Deckers Outdoor Corporation Q3 FY2026 earnings call

UGG Highlights - Global UGG revenue in the third quarter increased 5% to a record $1.3 billion, with DTC revenue up 5% and wholesale revenue up 4% versus last year. - Leveraged product collaborations, brand activations, and ambassadors to drive brand heat, including a feel house experience in New York City for the UGG SACAI product collaboration. - Made progress with products aimed at the UGG brand's 365 initiative, like the Lowmel franchise which more than doubled its revenue and ranked among the top 5 best sellers. ### HOKA Highlights - Global HOKA revenue in the third quarter increased 18% to $629 million, with DTC revenue up 19% and wholesale revenue up 18% versus last year. - The HOKA membership program enhanced consumer loyalty, with members showing better key performance indicators like revenue per consumer, units per transaction, etc. - Top franchises like Gaviota 6 and Arahi 8 performed well, and there are exciting product launches in the fourth quarter across road, trail, and lifestyle categories.

For the third quarter, Deckers delivered $1.96 billion of revenue. Global UGG revenue increased 5% versus last year to a record $1.3 billion, accounting for approximately 66.3% of the third quarter revenue. Global HOKA revenue increased 18% versus last year to $629 million, accounting for approximately 32.1% of the third quarter revenue. Year-to-date fiscal results showed total company revenue increasing 10%, HOKA revenue growing 16%, UGG revenue growing 8%.

• Raised full year 2026 revenue expectations to a range of $5.4 billion to $5.425 billion. - For HOKA, mid-teens revenue growth; for UGG, mid-single digits revenue growth. - Gross margin expected to be approximately 57%, 100 basis points above prior guidance. - Adjusted diluted earnings per share expected in the range of $6.80 to $6.85, representing a 7% to 8% increase over last year's record EPS.

• Dynamic macroeconomic environment and its impacts on business and operating results, including changes to global trade policy, tariffs, pricing actions and mitigation strategies and fluctuations in foreign currency exchange rates. - Changes in consumer behavior, including in response to price increases, ability to acquire new consumers and gain share in a dynamic consumer environment.

Q: Stefano, it sounds like HOKA really had a terrific quarter. It sounds like that you've seen an acceleration in the business from last quarter to this quarter. Can you maybe just dive into what has changed? What has driven the improvement?

A: Yes. First of all, I do see it sustainable going forward. I think we had a few learnings last year. We decided to space out key franchise launches with tightened inventories of outgoing styles, and we better leverage our DTC channel to move closeouts in a controlled manner. We see opportunity across every region every channel in every category of our business this year. So I feel confident that this trajectory will continue.

Q: I was interested in the channel strategy for the UGG brand. It's encouraging to see both channels grow in tandem in the key sell-through quarter. Given the shift in strategy to prioritize retail partner in-stocks for fiscal '26, I'm curious how we should think of your plans to manage the UGG brand in fiscal '27 on a wholesale versus DTC basis?

A: Potential for the UGG brand across all channels. all regions and all categories. So you should continue to see a balanced growth in the UGG portfolio. We're very happy with what the brand has delivered in terms of newness. Our 365 offering has been very well received. Our -- we're now playing legitimately in the sneaker category with the Lowmel. And our classic products continue to perform very well. So you should expect continued segmentation of the marketplace, continued differentiation and growth across all channels, markets and categories.

Q: I wanted to follow up on Peter's Steve. The HOKA guide of 13% to 14%, this is despite a very, very easy compare. Any considerations there on that front? Is it just conservatism?

A: Yes, sure. I'll start on that. I think the point there, right, is how we're managing both our brands for long-term sustainable growth, right? And so we're not going to get hung up on kind of quarterly compares if we believe it's kind of detrimental to the brand. So if we look at what happened this year, right, as I talked about with Peter's question in terms of how we were flowing inventory into the channel, we're making sure that we have the appropriate amount of inventory with the demand that we're seeing, but also setting up an opportunity to continue to grow our DTC, right, with a long-term target of improving the proportion of our DTC business overall, which will take several years. It's an important marketplace management setup of how you get there. And I think that's what you're seeing play out this year is a focus on balancing some of that wholesale demand out, fulfilling it a little bit earlier, placing then a little bit more emphasis on DTC growth as we get into the selling or bigger selling seasons. And that works, right? And so as we look going forward, it's about maintaining that. One of the positive things, I think, that we see is when we have these strong quarters, it's a signal of the consumer demand that's out there, right? And the demand for our brands is very strong. What it also does is it encourages some wholesale accounts to order bigger and order earlier, and we'll take advantage of that. And that's where that will play out. But again, we have a very keen focus on how we continue to develop our DTC business. You've seen some of the improvements that we've made and how that's driving more consumer engagement and more full-price consumer engagement for us.