Deckers Brands President and CEO Stefano Caroti reported Thursday evening, January 29, that the parent of the Hoka, Ugg and Teva brands delivered an outstanding third-quarter performance, underscored by a strong results mix that demonstrates robust global demand for the company’s brands, fueling an increased outlook for fiscal year 2026. 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.

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

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

  • Ugg brand net sales increased 4.9 percent y/y to $1.31 billion, adding $61 million of incremental revenue over the prior year.
  • Hoka brand net sales increased 18.5 percent year-over-year (y/y) to $628.9 million, adding $98 million in incremental revenue year-over-year.

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, driven by the company’s marketplace management initiatives.

“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 reported as 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 noted.

The Ugg Business
Caroti believes Ugg remains top of mind for consumers. He then rattled off a large amount of marketing gobbledygook about “purposeful consumer-informed product creation that celebrates recognizable brand codes,” “broadening the dimensions of category acceptance,” and something about “an elevated global marketplace aligned to our target consumer segments” where Ugg is able to “build connections and community through a tailored yet consistent brand identity.”

They’re just shearling boots from Australia for crying out loud.

This is a brand that found its first real acceptance in the U.S. as an après-surf boot worn by predominantly male surfers in the early morning hours on the California coast. But it didn’t explode until a random Hollywood actress wore a pair with a skirt or a tracksuit and then exploded globally after Oprah Winfrey featured them on her “Favorite Things” list in 2003.

It is doubtful the mouthful of marketing spin occupied any portion of Sarah Jessica Parker’s mind when she first pulled on a pair. It was hardly “category acceptance.” But, hey, whatever gets the Board to spend incremental cash on a brand that is near falling to No. 2 in the Deckers brand stable and is planned to grow for the year at just one-third the rate of its sister brand, Hoka.

Ugg is expected to be flat in the fiscal fourth quarter through March 31, while Hoka is forecasted to grow 13 percent to 14 percent year-over-year.

So, the Ugg business, which is really trying new things and stretching consumers’ acceptance of new ideas for the Ugg brand, becomes an inventory management project each year in the fall and winter as it works to keep SJP’s fashion idea alive and on point.

Deckers CEO Caroti said on the conference call that, in response to the ongoing rise in consumer demand for the Ugg brand, the company strategically allocated additional products to the Wholesale channel prior to peak season. He said the results indicate that this approach has proven effective. With all the marketing wordsmithing, it turns out that being in stock of basic items is still key.

“Our strategic execution [i.g, being in stock] enabled improved in-stock positions for our Wholesale partners, boosting fall sales as planned,” Caroti explained. And then added that the company “effectively addresses late season demand through our direct-to-consumer channels.”

By channel, DTC revenue increased 5 percent year-over-year for the Ugg brand, while Wholesale revenue grew 4 percent compared to last year’s fiscal third quarter.

“From a direct-to-consumer perspective, our marketplace teams around the globe work closely across different departments to fill consumer demand, both in retail locations and online,” the CEO explained. “Through these efforts, we drove meaningful growth in Ugg Rewards membership, e-mail subscribers and retained consumers, providing ample opportunity to further strengthen consumer connections and drive repeat purchases in the future.”

He said the brand also used the DTC channel to test products with speed-to-market, strategically pulling forward targeted new silhouettes to generate early reads at a time when Ugg historically has the greatest consumer attention [the fiscal third quarter or holiday quarter].

“Our new Quill franchise was a standout success through this initiative,” Caroti shared. “By sharing performance insights with our Wholesale partners for products like the Quill, we are able to accelerate the global expansion and adoption of new offerings. Ugg has firmly positioned itself as the top premium lifestyle brand in the global market. Our ongoing goal is to further enhance Ugg’s presence at every consumer touch point through consistent product presentation that highlights our distinctive brand identity.”

The CEO said the brand is also collaborating very closely with retail partners to elevate the brand through intentional product offerings that “support year-round wearability in our men’s initiative.”

“By planning strategically for shared growth, we sustain strong partnerships and nurture future opportunities, all while ensuring marketplace scarcity for Ugg remains healthy,” he said. “We’re especially proud of how our retail partners supported the Ugg brand during the holiday season, strengthening consumer connections and raising awareness and adoption across categories.”

Caroti said the men’s category performed very well globally as Ugg continues to see healthy adoption of popular all-gender products like the Tasman, Ultra Mini and Lowmel, as well as men-specific styles like the Weather Hybrid collection, which spans multiple silhouettes.

Overall product performance was said to be positively influenced by robust consumer response to newness, which underscores the growing demand for Ugg and its diversified product range across various categories.

He noted that iconic Ugg franchises continue to benefit from the addition of complementary styles, such as the new Tazelle and Classic Micro, helping fuel the brand’s growth, with the latter ranking among the 10 best-selling styles during the quarter.

“We also made notable progress with products aimed at supporting the Ugg brand’s 365 initiative,” Caroti said. “The Lowmel franchise continued to expand Ugg’s presence in the lifestyle sneaker segment, more than doubling its revenue this quarter and ranking among the brand’s Top 5 best sellers.”

The CEO said the key priority is to finish another successful year by boosting interest in new product launches that align with Ugg brand strategies, including the Minimel, an all-new low-profile spring sneaker with/the Lowmel collection, the Otzo, an all-new Clog with a “sleeker aesthetic that features elevated materials and new fashion sandal silhouettes within the Golden collection.”

At the end of the day, the word on the street is that, while appealing, the non-shearling designs do not distinguish themselves significantly from many other products in the market. They look great, but there are questions about price, with Otzo clogs running $150, for example, and approaching Birkenstock, Blundstone or Dansko prices at that point.

Deckers Profitability and Expenses
Gross margin for the third quarter was 59.8 percent of net sales, better than expected, 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, which benefited 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,” explained company CFO Steven Fasching. “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, 80 basis points below last year’s 29.3 percent, with leverage primarily driven by favorable impacts from foreign currency exchange rate remeasurement.

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, compared with 21.8 percent in 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.

Deckers 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 in authorized share repurchases remaining. Given strong cash flow and cash balance, and considering the current market valuation, Fasching said the company remains committed to 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.

Ugg revenue is expected to increase in mid-single digits versus last year, which is at the high end of prior guidance.

For Hoka, DECK raised expectations to now reflect mid-teens revenue growth versus last year,” CFO Fasching shared.

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

SG&A is still expected to be approximately 34.5 percent of revenue as DECK continues to invest in long-term growth and opportunities 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 reflect a full-year impact if tariffs remain in place.

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

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

“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 its brands’ ability to continue delivering exceptional results into the 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.

Images courtesy Ugg Brand/Deckers Brands