Footwear and apparel conglomerate Deckers (NYSE: DECK) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 9.1% year on year to $1.43 billion. On the other hand, the company’s full-year revenue guidance of $5.35 billion at the midpoint came in 1.9% below analysts’ estimates. Its GAAP profit of $1.82 per share was 15.1% above analysts’ consensus estimates.

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StockStory’s Take

Deckers’ third quarter results were met with a negative market reaction as investors focused on the company’s cautious full-year outlook despite revenue and profit surpassing Wall Street’s expectations. Management highlighted that international growth, particularly in Europe and China, drove the quarter’s performance, while U.S. consumer sentiment remained under pressure. CEO Stefano Caroti underscored that strong demand for HOKA and UGG brands was led by distinctive new product offerings and robust wholesale partnerships. Caroti remarked, “The U.S. marketplace remains dynamic, with recent consumer trends indicating a heightened preference for multi-brand shopping experiences.”

Looking ahead, Deckers’ outlook reflects a combination of global growth opportunities and headwinds from tariffs and consumer caution in the U.S. Management expects international markets and wholesale channels to continue outpacing domestic and direct-to-consumer growth. CFO Steve Fasching acknowledged the impact of rising tariffs and more selective consumer spending, stating, “As U.S. consumers are beginning to see some price increases, it is impacting their purchase behavior within the consumer discretionary space.” Deckers plans to maintain investment in global brand-building, but warns that macroeconomic and trade policy uncertainties could weigh on future results.

Key Insights from Management’s Remarks

Deckers' leadership attributed the quarter’s growth to international expansion and successful product innovation but cautioned that U.S. consumer headwinds and tariffs are set to impact future performance.

• International expansion momentum: Growth in Europe, the Middle East, Africa, and China was a core driver, with HOKA gaining market share and UGG’s new products resonating globally, supported by targeted marketing and local store openings.
• Wholesale channel strength: Both HOKA and UGG saw robust wholesale demand, with earlier shipments and expanded retail partnerships helping offset softer performance in direct-to-consumer channels, particularly in the U.S.
• Product innovation and launches: HOKA’s updates to core franchises like Clifton, Bondi, and Arahi, along with new entries such as Mafate X and the evolution of the Mach franchise, contributed to strong sell-through and increased brand awareness, while UGG’s new styles like the Classic Micro and Zora Ballet Flat outperformed expectations.
• Tariff timing and mitigation: The company benefited from favorable tariff timing in the quarter, but expects significant tariff headwinds in the second half of the year. Management cited strategic pricing and cost-sharing with factories as partial offsets.
• Shifting consumer behavior: U.S. consumers showed a preference for multi-brand shopping and remained sensitive to price increases, leading to deeper sales fluctuations and impacting direct sales traffic. Deckers adapted by emphasizing omnichannel flexibility and inventory management.

Drivers of Future Performance

Deckers’ guidance is driven by ongoing international momentum, wholesale channel strength, and the need to navigate tariff and consumer spending headwinds.

• Persistent tariff impact: Management expects the full effect of increased tariffs to weigh on margins in the second half of the year and into next year, with mitigation efforts including strategic price increases and cost-sharing only partially offsetting the pressure. Fasching emphasized, “We’re going to continue to see tariff headwinds as we look into next year.”
• International and wholesale priorities: The company anticipates international sales and wholesale partnerships will be the main growth engines, with U.S. direct-to-consumer performance recovering more slowly. Caroti noted “international regions remain the driving force behind UGG and HOKA revenue growth.”
• Consumer caution and product cycle: Deckers is planning for continued caution among U.S. consumers, reflecting the impact of inflation and discretionary spending limits. Management aims for long-term sustainable growth by focusing on product launches, clean inventory transitions, and balanced distribution between wholesale and DTC channels.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be tracking (1) the pace of recovery in U.S. direct-to-consumer traffic and whether improvements materialize as expected, (2) the effectiveness of Deckers’ tariff mitigation strategies and their impact on gross margins, and (3) sustained strength and market share gains in international regions for both HOKA and UGG. Additionally, how Deckers manages inventory and executes new product launches in a shifting consumer environment will be critical markers of its progress.

Deckers currently trades at $87.96, down from $102.50 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free for active Edge members).

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