Deckers Brands (DECK) 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 composition of results that demonstrate robust global demand for the company’s brands, fueling an increased outlook for fiscal year 2026.

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

Total company 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 (cc) basis. The numbers also reflect the phase-out of the Koolaburra brand’s standalone operations.

  • Deckers’ total Wholesale net sales increased 6.0 percent y/y to $864.6 million, reflecting the phase-out of the Koolaburra brand’s standalone operations.
  • Deckers’ total DTC net sales increased 8.1 percent y/y to $1.09 billion. DTC comparable net sales increased 7.3 percent year-over-year.

Caroti said the company’s results demonstrated positive inflection relative to the first half, driven by its 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 continued.

The Hoka Business
Global Hoka revenue in the third quarter increased 18.5 percent y/y to $628.9 million, adding $98 million of incremental revenue over the prior year. The growth was said to include strength in both DTC and Wholesale, with gains in the U.S. and international markets.

Hoka’s performance was said to benefit from another sequential improvement in the U.S. DTC business, which delivered healthy growth in the quarter, contributing to a more balanced result across DTC and Wholesale, according to comments from the company’s CFO, Steve Fasching.

Caroti said the strong performance was driven by broader consumer adoption of the Hoka brand’s innovative and versatile products, especially as the company has refined its approach to managing the global marketplace.

“This helped achieve balanced growth across channels as DTC revenue increased 19 percent versus last year and Wholesale revenue grew 18 percent compared to last year,” Caroti shared. “As we continue to build this brand and introduce new products to the market, we are proactively maintaining a healthy pull model of demand across all channels.”

He also noted the approach aligns with the company’s long-term objectives of achieving growth in every channel and region.

“While some fluctuations in channel growth may occur as we make strategic adjustments to distribution, we remain committed to creating a more balanced business over time, as demonstrated by Hoka’s performance this quarter. We continue to incorporate insights from consumers and learnings from the marketplace to refine how we go to market,” Caroti said.

In addition, he outlined that a notable initiative for the quarter has been Hoka’s membership program, which has enhanced consumer loyalty by delivering a “distinct, differentiated customer experience.”

“Our revamped membership program now includes exclusive and early product access, select opportunities for special discounts and rewards for higher purchase frequency,” the CEO continued. “Though we are still early in the development of the Hoka membership program with additional consumer engagement drivers and differentiation in the pipeline for next year, we’re already seeing a benefit in revenue per consumer, units per transaction and multi-category purchasing from Hoka members relative to the average consumer. These members’ key performance indicators are directly contributing to our positive results, helping drive an acceleration of the Hoka brand’s DTC growth in the third quarter compared to the first half of the fiscal year.”

DTC Channel
In the U.S., the Hoka DTC business was said to have returned to “healthy” growth in the quarter, with a “meaningful improvement” in online new consumer acquisition compared to 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.

He noted that Hoka’s improved DTC performance demonstrates the effectiveness of the brand’s loyalty marketing tactics, which have enabled the company to:

  • Enhance the consumer’s journey.
  • Increase brand affinity.
  • Build lasting relationships.
  • Increase customer lifetime value for a growing customer base.

Wholesale Channel
Caroti stressed that the company remains focused on driving strong performance with Hoka in the Wholesale channel.

“We believe it’s very important for Hoka to compete in a multi-brand environment, particularly in the performance category where innovation is critical to success,” he said. “Our partners remain an important destination for consumers to experience the Hoka brand’s unique blend of technology, geometry and premium materials directly on their feet. Hoka has continued to perform very well in the Wholesale channel globally, driving healthy levels of full price sell-through and gaining additional market share.”

Quoting numbers from market research firm Circana, Caroti said Hoka’s market share in the U.S. “increased significantly” in the Road Running category above $140 for the three months ending in December.

“This growth further establishes Hoka as a top brand in the segment and demonstrates the strength of our full price sell-through,” he said.

In Europe, the pace of sell-out reportedly continues to drive record levels of reorders, with Hoka’s top strategic customers averaging 90 percent sell-through, which is said to be fueling future-season demand.

Caroti attributed the Hoka brand’s market share expansion to three main factors:

  • Compelling innovative products that resonate with consumers,
  • Enhanced global brand awareness and recognition, and
  • Increased brand access in more locations.

“These developments have opened the door for a wider range of consumers to connect with the brand, not just for performance-related reasons,” Caroti said.

The Lifestyle Move
Caroti suggested that, as more consumers choose to wear Hoka as part of their active-lifestyle wardrobe, the brand is well-positioned to capitalize on the growing trend.

“Hoka is proactively advancing its lifestyle strategy, identifying this segment as a significant opportunity in terms of product development and expansion through wholesale distribution, account segmentation and differentiation,” The CEO explained. “As the lifestyle category evolves, Hoka is positioned to leverage the company’s global expertise in this area. As Hoka continues to tap into significant lifestyle opportunities, it’s important to acknowledge the valuable growth potential within our established categories.”

Caroti said the main global marketplace priorities for Hoka include:

  • Enhancing the brand’s premium position through product innovation,
  • Engaging authentically with consumers through strategic product segmentation, and
  • Expanding the brand’s reach while maintaining performance integrity.

The Opportunity in Channel Penetration
“As we look at wholesale distribution in the U.S. market, run specialty remains our priority segment to introduce and engage consumers with Hoka brand’s innovative performance products,” Caroti confirmed. “Our aim here is to uphold Hoka’s performance credibility by continuing to lead in this segment. In the sporting goods category, Hoka is present in roughly half of the targeted stores we consider potential distribution points. We also see more opportunities to expand shelf space and market share in existing doors as we continue to diversify our product offering.”

He said the biggest opportunity for Hoka’s expansion in the U.S. lies within the athletic specialty segment, where we are currently represented in only about one-quarter of the stores they believe will be relevant for the brand moving forward.

Internationally, he said the company is much earlier in the process of expanding Hoka’s distribution.

In Europe, Caroti shared that the brand is making steady progress in building awareness and marketplace presence.

“We still have room for door and market share expansion in the European run specialty segment, where we continue to climb in brand ranking throughout various countries in the region, having captured around 80 percent of the opportunity we see for this segment,” he detailed.

“Furthermore, Hoka has reached approximately 40 percent of the European sporting goods destinations considered relevant for the brand and is available in less than 20 percent of suitable athletic specialty stores in the region.”

He said this illustrates the significant opportunity that remains for attractive distribution expansion.

“In Asia, our primary area of focus remains China, where we operate mainly through a mix of company-owned and partner-run mono-brand retail stores. Typically, we keep a 2:1 ratio of Wholesale partner locations to company-owned retail stores. Currently, we occupy a little less than one-third of the potential we see over the next several years,” the CEO explained.

Caroti wrapped up the channel distribution conversation, saying that the company continues to see meaningful untapped global opportunities for Hoka.

“We’re building this brand for the long term, and we’ll continue to take a methodical approach to global expansion, maintaining a full model of demand while gradually improving the balance between DTC and Wholesale channels,” he noted. “Our ongoing progress in international markets, along with positive developments in our U.S. operations, makes us very optimistic about Hoka’s promising future.”

Inside the Hoka Product Machine
Caroti reported that its top Hoka franchises continue to perform very well, and the business is now operating in a much cleaner global marketplace relative to a year ago. He said the brand’s launch of Gaviota 6 is off to a great start, further bolstering its position in the stability category, alongside the positive reception of the Arahi 8.

“Hoka has a number of exciting product updates to come in the [fiscal] fourth quarter across our key strategic priorities of winning in road, dominating trail and igniting lifestyle,” the CEO said.

He said the category has two key product stories launching in the fiscal fourth quarter that runs through March.

For the Road category, he called out the brand’s pinnacle racing shoe, the Cielo X1 3.0, which he said is the fastest and lightest racing shoe Hoka has ever created, and the completely redesigned Mach 7, which he said is crafted for responsive daily runs with tempo.

“Beyond the Road segment, we eagerly anticipate the launch of Speedgoat 7, which is designed to build Hoka’s legacy in the Trail category by offering an exceptional underfoot experience across diverse terrains,” he detailed. “In Lifestyle, we are excited to announce the launch of our first fully integrated marketing campaign for this category, featuring new ambassador partnerships, global brand experiences and products that connect with well-known Hoka franchises.

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,” 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 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. And given strong cash flow and cash balance and in consideration of the current market valuation, Fasching said they remain committed to continuing to return 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.

“We intend to continue driving healthy profitable growth for both Ugg and Hoka,” added Caroti. “We expect Hoka to remain our fast-growing brand with significant potential for international expansion and consistent progress in the U.S., supported by effective marketplace management.”

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:

  • 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.
  • 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.

“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.

Image courtesy Hoka/Deckers Brands, Inc.