Deckers raises outlook 2% as HOKA, UGG drive growth despite tariffs

Deckers Outdoor Corp. reported first-quarter earnings that topped estimates and raised its full-year profit outlook, as strong demand for HOKA and UGG footwear offset higher tariffs and elevated spending.

"Our direct-to-consumer channel grew at a double-digit pace, driven by robust demand across international markets and the US," Chief Executive Officer Stefano Caroti said. HOKA's DTC revenue rose 17 percent and UGG's gained 6 percent, he said.

Earnings came in at $0.94 per share for the quarter ended June 30, surpassing the $0.88 consensus estimate by 6.8 percent. Revenue rose 5.7 percent year over year to $1.02 billion, in line with analyst expectations. The company raised its full-year EPS guidance to $7.35-$7.50 from $7.30-$7.45, citing stronger-than-expected gross margin performance now seen at slightly better than 56.5 percent.

The improved outlook comes as Deckers navigates a more challenging trade environment. The company raised its assumed tariff rate to 12.5 percent from 10 percent, with the first quarter bearing the biggest impact. Operating income fell 6 percent to $155.3 million, and operating margin contracted to 15.2 percent from 17.1 percent a year earlier. Selling, general and administrative expenses are expected to remain at about 35 percent of net sales for the full year.

Deckers ended the quarter with $1.60 billion in cash and no outstanding borrowings, giving it financial flexibility to fund marketing, technology and store investments. Inventories declined 4.9 percent year over year to $807.6 million. The company repurchased about 3.3 million shares for $338.2 million in the quarter at an average price of $103.79, with $4.7 billion remaining under its buyback authorization.

International sales rose 8.4 percent, outpacing domestic growth of 3.2 percent. Other Brands sales fell 18.1 percent to $37.9 million, increasing the company's reliance on HOKA and UGG. That concentration exposes Deckers to demand shifts or product missteps in its two core brands, while large competitors such as Nike and Adidas maintain pressure across performance and lifestyle categories.

For the second quarter, Deckers expects revenue growth of about 5 percent and EPS of $1.73-$1.78. The stock trades at 13.4 times forward earnings, below its five-year median of 19.8 times and the S&P 500's 20.1 times.

The guidance raise signals management expects brand momentum to sustain through the tariff headwinds. Investors will watch second-quarter results for evidence that HOKA's product pipeline and UGG's seasonal strength can deliver the margin expansion embedded in the raised forecast.

This article is for informational purposes only and does not constitute investment advice.