Deckers Outdoor Corporation (DECK Quick QuoteDECK - Free Report) reported mixed second-quarter fiscal 2027 results, with earnings surpassing the Zacks Consensus Estimate but revenues falling short. Adjusted earnings of $2.03 per share increased 11.5% year over year and beat the consensus estimate of $1.82. Including a 28-cent benefit from net refunds related to International Emergency Economic Powers Act (“IEEPA”) tariffs, earnings came in at $2.31 per share. Net sales grew 3.5% year over year to $1,480.6 million but missed the Zacks Consensus Estimate of $1,510 million. On a constant-currency basis, net sales increased 2.8%.

Strong full-price selling, favorable product mix and disciplined expense management supported profitability. However, softer domestic direct-to-consumer (DTC) demand and European logistics disruptions weighed on revenues. International sales increased 9%, providing an important growth driver.

The HOKA brand generated revenues of $677.2 million, up 6.8% year over year. Wholesale strength and continued international momentum supported growth. HOKA wholesale revenues rose 9%, while DTC sales grew 4%.

The UGG brand delivered revenues of $786.4 million, increasing 3.5% year over year. Wholesale revenues grew 7%, partially offset by an 8% decline in DTC sales. Other Brands revenues decreased 54.3% to $17 million, reflecting the wind-down of Koolaburra's standalone operations.

Deckers' Wholesale Growth Offsets DTC Weakness

Wholesale net sales increased 5.5% year over year to $1.09 billion in the second quarter, supported by healthy global sell-in across HOKA and UGG. Strong performance in multi-brand retail environments helped offset weaker demand through company-operated channels.

DTC net sales declined 1.8% to $387.5 million, while comparable DTC sales decreased 6.4%. Management attributed the weakness primarily to heightened promotional activity in the U.S. athletic footwear market and increasingly selective consumer spending.

Domestic revenues declined 0.4% to $835.8 million, while international revenues increased 9% to $644.7 million. Asia-Pacific delivered the highest percentage growth among international regions.

European third-party logistics disruptions delayed approximately $22 million in shipments. Management cautioned that some delayed sales could be canceled rather than fully recovered in subsequent quarters.

Deckers Outdoor Corporation Price, Consensus and EPS Surprise

Deckers Outdoor Corporation price-consensus-eps-surprise-chart | Deckers Outdoor Corporation Quote

DECK's Full-Price Strategy Supports Higher Margins

Gross profit increased 11.4% year over year to $895.1 million. Gross margin expanded 430 basis points to 60.5%, including a 310-basis-point benefit from IEEPA tariff refunds. Excluding this benefit, gross margin improved 120 basis points, supported by favorable product mix and full-price selling.

Selling, general and administrative expenses increased 5.9% year over year to $505.7 million. Higher marketing and technology investments contributed to the increase, although management's cost-control measures kept spending below expectations.

Operating income rose 19.3% to $389.5 million. Operating margin expanded to 26.3% from 22.8%. Excluding tariff refund benefits, operating margin reached 23.2%, reflecting underlying profitability improvement.

Deckers Maintains Strong Liquidity & Shareholder Returns

Cash and cash equivalents totaled $1.21 billion as of Sept. 30, 2026 compared with $1.41 billion a year earlier. Inventories increased 3% year over year to $860.8 million. The company maintained a debt-free balance sheet with no outstanding borrowings.

During the quarter, Deckers repurchased approximately 3.2 million shares for $299.3 million at an average price of $93.65 per share. First-half repurchases totaled $637.5 million, with approximately $4.4 billion remaining under its authorization.

DECK Expects Modest Q3 Growth Amid Consumer Pressure

For the fiscal third quarter, management expects consolidated revenues to increase at a low-single-digit rate. UGG revenues are projected to grow at a low-single-digit pace, while HOKA revenues are expected to increase at a low-to-mid-single-digit rate.

Management expects continued international strength but anticipates pressure on domestic DTC sales as consumers increasingly seek promotional offers. Higher freight expenses and slightly increased promotional activity are also expected to affect margins.

Third-quarter earnings are projected between $3.52 and $3.60 per share, including approximately 24 cents from IEEPA tariff refunds. Product launches and international demand are expected to support an acceleration in HOKA's revenue growth during the fourth quarter.

Deckers' Fiscal 2027 View Reflects Softer Demand

For fiscal 2027, Deckers lowered its consolidated revenue outlook to $5.70-$5.725 billion from $5.86-$5.91 billion. HOKA revenues are now expected to increase at a high-single-digit rate compared with the previous low-double-digit outlook. UGG growth expectations were reduced to low-single-digit from mid-single-digit.

Gross margin is now projected at approximately 58.5%, while SG&A expenses are expected to represent 35.5% of revenues. Operating margin is forecast at approximately 23%, including tariff refund benefits.

Management raised its earnings guidance to $7.80-$7.95 per share from $7.35-$7.50, incorporating approximately 52 cents of tariff refund benefits. Excluding these benefits, the outlook implies a gross margin of 57% and operating margin slightly above 21.5%. The company continues to expect an effective tax rate of approximately 23% and assumes $1 billion in fiscal-year share repurchases.

Shares of this Zacks Rank #3 (Hold) company have fallen 11.2% over the past three months compared with the industry’s decline of 2.5%.

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