Deckers Outdoor (DECK, Financial) exceeded Q4 2025 EPS expectations, marking a five-year streak of consistent EPS beats. However, the company's year-over-year revenue growth decelerated to 6.5%, a sharp drop from the high-teen/low-twenty percent levels it previously achieved. DECK issued disappointing guidance for Q1 2026 and withheld FY26 guidance due to macroeconomic uncertainties and potential tariff impacts, which could increase the cost of goods sold by $150 million. These tariffs are expected to reduce gross margins by about 250 basis points year-over-year, raising concerns about future profitability.
- HOKA's revenue growth slowed, with a 10% increase in net sales to $586 million in Q4, down from 24% in Q3, 35% in Q2, and 30% in Q1. This slowdown is attributed to model changeovers for key products like the Bondi 9 and Clifton 10, leading to increased price promotions and affecting average selling prices, despite strong unit volumes. A strategic shift towards wholesale expansion also diluted direct-to-consumer (DTC) performance. DECK's DTC net sales decreased by 1.2% in Q4, while wholesale net sales, heavily contributed by HOKA, rose by 12.3%.
- UGG Brand's net sales grew by only 3.6% to $374.3 million in Q4, a decline from 16% growth in Q3 and 13% in Q2. UGG's slower growth is due to inventory constraints heading into Q4, limiting sales potential despite strong demand, especially in international markets. Both brands are facing challenges from tougher year-over-year comparisons and macroeconomic pressures, including cautious U.S. consumer spending.
- DECK's Q1 2026 guidance disappointed investors, reflecting post-tariff impacts without immediate mitigation from planned price adjustments or cost-sharing with partners, expected only after Q1. The company anticipates HOKA growth of at least low-double digits and UGG growth of at least mid-single digits, indicating continued moderation in growth rates.
- The decision to withhold FY26 guidance due to trade uncertainty and potential tariff-related COGS increases has increased market unease. This lack of forward visibility, combined with concerns about U.S. consumer spending and potential margin compression, has worried investors, deviating from DECK’s historical practice of providing clear annual guidance.
- Despite challenges, DECK's Q4 report highlighted some positives, particularly in profitability. The company achieved a gross margin of 56.7% for Q4, up 50 basis points from the previous year, driven by disciplined inventory management and a favorable product mix. This shift towards higher-margin products, especially within HOKA’s premium offerings, helped offset some promotional activity tied to model changeovers.
DECK’s stock decline reflects investor concerns over slowing revenue growth, particularly HOKA’s slowdown to 10% in Q4, and disappointing Q1 guidance incorporating unmitigated tariff impacts. The decision to withhold FY26 guidance due to trade and macroeconomic uncertainties has amplified market fears, overshadowing a strong EPS beat and improved margins.
