Deckers Outdoor Corporation (DECK) Earnings & Analysis

Latest quarter

Deckers reported Q2 FY2027 revenue of $1.48 billion, below the consensus, while adjusted earnings per share of $2.03 exceeded the consensus estimate of $1.82. CEO Stefano Caroti said reported diluted EPS of $2.31 included a $0.28 benefit from net tariff refunds.

CFO Steve Fasching said revenue rose 3.5% from a year earlier, driven by HOKA and UGG, whose sales increased 7% and 4%, respectively. He said other brands’ revenue fell 54%, primarily as the company passed the final quarter of impacts from winding down Koolaburra’s standalone operations.

Deckers reported gross margin of 60.5%, up from 56.2% a year earlier, and operating margin of 26.3%, up from 22.8%. Fasching attributed part of the gross-margin increase to net tariff refunds and said full-price selling and product mix also contributed. Deckers’ free cash flow was −$79.1 million, compared with −$13.9 million a year earlier.

The company’s revenue growth came in below its own quarterly guidance. Caroti said EPS excluding the refund benefit was above the high end of Deckers’ guidance range.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Stefano Caroti said shoppers were increasingly seeking discounts, concentrating purchases around promotional events and prioritizing products with immediate utility. He said rising U.S. promotional activity, particularly in athletic footwear, weighed on Deckers’ e-commerce performance as the company maintained full-price selling. Caroti said some UGG customers were delaying purchases until closer to when they needed the products.

Caroti said international markets contributed to growth, with APAC providing the highest percentage growth. In Europe, the Middle East and Africa, he said service disruptions at a third-party logistics provider affected shipment timing during a peak period. CFO Steve Fasching put the quarterly impact at approximately $22 million and said domestic direct-to-consumer softness was largely offset by wholesale shipments that exceeded expectations.

Asked about the delayed European shipments, Fasching said some could move into the second half, while others might be canceled. He said: “Right now, the way we’ve modeled it is not all of it carries through into the back half of the year.”

Caroti said feedback from consumers and wholesale partners indicated that some HOKA franchise updates had not resonated as well, prompting work on future seasons. He said Deckers was sharpening HOKA’s product segmentation across performance and lifestyle and changing its marketing deployment to improve effectiveness. On distribution, Caroti said Deckers planned a gradual expansion of HOKA wholesale accounts in the U.S. and Europe as its product range allowed more differentiation between accounts.

In response to questions about promotions and channel competition, Fasching said Deckers expected U.S. HOKA wholesale growth to outpace direct-to-consumer growth as shoppers found more heavily promoted products through wholesalers. Caroti said: “we do not want to trade brand equity for short-term revenue.”

For the quarter ahead, Fasching said Deckers anticipated continued international growth alongside U.S. pressure, primarily in direct-to-consumer. He said the company expected some offset to the gross-margin benefit from tariff refunds from higher freight rates and a slightly more promotional environment.

Guidance

Deckers reduced its FY2027 revenue outlook to $5.7 billion-$5.725 billion. CFO Steve Fasching said the company now expects high-single-digit HOKA growth and low-single-digit UGG growth.

Deckers raised its diluted EPS outlook to $7.80–$7.95 from $7.35–$7.50. Fasching said the new range includes net tariff refunds and related interest received to date and assumes $1 billion of share repurchases.

Deckers raised its gross-margin expectation to approximately 58.5% from 56.5% and its operating-margin expectation to approximately 23% from 21.5%. Fasching said both updated expectations include net tariff refunds received to date.