Deckers Outdoor’s Strong FY2025 and Cautious FY2026 Outlook

Deckers Outdoor ((DECK)) has held its Q4 earnings call. Read on for the main highlights of the call.

Deckers Outdoor Corporation recently held its earnings call, revealing a strong fiscal year 2025 performance with significant revenue and margin growth, primarily driven by the HOKA and UGG brands. Despite the positive results, the company acknowledged challenges ahead, including increased tariffs and macroeconomic uncertainties that could affect demand. Nonetheless, Deckers remains optimistic about its strategic initiatives and brand strength, while cautiously navigating potential headwinds in fiscal year 2026.

Record Fiscal Year 2025 Performance

Deckers Outdoor Corporation celebrated a record fiscal year 2025, achieving a remarkable 16% revenue growth to nearly $5 billion. The company’s gross margin expanded by 230 basis points to 57.9%, while operating margins improved by 200 basis points to 23.6%. Earnings per share saw a substantial increase of 30%, reaching $6.33, underscoring the company’s robust financial performance.

Strong HOKA Brand Growth

The HOKA brand was a standout performer, with global revenue climbing by 24% to $2.2 billion. The brand’s international revenue surged by 39%, while US revenue grew by 17%. This impressive growth highlights HOKA’s expanding footprint and popularity across diverse markets.

UGG Brand Achievements

UGG also contributed significantly to Deckers’ success, with global revenue increasing by 13% to $2.5 billion. The brand experienced a 20% rise in international revenue and a 9% increase in US revenue, demonstrating its continued appeal and market strength.

Successful Brand Awareness Initiatives

Deckers’ efforts to boost brand awareness paid off, particularly for HOKA. In the US, HOKA’s brand awareness increased by 25% to 50%, while international awareness rose by an average of 10%. These initiatives have reinforced the brand’s presence and consumer recognition.

Cash and Share Repurchases

The company ended fiscal year 2025 with a strong cash position of $1.9 billion and repurchased $567 million worth of shares. This reflects Deckers’ solid financial health and commitment to returning value to shareholders.

HOKA DTC Growth Pressure

Despite overall growth, HOKA’s direct-to-consumer (DTC) growth in the US faced challenges due to model changeovers, increased promotional activities, and macroeconomic uncertainties. These factors contributed to a slight decline in DTC performance.

Impact of Tariffs

Deckers anticipates an additional $150 million in costs due to increased tariffs, which could negatively impact demand and profitability. The company is strategizing to mitigate these effects through selective pricing and cost-sharing with partners.

SG&A Expenses Increase

Selling, general, and administrative (SG&A) expenses rose by 17% to $1.71 billion, driven by higher marketing spend and investments in talent and infrastructure. These expenditures are part of Deckers’ strategy to support growth and brand expansion.

Potential Demand Erosion

Economic uncertainties and price increases pose risks to consumer spending, potentially impacting future demand. Deckers is mindful of these challenges as it plans its strategies for fiscal year 2026.

Forward-Looking Guidance

Looking ahead to fiscal year 2026, Deckers anticipates continued growth, albeit in a challenging environment. The company plans to counteract a projected $150 million tariff impact through strategic pricing and cost-sharing. HOKA is expected to lead growth, particularly internationally, as Deckers aims for a balanced channel mix of 50/50 between direct-to-consumer and wholesale. The company remains focused on innovation and expanding its global brand presence.

In conclusion, Deckers Outdoor Corporation’s earnings call highlighted a successful fiscal year 2025, driven by strong performances from the HOKA and UGG brands. While the company faces challenges such as tariffs and economic uncertainties, it remains confident in its strategic direction and long-term growth potential. Investors and market watchers will be keen to see how Deckers navigates the upcoming fiscal year.