Deckers Outdoor Corporation FY2025: 16% Revenue Growth Driven by HOKA and UGG Strength

What happened

Deckers reported net sales of $4.99 billion for the fiscal year ended March 31, 2025, representing a 16.3% increase from the prior year. HOKA brand sales grew 23.6% to $2.23 billion, driven by higher global demand for performance products, market share gains, and new points of distribution with key wholesale partners. UGG brand sales increased 13.1% to $2.53 billion, supported by strong global demand for year-round product franchises and gains in consumer acquisition and retention. International sales increased 26.3%, outpacing domestic growth of 11.3%. The wholesale channel grew 17.4% while the direct-to-consumer channel increased 14.8%. Comparable DTC sales increased 13.4%, and total units sold rose 13.5% to 74.1 million units. Gross margin expanded 230 basis points to 57.9%, driven by favorable brand and product mix, increased full-price selling primarily for UGG (including reduced closeouts to wholesale), partially offset by unfavorable freight cost changes. SG&A expenses increased 17.1% to $1.71 billion, primarily due to $83.3 million in higher advertising and marketing expenses for HOKA and UGG to drive brand awareness, $67.8 million in increased payroll costs from talent investments and higher variable compensation, and $79.8 million in other operating expenses including third-party logistics fees and IT costs. Operating income grew 27.1% to $1.18 billion, with operating margin expanding 200 basis points to 23.6%. Net income increased 27.2% to $966.1 million, and diluted earnings per share rose 30.2% to $6.33. The company completed the sale of the Sanuk brand during the second quarter and began phasing out standalone Koolaburra brand operations by closing Koolaburra.com as of March 31, 2025, with plans to wind down wholesale operations by year-end 2025.

Why it matters for investors

The results demonstrate Deckers' ability to drive profitable growth through its two core brands while maintaining pricing power and operational discipline. The 200 basis point operating margin expansion to 23.6%, despite 17% growth in SG&A expenses, indicates that revenue growth and gross margin improvement are outpacing cost increases. HOKA's 24% growth trajectory positions it as a significant driver of future expansion, while UGG's 13% growth and margin improvement reflect successful diversification beyond seasonal products and strategic marketplace management. The 230 basis point gross margin expansion to 57.9% signals improved product mix and pricing discipline, with higher full-price selling and reduced promotional activity. International growth of 26%, significantly outpacing domestic growth of 11%, highlights meaningful runway for geographic expansion. The company's strong cash generation of $1.04 billion from operations, combined with a cash position of $1.89 billion, provides flexibility to fund growth investments including HOKA retail expansion (capital expenditures guided at $120-130 million for next fiscal year) and return capital to shareholders through buybacks ($266 million repurchased in FY2025, with $2.25 billion newly authorized). However, the portfolio rationalization through Sanuk divestiture and Koolaburra wind-down reflects management's focus on core brands with the strongest growth potential. The business faces structural risks from tariff exposure (products sourced primarily from Vietnam), reliance on sheepskin supply for UGG from limited suppliers in Australia, and potential demand volatility from macroeconomic pressures on premium discretionary products.

Key highlights

For the fiscal year ended March 31, 2025, Deckers reported total net sales of $4.99 billion, up 16.3% from $4.29 billion in the prior year. The HOKA brand delivered $2.23 billion in sales (up 23.6%), while UGG brand generated $2.53 billion (up 13.1%). Gross margin expanded 230 basis points to 57.9%, driven by favorable brand and product mix and increased full-price selling. Operating income increased 27.1% to $1.18 billion, representing a 23.6% operating margin (up 200 basis points). Net income grew 27.2% to $966.1 million, and diluted earnings per share increased 30.2% to $6.33. The wholesale channel grew 17.4% to $2.86 billion while the DTC channel increased 14.8% to $2.13 billion. International sales rose 26.3% to $1.80 billion, outpacing domestic growth of 11.3% to $3.19 billion. Comparable DTC sales increased 13.4% and total units sold rose 13.5% to 74.1 million. The company generated $1.04 billion in operating cash flow and ended the year with $1.89 billion in cash and cash equivalents. During the year, Deckers repurchased $266 million of common stock and completed the sale of the Sanuk brand. The company is phasing out Koolaburra brand operations with plans to close wholesale operations by the end of calendar year 2025. Management guided capital expenditures of $120-130 million for fiscal 2026, primarily for HOKA retail expansion, IT infrastructure, and distribution network enhancements. The Board authorized an additional $2.25 billion for stock repurchases in May 2025.

Management commentary

Management highlighted several strategic priorities and trends impacting the business. The company emphasized its focus on increasing global consumer awareness and adoption of its brands through launches of innovative product offerings coupled with marketing investments across multiple geographic markets and channels. Management noted continued implementation of a marketplace inventory management strategy through segmentation and differentiation, which resulted in higher full-price sell-through during fiscal 2025, benefiting gross margins across all channels. However, management cautioned that these gross margin benefits may not continue in fiscal 2026 due to various factors including macroeconomic and geopolitical developments and potential impacts from pricing strategies. The long-term strategy remains focused on building the DTC channel to represent an increased proportion of total sales and differentiating the consumer experience from wholesale to drive acquisition and retention. Management acknowledged that as they expand doors with wholesale partners to drive brand awareness and market share in the near-term, the wholesale channel may represent a higher portion of total sales in certain periods, which could pressure margins. The company continues to implement international growth strategies for HOKA and UGG to represent an increased proportion of total sales, with selective expansion of HOKA presence through wholesale locations and targeted retail store expansion. Management noted they expect to continue investing in certain regions that provide influential market presence to build HOKA brand awareness, including in fiscal 2026. On supply chain, management stated they continue to invest in and build upon infrastructure capabilities through the network of global warehouses, distribution centers, and third-party logistics providers to meet customer and consumer demand. Management disclosed they are currently negotiating the transition of one international third-party logistics provider to a new partner with an upgraded warehouse management system during fiscal 2026. Regarding macroeconomic factors, management noted exposure to risks from evolving US trade policy that has introduced uncertainty and volatility in global trade relations, including higher tariffs and restrictions on goods from certain regions. While the company pursues mitigation strategies including selective price increases and cost-sharing arrangements with manufacturers, management stated they may be unable to offset all resulting increases to cost of goods sold, and these risks may materially impact demand for products.

What to watch next

Investors should monitor:

• Impact of tariff increases and evolving trade policy on cost of goods sold and gross margins, particularly given heavy reliance on Vietnam manufacturing, and whether the company can successfully implement pricing increases and manufacturer cost-sharing arrangements to offset cost pressures without materially impacting demand.

• Sustainability of HOKA brand growth trajectory and ability to maintain 20%+ growth rates as the brand scales, along with monitoring of consumer adoption trends, market share gains, and effectiveness of international expansion strategy in building long-term brand awareness.

• Execution of international growth strategy and whether international sales can continue to significantly outpace domestic growth, particularly for HOKA brand in underpenetrated markets, while managing distribution quality and brand positioning.

• Gross margin trends in fiscal 2026 given management's caution that benefits from full-price selling and marketplace management seen in fiscal 2025 may not continue due to macroeconomic factors and pricing strategy impacts, and whether operating margin expansion can be sustained amid elevated SG&A investment levels.

This summary is based solely on excerpts from the company's Form 10-K filing.