DECK — Deckers Outdoor Corporation

Summary of Deckers Brands Q3 2026 Earnings Call

1. Key Financial Results and Metrics:

• Revenue: $1.96 billion, a 7% increase year-over-year.
• HOKA Revenue: $629 million, up 18% from the previous year.
• UGG Revenue: $1.3 billion, a 5% increase year-over-year.
• Gross Margin: 59.8%, better than expected due to lower tariff impacts and effective pricing strategies.
• Diluted Earnings Per Share (EPS): $3.33, an 11% increase from $3.00 in the prior year.
• SG&A Expenses: $557 million, up 4%, but as a percentage of revenue, it decreased to 28.5%.
• Cash and Equivalents: $2.1 billion, with inventory at $633 million, reflecting a 10% increase year-over-year.
• Share Repurchase: Approximately $349 million in Q3, with a total of 8 million shares repurchased in the fiscal year.

2. Strategic Updates and Business Highlights:

• Brand Performance: Both HOKA and UGG showed strong growth across direct-to-consumer (DTC) and wholesale channels, with UGG achieving its largest quarter ever.
• HOKA Membership Program: Enhanced consumer loyalty and engagement, contributing to improved revenue metrics.
• Product Innovation: Successful launches of new products across both brands, including lifestyle offerings and performance updates.
• Marketplace Management: Effective strategies to maintain high levels of full-price selling and manage inventory cleanly across channels.

3. Forward Guidance and Outlook:

• Revenue Guidance: Increased full-year revenue expectations to $5.4 billion to $5.425 billion.
• HOKA Growth: Expected mid-teens revenue growth for HOKA.
• UGG Growth: Anticipated mid-single-digit growth for UGG, at the high end of previous guidance.
• Gross Margin Forecast: Projected at approximately 57%, 100 basis points higher than prior guidance.
• EPS Guidance: Expected to be in the range of $6.80 to $6.85, representing a 7% to 8% increase over the previous year.

4. Bad News, Challenges, or Points of Concern:

• Tariff Impact: The estimated unmitigated tariff impact for FY 2026 is approximately $110 million, with a net impact of $25 million expected. This is a concern for future pricing strategies.
• Consumer Behavior: While the brands showed resilience, there remains caution regarding overall consumer spending trends, particularly in the U.S. market.
• Koolaburra Phaseout: The decline in revenue from the Koolaburra brand may impact overall performance metrics.

5. Notable Q&A Insights:

• Sustainability of HOKA Growth: Management expressed confidence in the sustainability of HOKA's growth trajectory, attributing it to strategic product launches and improved inventory management.
• DTC Performance Drivers: The positive inflection in DTC for both brands was driven by improved consumer engagement through the HOKA membership program and a cleaner marketplace.
• Lifestyle Strategy: There is a significant opportunity for HOKA to expand into the lifestyle segment, with early positive feedback on new lifestyle products.
• Wholesale Channel Dynamics: Strong performance across various wholesale partners, with specific mention of Journeys and Foot Locker as key contributors.
• Future Growth for UGG: Management anticipates continued growth for UGG in FY 2027, supported by strong consumer demand and effective inventory management strategies.

Overall, Deckers Brands reported a strong third quarter with robust growth in both HOKA and UGG, driven by strategic initiatives and effective marketplace management, while also raising its full-year guidance amid some caution regarding consumer behavior and tariff impacts.