Deckers Outdoor Corporation – FY2026 Results: 10% Revenue Growth Led by HOKA and International Expansion

• Revenue reached $5.47 billion, up 9.8%, with HOKA growing 15.9% to $2.59 billion and UGG advancing 8.2% to $2.74 billion, reflecting strong global demand and strategic marketplace expansion across both brands.

• Gross margin contracted 20 basis points to 57.7% as incremental tariffs on domestic goods offset benefits from strategic price increases, cost-sharing arrangements, and favorable product mix.

• Operating cash flow rose 13.2% to $1.18 billion while the company repurchased approximately $1.08 billion of stock, demonstrating continued capital allocation discipline despite ongoing tariff headwinds.

Deckers posted revenue of $5.47 billion for fiscal 2026, up 9.8% year-over-year, driven by robust growth in both core brands. HOKA delivered 15.9% growth to $2.59 billion, fueled by international expansion and increased global adoption of key franchises including new innovation. UGG achieved 8.2% growth to $2.74 billion, benefiting from year-round product diversification and strong international demand. Other brands declined 33.9% to $146.2 million, reflecting the phase-out of Koolaburra and AHNU standalone operations and the prior-year sale of Sanuk.

Wholesale channel sales increased 12.3% to $3.21 billion, while DTC grew 6.3% to $2.26 billion. International sales surged 26.8% to $2.28 billion, while domestic sales were essentially flat at 0.2% growth. Units sold rose 6.2% to 78.7 million.

Gross margin declined 20 basis points to 57.7%, as incremental tariffs on domestic goods and slightly unfavorable channel mix were only partially offset by cost-sharing arrangements, strategic price increases, favorable product mix, and modestly favorable freight and foreign exchange impacts. SG&A expenses increased 11.0% to $1.89 billion, driven by higher advertising and promotion spending (up approximately $63.6 million), increased IT and 3PL service fees, expanded retail footprint, and higher payroll costs to support brand growth.

Operating income rose 7.1% to $1.26 billion, though operating margin compressed 50 basis points to 23.1%. Net income grew 6.0% to $1.02 billion, while diluted EPS advanced 10.9% to $7.02, aided by share count reduction from repurchases. The effective tax rate increased to 22.8% from 22.3%, primarily due to net unrecognized tax benefits partially offset by favorable jurisdictional earnings mix.

The results demonstrate Deckers' ability to deliver high single-digit revenue growth and double-digit EPS expansion despite margin pressure from tariffs. HOKA continues to scale rapidly-up nearly 16%-reflecting successful innovation launches, international penetration, and strategic distribution. UGG's 8% growth signals effective diversification beyond seasonal classics into year-round product categories and men's offerings.

However, the 50-basis-point operating margin contraction indicates that cost inflation, particularly from tariffs, exceeded pricing power and efficiency gains. SG&A grew faster than revenue (up 11%) as the company invested heavily in advertising, promotions, IT infrastructure, and retail expansion to support long-term brand positioning and market share gains. This investment intensity, while reducing near-term profitability, positions both brands for sustained global growth.

International growth at nearly 27% highlights Deckers' early-stage penetration in key markets outside the U.S., where brand awareness and distribution remain underdeveloped. The transition from minimal domestic growth to substantial international expansion reduces geographic concentration risk and extends the company's runway for growth. Strong operating cash flow of $1.18 billion (up 13%) and a cash balance exceeding $1.9 billion provide financial flexibility to manage tariff uncertainty, fund capital investments, and return capital to shareholders.

Deckers achieved $5.47 billion in revenue, up 9.8%, with HOKA (+15.9%) and UGG (+8.2%) both contributing meaningfully to growth. International sales rose 26.8%, reflecting significant global expansion, while domestic sales were flat. Gross margin declined 20 basis points to 57.7% due to tariffs, though cost-sharing and selective pricing mitigated some pressure. Operating margin compressed 50 basis points to 23.1% as SG&A rose 11.0%, driven by marketing investments, IT upgrades, and retail expansion.

Diluted EPS grew 10.9% to $7.02, aided by $1.08 billion in share repurchases. Operating cash flow increased 13.2% to $1.18 billion. The company phased out Koolaburra and AHNU brands, launched the HOKA U.S. loyalty program, and continued investing in global retail presence. Units sold rose 6.2% to 78.7 million, and comparable DTC sales increased 4.6% on a constant currency basis. Revenue on a constant currency basis increased 9.0%.

Management highlighted continued global brand awareness investments and strategic marketplace presence as key drivers of HOKA and UGG growth. The company launched the HOKA U.S. brand loyalty program during fiscal 2026 and plans to continue investing in global loyalty programs for both brands. Management noted that promotional activity slightly increased compared to exceptionally low prior-year levels but emphasized high levels of full-price sell-through by aligning product assortments with marketplace demand.

Management acknowledged that gross margin benefits achieved in fiscal 2026 may not be replicated in fiscal 2027 due to macroeconomic and geopolitical factors, including tariffs and potential impacts from pricing strategies. The company is pursuing mitigation strategies including selective pricing actions, inventory and sourcing management, supplier diversification, and negotiating cost-sharing arrangements; however, management stated they may be unable to fully offset tariff-related cost impacts, which could materially affect gross margin and product demand.

Management disclosed ongoing efforts to reposition the Teva brand by refocusing wholesale distribution toward outdoor and premium retailers and emphasizing outdoor-adventure heritage messaging. The company is also transitioning one international third-party logistics provider to a new partner, which may create temporary operational risks.

The company faces significant exposure to tariffs, with incremental tariffs on domestic goods pressuring gross margin in fiscal 2026. Management stated that recent judicial, regulatory, and administrative developments regarding tariffs have increased uncertainty related to both future duty costs and potential recovery of previously paid duties, and no amounts related to potential tariff refunds or other recoveries have been recognized as of March 31, 2026. The majority of production occurs in Vietnam and Indonesia, concentrating geographic and trade policy risk.

Sheepskin, a critical input for UGG products, is sourced primarily from Australia and processed largely by two tanneries in China, creating supplier concentration and potential supply disruption risk. Management noted that macroeconomic factors including inflationary pressures, increased tariffs, rising supply chain costs, high interest rates, foreign currency volatility, escalating global conflicts, changes in discretionary spending, and recession risks are creating a complex environment that could pressure future results.

The company is transitioning one international third-party logistics provider to a new partner, which may create temporary operational risks. SG&A expenses grew 11.0%, outpacing revenue growth, indicating rising cost intensity to support brand investments. Management noted that the pace of gross margin improvement may slow in fiscal 2027 due to macroeconomic pressures and pricing strategies.

Investors should monitor:

• Tariff policy developments and the company's ability to offset duty cost increases through pricing, cost-sharing, or sourcing diversification, including any future recognition of tariff refunds or recoveries.

• Gross margin trajectory in fiscal 2027, particularly whether strategic pricing and cost mitigation can offset tariff headwinds and whether promotional intensity increases further.

• HOKA international growth sustainability and UGG's ability to continue year-round product diversification and market share gains outside the U.S.

• SG&A leverage potential as marketing, IT, and retail investments mature, and whether operating margin compression stabilizes or continues.