Deckers Outdoor ((DECK)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Deckers Brands recently held its earnings call, revealing a positive sentiment overall, driven by robust growth in revenue and earnings. The company has seen impressive international expansion and strong performances from its HOKA and UGG brands. However, challenges in the U.S. market, including consumer pressure and tariff impacts, are expected to affect margins and growth in the upcoming quarters.
Strong Revenue Growth
Deckers reported a solid 9% increase in revenue and a 14% rise in diluted earnings per share for the second quarter compared to the previous year. The first half of fiscal year 2026 was particularly strong, with total company revenue growing by 12%. The HOKA brand led the charge with a 15% increase, while UGG followed closely with a 12% rise.
International Expansion Success
International markets played a crucial role in Deckers’ revenue growth, with UGG and HOKA experiencing a remarkable 38% year-over-year increase. The company’s strategic marketing investments in these regions have successfully boosted brand awareness and market share.
HOKA Brand Performance
The HOKA brand recorded a 15% increase in global revenue for the first half, thanks to consumer-led updates and the popularity of the Clifton, Bondi, and Arahi franchises. HOKA also gained two points of market share in the U.S. road running category, underscoring its growing influence.
UGG Brand Growth
UGG’s global revenue increased by 12% in the first half, driven by significant growth in international regions. The introduction of newer products and expanded franchises, particularly those aligned with men’s initiatives, contributed positively to this growth.
Strong Balance Sheet and Cash Position
Deckers ended the quarter with a robust $1.4 billion in cash and equivalents. The company also repurchased approximately $282 million worth of shares, leaving $2.2 billion available for future repurchases, showcasing its strong financial health.
U.S. Consumer Pressure
In the U.S., consumer sentiment is under pressure due to macroeconomic factors and price increases. This has impacted UGG’s direct-to-consumer (DTC) performance, which saw a 10% decline in the quarter.
Tariff Impact and Margin Pressure
Deckers anticipates headwinds from tariffs in the second half of fiscal 2026, with an unmitigated impact of approximately $150 million. The company plans to offset $75 million to $95 million through various mitigation strategies.
DTC Channel Challenges
UGG’s DTC channel faced challenges due to increased wholesale allocations and shifts in consumer shopping preferences towards multi-brand in-store experiences, affecting its performance.
Forward-Looking Guidance
Looking ahead, Deckers Brands projects fiscal 2026 revenue to reach approximately $5.35 billion. HOKA is expected to grow by a low teens percentage, while UGG is anticipated to grow by low to mid-single digits. The company forecasts a gross margin of around 56% and SG&A expenses at 34.5% of revenue, resulting in an operating margin of approximately 21.5%. Earnings per share are projected to range from $6.30 to $6.39, reflecting cautious consumer sentiment in the U.S. and the impact of tariffs.
In summary, Deckers Brands’ earnings call highlighted a strong performance driven by international expansion and successful brand strategies. Despite challenges in the U.S. market, the company remains optimistic about its growth prospects, focusing on long-term brand growth and sustainable value creation.