.6 million.
  • Other brands, which includes Teva, saw net sales decrease 26.5 percent y/y to $37.2 million.
  • Wholesale net sales increased 13.4 percent y/y to $1.04 billion compared.
  • DTC net sales decreased 0.8 percent y/y to $394.6 million. DTC comparable net sales decreased 2.9 percent.
  • Domestic net sales decreased 1.7 percent y/y to $839.5 million.
  • International net sales increased 29.3 percent y/y to $591.3 million.

Gross margin for the second quarter was 56.2 percent of net sales, up 30 basis points from 55.9 percent in the prior-year quarter, reportedly benefiting from price increases, favorable product mix, favorable foreign currency exchange rates and factory cost sharing with partial offsets from incremental tariffs on U.S. goods and channel mix headwinds.

“As a result of our price increases being implemented at the beginning of July, in combination with actions to bring additional inventory in ahead of increased tariff rates being implemented, we saw a slight delay in the net headwind of tariffs and did not experience a meaningful negative impact in the second quarter compared to the prior year result,” CFO Fasching noted. “However, this is unique to the second quarter, and our expectation of net tariff headwinds in the back half of fiscal year remain largely unchanged.”

Sales, general & administration (SG&A) dollar spend in the second quarter was said to be in line with expectations, amounting to $477 million, up 11 percent versus last year’s $428 million as DECK continues “investing in key areas of the business.” As a percentage of revenue, SG&A was 33.4 percent versus 32.7 percent in Q2 last year.

The tax rate was 21.7 percent for the quarter, which compares to 24 percent for the prior-year Q2 period as a result of onetime benefits recorded in the quarter.

These results culminated in diluted earnings per share of $1.82 for the quarter, which is 23 cents above last year’s $1.59 diluted earnings per share, representing EPS growth of 14 percent year-over-year.

“In terms of our second-quarter performance relative to the guidance we provided in July, gross margin was the primary driver of EPS favorability,” Fasching shared. “Again, the better-than-expected gross margin result was largely driven by favorable timing of tariff-related variables unique to the second quarter, with benefits of our pricing actions flowing through in advance of the full burden from increased tariffs.”

Balance Sheet Summary

  • At quarter-end, DECK had $1.4 billion of cash and equivalents on hand.
  • Inventory was reported at $836 million, up 7 percent versus the same point in time last year.
  • The company had no outstanding borrowings during the quarter.
  • Deckers repurchased approximately $282 million worth of shares at an average price of $109.31 during the quarter. As of September 30, 2025, the company had approximately $2.2 billion remaining authorized for share repurchases.

Outlook
Deckers Brands reported guidance with expectations that total company revenue will reach ~$5.35 billion for the year, with Hoka increasing in the low-teens percentage versus last year and Ugg growing in the range of a low- to mid-single-digit percentage.

  • Gross margin is expected at ~56 percent of revenue as the company anticipates headwinds from the impact of tariffs as this becomes material in the back half of this fiscal year with partial offsets from its mitigation strategies and normalized levels of promotion in a more pressured macroeconomic environment.
  • SG&A is expected to be ~34.5 percent of revenue, reflecting a commitment to investing in the long-term opportunities of the company’s “powerful brands,” resulting in an expected operating margin of approximately 21.5 percent, which Fasching said remains at a top-tier level of profitability relative to the company’s peers.
  • The company is projecting an effective tax rate of approximately 23 percent for the year.
  • EPS is forecast in the range of $6.30 to $6.39 per share.

Fasching said the guidance assumes a blended growth rate of approximately 9 percent from the company’s two largest brands after streamlining the brand portfolio to focus on DECK’s “most profitable long-term opportunities.” He said they expect to yet again deliver record years for Ugg and Hoka, each with annual revenues north of $2.5 billion and significantly contributing to our best-in-class profitability profile.

“Within this revenue guidance, we continue to expect International to outpace U.S. growth and global Wholesale to outpace DTC for this fiscal year,” he added.

“Over the longer term, our focus remains to create a balanced business across regions and channels as we continue building our consumer base, bolstering connections with consumers through direct relationships and capturing incremental market share for years to come.

Tariffs
With timing-related favorability seen in the second quarter results and expectation of tariff impact in the second fiscal half largely unchanged, Fasching said the company now expects the unmitigated tariff impact on fiscal year 2026 to be approximately $150 million.

“Further, we now estimate that our mitigation efforts for this fiscal year will offset approximately $75 million to $95 million of this pressure, including benefits from select strategic and staggered pricing increases as well as partial cost sharing with factory partners,” he continued. “Please note, this guidance excludes any unforeseen charges that may be considered nonrecurring to our ongoing business or impact from any future share repurchases.”

Additionally, he said the guidance assumes no meaningful deterioration of current risks and uncertainties, which include, but are not limited to, further updates to imposed tariffs or other global trade policy, changes in consumer confidence and recessionary pressures, inflationary pressures, fluctuation in foreign currency exchange rates, supply chain disruptions and geopolitical tensions.

Image courtesy Ugg/Deckers Brands

See below for additional coverage of the company’s second quarter and deeper details from Hoka:

EXEC: Hoka Outpaces Overall Deckers Trends in Q2; Execs See H2 Trends Moderating