Deckers Outdoor Corporation (DECK Quick QuoteDECK - Free Report) reported fourth-quarter fiscal 2026 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. DECK reported earnings of 96 cents per share, down 4% year over year but surpassed the Zacks Consensus Estimate of 81 cents by 18.5%. Net sales increased 9.6% year over year to $1,119.4 million and topped the consensus estimate of $1,082 million by 3.4%. On a constant-currency basis, net sales grew 7.7% year over year.

The company delivered record fourth-quarter revenues driven by continued momentum in the HOKA brand, strong UGG demand, robust international growth and disciplined full-price selling across channels. Management highlighted that strategic investments in innovation, brand marketing and marketplace execution continue to strengthen Deckers’ competitive positioning while supporting long-term profitable growth. As a result, shares of the company gained 4.6% yesterday.

DECK’s Brand Momentum Led by HOKA and UGG

The HOKA brand continued to deliver strong momentum in the fourth quarter, with net sales increasing 14.5% year over year to $671.2 million, exceeding our projected $665.5 million. Growth was driven by robust demand across both direct-to-consumer and wholesale channels, supported by healthy gains in the U.S. and international markets. 

Management highlighted that the performance reflected growing consumer adoption of HOKA’s innovative performance and lifestyle offerings, continued success of franchise families such as Bondi, Clifton and Mafate, as well as disciplined marketplace management that supported high levels of full-price selling. The brand also benefited from strong international demand and accelerating consumer awareness globally.

The UGG brand also delivered solid fourth-quarter results, with net sales increasing 9.2% year over year to $408.6 million, beating our estimate of $373.2 million. Growth was primarily driven by strength in the direct-to-consumer channel, seasonal product extensions and continued traction from newer categories including sneakers, sandals and clogs. Management noted strong consumer engagement across the global marketplace, supported by successful product launches such as the Lowmel sneaker and Golden collection, which further reinforced UGG’s positioning as a premium lifestyle brand.

Meanwhile, net sales for Other Brands declined 35.6% year over year to $39.5 million compared with our estimate of $33.3 million, primarily reflecting the phase-out of Koolaburra standalone operations and the sale of the Sanuk brand.

Deckers’ Channel Mix Favored DTC and International

Wholesale net sales increased 7.1% year over year to $654.9 million in the fourth quarter, reflecting continued healthy demand across both HOKA and UGG brands as well as strong full-price sell-through in the marketplace. Direct-to-consumer (DTC) net sales increased 13.2% year over year to $464.4 million, while DTC comparable net sales rose 8.2%, supported by strong consumer engagement, higher traffic and momentum across digital and retail channels.

From a geographic perspective, domestic net sales increased modestly 0.3% year over year to $649.8 million. International net sales surged 25.5% to $469.5 million, driven by strong growth across Europe and Asia, rising global awareness for HOKA and continued healthy demand for UGG products in international markets.

DECK’s Full-Price Selling Lifted Gross Margin

Gross profit in the fourth quarter increased 11.2% year over year to $644.6 million. Gross margin expanded 90 basis points to 57.6% and surpassed our estimate of 54.7%, primarily driven by stronger full-price selling across the UGG and HOKA brands, favorable foreign exchange rates, lower freight expenses and a modest benefit from favorable product and channel mix. 

These benefits were partially offset by tariff-related headwinds. Management also noted that gross margin performance exceeded expectations due to stronger full-price selling, greater freight savings and favorable product mix.

Deckers’ Expenses Rose as Investments Accelerated

Selling, general and administrative expenses increased 20.2% year over year to $487.9 million. As a percentage of revenues, SG&A expenses increased 390 basis points to 43.6%. The quarter also included the acceleration of certain expenses to better position the business entering fiscal 2027. The higher and earlier spending was primarily tied to increased top-of-funnel marketing initiatives aimed at boosting brand awareness, investments in advanced technology and unfavorable impacts from foreign currency exchange rate remeasurement.

Deckers’ operating income declined 9.9% year over year to $156.7 million from $173.9 million in the year-ago quarter. The operating margin contracted to 14% from 17% in the prior-year period.

DECK’s Cash Returns Expanded With Bigger Buyback

Cash and cash equivalents were $1.91 billion as of March 31, 2026, compared with $1.89 billion in the prior-year period. Inventories declined 2% year over year to $487 million despite the impact of incremental tariffs, and the company continued to maintain a debt-free balance sheet with no outstanding borrowings. Total stockholders’ equity stood at $2.50 billion at the end of the quarter.

During the fourth quarter of fiscal 2026, Deckers repurchased approximately 2.5 million shares of its common stock for $261.6 million at an average price of $105.61 per share. For the full fiscal year, the company repurchased approximately 10.5 million shares for $1.08 billion at an average price of $102.43 per share. 

As of March 31, 2026, approximately $1.5 billion remained under the existing stock repurchase authorization. Additionally, the board approved an incremental $3.5 billion increase to the authorization, bringing the total outstanding authorization to nearly $5 billion.

Q1 Outlook for DECK

For the fiscal first quarter, Deckers expects consolidated revenues to increase approximately 5% year over year, which would mark its first-ever June quarter with more than $1 billion in revenues. HOKA sales are projected to grow at a high-single-digit rate, primarily driven by continued strength in the DTC business. 

However, wholesale revenues will face timing-related headwinds, including the impact of earlier shipments in the prior year tied to the EMEA warehouse transition, as well as delayed distributor shipments in APAC ahead of the Clifton launch in July. UGG revenues are expected to increase at a mid-single-digit rate, consistent with the company’s full-year growth outlook.

Gross margin in the first quarter is expected to decline year over year, mainly due to the carryover impact of higher tariffs on U.S. goods, although this pressure is expected to be partially offset by favorable channel mix and currency benefits. 

SG&A expenses are projected to grow at roughly double the pace of revenue growth, reflecting increased marketing investments supporting brand initiatives, the lapping of favorable timing-related items from the prior year, including FX remeasurement, and the annualization of new hires made last year. Earnings per share for the quarter are expected to be in the range of 82-87 cents.

Deckers’ Fiscal 2027 View Reflects Cost Pressures

For fiscal 2027, Deckers expects revenues in the range of $5.86-$5.91 billion, representing high-single-digit growth compared with fiscal 2026. HOKA is projected to deliver low-double-digit growth, led by a faster expansion in DTC relative to wholesale, while UGG is expected to grow at a mid-single-digit rate with balanced growth across both channels.

The company expects the gross margin to be approximately 56.5%, down from the prior year primarily due to higher freight costs linked to rising transportation expenses and shipping disruptions associated with the ongoing Middle East conflict, along with increased input costs stemming from material upgrades and inflationary pressures. The guidance assumes the current 10% tariff rate remains in effect throughout fiscal 2027, with inventory sold in the first half carrying previously paid higher IEEPA tariff rates. Although Deckers is pursuing potential government refunds, no refund assumptions have been included in guidance.

SG&A expenses are expected to be about 35% of revenues as the company continues investing in long-term growth initiatives. Planned investments include increased marketing to strengthen brand awareness, additional personnel supporting critical growth opportunities, enhanced technology infrastructure for more effective data utilization, and continued DTC expansion, including selective global HOKA store openings and UGG store refreshes. Management believes these investments will help drive operating expense leverage beginning in fiscal 2028 and beyond.

Operating margin is expected to be approximately 21.5%, reflecting Deckers’ strategy of balancing strong profitability with continued brand investment. The company projects an effective tax rate of roughly 23% and earnings per share between $7.30 and $7.45. Guidance also includes an expectation to repurchase shares equivalent to at least 80% of free cash flow. Capital expenditures are projected in the range of $145-$155 million, primarily aimed at strengthening technology infrastructure, expanding select HOKA retail locations globally and refreshing certain UGG stores.

DECK’s Multi-Year Financial Framework

Management emphasized that while quarterly growth may not be linear due to macroeconomic uncertainties and timing dynamics, the company remains confident in its long-term strategy. Over the last three fiscal years, Deckers has achieved a 15% compound annual revenue growth rate and more than doubled earnings per share. 

Looking ahead, the company expects consolidated net sales to increase at a high-single-digit annual rate during fiscal years 2028 through 2030. HOKA revenues are projected to grow at a low-double-digit annual rate, while UGG is expected to deliver mid-single-digit annual growth. The company also expects to maintain operating margins in the low-20% range and deliver low-double-digit earnings per share growth, supported by the continuation of its share repurchase program.

DECK Past Three-Month Performance

Image Source: Zacks Investment Research

Shares of the Zacks Rank #4 (Sell) company have lost 13.1% in the past three months compared with the industry’s 14% decline.

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