Deckers Stock Gains More Than 12% on Solid Earnings & Sales in Q1

Deckers Outdoor Corporation (DECK) delivered an impressive first-quarter fiscal 2026 performance, surpassing expectations and increasing year over year. The standout performances of its HOKA and UGG brands were the key drivers behind the strong results.

However, the footwear company chose not to provide an outlook for fiscal 2026 due to ongoing macroeconomic uncertainties. Nonetheless, the company’s growth strategy continues to pay off, driven by an expanded brand presence and a strengthened direct-to-consumer (DTC) approach. Deckers’ focus on innovation, product development and international expansion has solidified its position, setting the stage for sustained long-term success.

Backed by impressive quarterly results, shares of this Goleta, CA-based company have gained more than 12% in the after-market trading session yesterday.

Deckers’ Quarterly Performance: Key Metrics & Insights

DECK delivered quarterly earnings of 93 cents per share, which surpassed the Zacks Consensus Estimate of 68 cents. The reported figure increased from the prior-year quarter’s 75 cents.

Deckers Outdoor Corporation Price, Consensus and EPS Surprise

Deckers Outdoor Corporation price-consensus-eps-surprise-chart | Deckers Outdoor Corporation Quote

Net sales of this company increased 17% year over year to $964.5 million and outpaced the consensus estimate of $899 million. On a constant-currency basis, net sales grew 7.5%.

Gross profit increased 14.4% year over year to $537.9 million. The gross margin in the quarter contracted 110 basis points to 55.8% from 56.9% in the year-ago period and surpassed our estimate of 54.4%. This decline was primarily due to adverse channel mix with wholesale increasing faster than DTC, higher promotion across UGG and HOKA as projected and elevated freight rates, with partial offsets from positive product mix and favorable foreign currency exchange rates.

The company’s SG&A expenses climbed 11% year over year to $372.6 million. As a percentage of revenues, SG&A expenses stood at 38.6%, down 230 basis points from the last year, primarily backed by positive timing of certain expenses and one-time gains.

Deckers’ operating income was $165.3 million, up 24.5% from $132.8 million in the year-ago quarter. The operating margin increased 100 basis points to 17.1% from 16.1% in the prior-year period.

DECK’s Brand-Wise Discussion

The HOKA brand maintained its impressive performance, achieving a 19.8% year-over-year increase in sales to $653.1 million, which exceeded our projected $609.7 million.

The UGG brand exhibited decent growth of 18.9% in net sales of $265.1 million, which surpassed our estimate of $238.5 million.

Meanwhile, net sales for Other brands, which are primarily comprised of Teva, AHNU and Koolaburra, declined 19% year over year to $46.3 million compared with our estimate of $52.6 million.

Deckers’ Channel & Geography-Wise Discussion

Wholesale net sales increased 26.7% year over year to $652.4 million. DTC net sales inched up 0.5% to $312.2 million, while DTC comparable net sales dipped 2.2%.

Domestic net sales dipped 2.8% to $501.3 million, while International net sales rose 49.7% to $463.3 million.

DECK’s Financial Snapshot

Cash and cash equivalents were $1.72 billion as of June 30, 2025. The company ended the quarter with a total stockholders’ equity of $2.47 billion. There were no outstanding borrowings.

In the fiscal first quarter, the company repurchased 1.7 million shares of its common stock for $183 million at an average price of $109.84 per share. As of July 10, 2025, $2.4 billion remained under the company's stock repurchase authorization.

Sneak Peek Into FY26

Given the macroeconomic uncertainty associated with the global trade policy and difficulty in analyzing the impact on the consumer environment and purchasing behavior, management did not issue a formal outlook for fiscal 2026. For fiscal 2026, from a revenue perspective, Deckers projects HOKA to continue as its fastest-growing brand, UGG to continue to grow, international to surpass U.S. growth and wholesale to outpace DTC in the short term.

From a gross margin perspective, management anticipates a year-over-year decrease from headwinds such as elevated tariffs, higher levels of promotion, upgraded materials on key styles and increased ocean freight rates in the first half. These might be partly offset by selective price increases in the U.S. and partial cost sharing with factory partners.

On the SG&A front, Deckers continues to efficiently manage expenses and boost efficiencies; however, it may deliver a short-term increase in SG&A expense ratio to revenues owing to investment in brands over the long haul. Overall, this will result in a reduced operating margin from 23.6% delivered in fiscal 2025. With a normalized consumer landscape, the company has the ability to deliver leverage in the coming years.

Regarding tariffs, the company assumes Vietnam increases from 10-20%, while facing a total of $185 million of unmitigated impacts to the cost of goods sold in fiscal 2026, up from its earlier guided estimate of up to $150 million. DECK expects recapturing up to roughly $75 million and continues evaluating additional levers for potential mitigation ahead. The company looks to mitigate through price adjustments.

Q2 Outlook For DECK

For the second quarter of fiscal 2026, DECK expects net sales between $1.38 billion and $1.42 billion. HOKA is projected to grow about 10%, while UGG is expected to increase at least in the mid-single digits.

The gross margin is anticipated to decline 250 basis points from that reported in the prior year, led by higher freight costs, increased promotional activity and an unfavorable shift in channel mix as wholesale grows faster than DTC.

Gross margin is likely to be in the range of 53.5-54%, which is down from the last year, mainly owing to higher tariffs for goods shipped into the US, increased promotional activity and elevated freight costs relative to last year's low levels, with partial offsets from the initial price increases effective July 1. SG&A is anticipated to be roughly 33.5% of revenues, reflecting continued investments in brand-building marketing.

Earnings per share are expected between $1.50 and $1.55 compared with $1.59 in the prior-year period. This excludes the impact of any additional share repurchases.

Despite the uncertain environment, DECK remains confident about the strength of its brands, its disciplined operating model and its ability to generate strong profitability and free cash flow. Shares of the Zacks Rank #4 (Sell) company have lost 10% in the past three months against the industry’s 2.7% growth.

Key Picks in Retail

We have highlighted three better-ranked stocks, namely Urban Outfitters (URBN), Levi Strauss (LEVI) and Canada Goose (GOOS).

Urban Outfitters, a lifestyle specialty retailer that offers fashion apparel and accessories, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Urban Outfitters’ current financial-year sales indicates growth of 8.5% from the year-ago figure. URBN delivered an average earnings surprise of 29% in the last four quarters.

Levi Strauss, designer and marketer of jeans and casual wear, currently has a Zacks Rank of 1. LEVI delivered an average earnings surprise of 25.9% in the trailing four quarters.

The Zacks Consensus Estimate for LEVI’s current financial-year earnings indicates growth of 4% from the year-ago figure.

Canada Goose, a global outerwear brand, currently carries a Zacks Rank #2 (Buy). GOOS delivered an average earnings surprise of 57.2% in the trailing four quarters.

The Zacks Consensus Estimate for Canada Goose’s current financial-year sales indicates growth of 3.2% from the year-ago figure.

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This article originally published on Zacks Investment Research (zacks.com).

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