Deckers Outdoor Corporation (DECK) Earnings

Management highlights

- Core Brand Strategy & Long-Term Framework - Management maintains a consistent growth strategy: build category leadership for HOKA and UGG, prioritize high-quality full-price sell-through, and scale long-term market share. The multi-year framework through FY2030 targets: high single-digit annual consolidated revenue growth, 10%+ annual low double-digit HOKA growth, mid-single-digit annual UGG growth, and low double-digit annual compound EPS growth from FY27 to FY30. - The Board approved an expanded share repurchase authorization, reflecting confidence in the framework, with management targeting at least 80% of free cash flow returned via repurchases annually. - HOKA Operational Progress - Product strategy focused on scaling scalable franchise product families (rather than single styles): 6 franchises generated over $100 million in annual revenue by end-FY26, with 3 more approaching this milestone, and all 9 top franchises have been updated since January 2025. HOKA brand awareness grew to 60% in the U.S. (from 50% YoY) and 40% averaged across international markets (from 30% YoY). - Channel and geographic progress: HOKA holds top brand share in U.S. performance road/trail footwear above $140, and is a top 3 performance running brand in France, Italy, and the U.K. It gained market share in China with strong full-price performance. Management plans controlled, selective wholesale expansion focused on underpenetrated high-quality sporting goods and athletic specialty channels, plus selective DTC retail expansion in key global cities. - UGG Operational Progress - The 365 (year-round) multi-category strategy continued to gain traction, with non-winter categories driving faster growth. Sneakers and sandals (led by the Low Mail and Golden collections) accounted for over half of UGG's FY26 growth. New silhouettes like the Otzel Clog delivered strong sell-through, particularly among new male consumers. Men's products accounted for over 20% of UGG's global growth in FY26, with the brand attracting high rates of new younger consumers via targeted collaborations. - Geographic progress: EMEA delivered the highest incremental UGG revenue growth, and China saw broad adoption across categories with strong full-price sales of new products. Channel growth balanced out in the second half of FY26 after early-year DTC pressure from increased strategic wholesale allocations.

Guidance

- Full Fiscal 2027 Guidance: - Total revenue expected in the range of $5.86 billion to $5.91 billion, representing high single-digit year-over-year growth, with HOKA growing low double digits and UGG growing mid-single digits (balanced across channels). - Gross margin expected to be approximately 56.5% (down from FY26's 57.7%), pressured by higher freight costs (from Middle East conflict shipping disruptions), increased material input costs and inflation, and assumes the current 10% tariff rate remains in effect (no assumed tariff refunds are included in guidance). - SG&A expected to be approximately 35% of revenue, as the company increases investments in marketing, talent, technology, and HOKA retail expansion, with operating expense leverage expected to begin in FY28 and beyond. - Operating margin expected to be approximately 21.5%, with an effective tax rate of ~23%. Diluted EPS is expected in the range of $7.30 to $7.45. Capital expenditures are expected to be $145 million to $155 million, higher than FY26, for technology infrastructure upgrades, new HOKA stores, and UGG store refreshes. - Q1 FY27 Guidance: - Consolidated revenue expected to grow ~5% year-over-year, hitting the first ever $1 billion Q1, with HOKA growing high single digits and UGG growing mid-single digits. Q1 growth is impacted by timing dynamics (last year's early EMEA 3PL transition shipments, delayed APAC distributor shipments, and reduced outgoing model shipments ahead of the July Clifton 11 launch), which do not reflect underlying full-year trends. - Gross margin expected to be down year-over-year due to higher tariff impacts, partially offset by favorable mix and currency. EPS expected in the range of 82 cents to 87 cents. - Multi-Year Guidance (FY28-FY30): - Confirmed high single-digit annual consolidated revenue growth, low double-digit annual HOKA growth, mid-single-digit annual UGG growth, and low double-digit annual EPS growth, with operating margins expected to remain strong and top-tier.

Segment performance

For full fiscal 2026, Deckers Brands total revenue grew 10% year-over-year to $5.47 billion, with 2 core segments: 1. HOKA: Full-year global revenue reached $2.59 billion, growing 16% year-over-year, contributing 47.3% of total company revenue. In Q4 2026, HOKA revenue was $671 million (up 15% YoY), its largest ever quarter, with DTC growing 18% and wholesale growing 13%. For full-year 2026, HOKA delivered double-digit revenue growth across both DTC (12%) and wholesale (18%). 2. UGG: Full-year global revenue reached $2.74 billion, growing 8% year-over-year, contributing 50.1% of total company revenue. In Q4 2026, UGG revenue was $409 million (up 9% YoY), above internal expectations. For full-year 2026, UGG wholesale grew 13% (driving most of the brand's growth) and DTC grew 4%. Company-wide full fiscal 2026 gross margin was 57.7% (down 20 bps YoY), operating margin was 23.1% (above expectations), and diluted EPS hit a record $7.02 (up 11% YoY). Q4 2026 gross margin was 57.6% (up 90 bps YoY), and diluted EPS was 96 cents.

Risks & headwinds

- Macroeconomic and consumer demand uncertainty: Management notes challenges in the current macroeconomic environment, with consumers shifting to more event-driven, buy-now-wear-now purchasing patterns that create quarterly demand volatility. - Geopolitical and supply chain risks: Ongoing Middle East conflict has disrupted shipping and increased freight costs, creating gross margin headwinds. - Input cost and inflation risks: Higher material costs (including for product upgrades) and broader inflationary pressures are pressuring gross margins in FY27, with volatility in oil prices adding additional uncertainty to supply chain costs. - Tariff uncertainty: The company paid ~$120 million in higher IEBA tariffs on imported goods, and while it is pursuing refunds, guidance does not include any assumed refund amounts, creating potential upside but also current margin headwinds. - Foreign exchange volatility: Currency fluctuations can create operating expense and margin impacts, as seen in Q4 FY26's unfavorable FX remeasurement impact on SG&A.

Analyst Q&A

• Q: For HOKA's full-year FY27 low double-digit growth target, how should investors interpret Q1's slower high single-digit growth, and what is the U.S. vs international growth breakdown for the multi-year framework? Is the new multi-year framework conservative guidance? /

  A: Q1's slower growth reflects only timing dynamics (last year's early EMEA 3PL transition shipments, reduced outgoing model shipments ahead of the July Clifton launch) and is not indicative of underlying business trends. Management remains extremely confident in hitting the full-year low double-digit HOKA growth target, with positive global trends intact. For the multi-year framework, the expected growth breakdown (mid-single-digit U.S. growth, mid-teens international growth) matches investor consensus, as international will continue to grow faster than the U.S. Management notes this framework is not conservative like past guidance; strong brand performance over the last two years gives management confidence to lean into this outlook.

• Q: What is the health of HOKA's wholesale order book, what is the U.S. vs international wholesale growth outlook, and how important is the lifestyle category to HOKA's multi-year growth goals? /

  A: HOKA has a strong, healthy wholesale order book, driven by strong full-price sell-through of new models (Gaviota, Mach, Speed Goat 7) that has delivered success for retail partners. The growth outlook matches the broader brand trend: mid-single-digit U.S. wholesale growth, double-digit international wholesale growth. Green shoots are already visible in the lifestyle category, with styles like Mach 5, Speed 2, and Bondi 7 leading early traction, and the large untapped potential of the lifestyle category is a key driver of HOKA's long-term low double-digit growth plan.

• Q: For UGG's multi-year growth, how will the growth mix split between the traditional fall/winter classic business and newer year-round categories, and does the plan include expanding HOKA's retail footprint as part of growth through 2030? /

  A: UGG is now a fully year-round premium lifestyle brand, and management expects spring and summer categories to grow faster than the traditional fall/winter core business. New non-boot categories (sneakers, sandals, clogs, slippers, apparel) are already performing very well, with the Lomel sneaker ranking as UGG's third top-selling product in FY26. For HOKA, management plans to continue expanding its retail footprint at a steady pace of 20 to 25 new store openings per year, focused on major global cities, aligned with the brand's overall growth.

• Q: Over the multi-year framework, how should investors think about gross margin and operating margin, and what impact are higher oil prices having, and will pricing be increased to offset higher input costs? /

  A: The multi-year margin outlook is consistent with FY27's setup: gross margins will remain strong supported by high full-price selling and the value of the company's premium brands. The company expects to achieve operating expense leverage over time, with investments in growth holding margins steady near current levels for the near term. Higher oil and freight price impacts are still emerging, most FY27 product has already been sourced, and management will monitor input costs moving into future years. With strong brand portfolio, the company has pricing power to adjust pricing if needed, but no immediate broad hikes are planned.