DECK Q2 Earnings Beat Estimate, HOKA & UGG Posts Double-Digit Growth

Deckers Outdoor Corporation DECK delivered an impressive second-quarter fiscal 2026 performance, surpassing expectations and increasing year over year. The standout performances of its HOKA and UGG brands were the key drivers behind the strong results.The company’s ability to deliver innovative products, combined with an efficient operating model and strong financial profile, positions it well to achieve its fiscal 2026 targets and pursue growth opportunities.Deckers Outdoor Corporation Price, Consensus and EPS Surprise Deckers Outdoor Corporation price-consensus-eps-surprise-chart | Deckers Outdoor Corporation QuoteDeckers’ Quarterly Performance: Key Metrics & InsightsDECK delivered quarterly earnings of $1.82 per share, which surpassed the Zacks Consensus Estimate of $1.58. The reported figure increased from the prior-year quarter’s $1.59.Net sales of this company increased 9.1% year over year to $1.43 billion and outpaced the consensus estimate of $1.41 billion. On a constant-currency basis, net sales grew 8.3%.Gross profit increased 9.6% year over year to $803.8 million. The gross margin in the quarter expanded 30 basis points to 56.2% from 55.9% in the year-ago period and surpassed our estimate of 53.7%. This improvement was primarily due to price increases, a favorable product mix, positive foreign currency exchange rates and factory cost sharing, partially offset by incremental tariffs on U.S. goods and an unfavorable channel mix.The company’s SG&A expenses rose 11.5% year over year to $477.3 million. As a percentage of revenues, SG&A expenses stood at 33.4%, up 70 basis points from last year, primarily reflecting continued brand investments.Deckers’ operating income was $326.5 million, up 7% from $305.1 million in the year-ago quarter. The operating margin came in at 22.8%, down 50 basis points from the prior-year period.DECK’s Brand-Wise DiscussionThe HOKA brand maintained its strong momentum, achieving an 11.1% year-over-year increase in sales to $634.1 million, exceeding our projected $630.1 million. HOKA’s growth was primarily driven by wholesale, which rose 13%, supported by strong sell-in, healthy sell-through and continued international momentum. HOKA DTC sales increased 8%, reflecting sequential improvement in the United States and robust demand globally.The UGG brand delivered solid results, posting a 10.1% increase in net sales to $759.6 million, compared with our estimate of $738.4 million. UGG’s performance was fueled by a 17% increase in wholesale, partly offset by a 10% decline in DTC. Wholesale strength stemmed from strong partner demand and earlier European shipments ahead of a warehouse transition. Softer DTC results reflected higher in-stock levels at wholesale partners and a more cautious U.S. consumer environment, with spending shifting toward multi-brand retail experiences.Meanwhile, net sales for Other Brands declined 26.5% year over year to $37.2 million compared with our estimate of $40.3 million, reflecting the phase-out of Koolaburra's standalone operations.Deckers’ Channel & Geography-Wise DiscussionWholesale net sales increased 13.4% year over year to $1.04 billion, while DTC net sales declined 0.8% to $394.6 million. DTC comparable net sales edged down 2.9% year over year.Domestic net sales dipped 1.7% to $839.5 million, while International net sales rose 29.3% to $591.3 million.DECK Stock Past Three-Month PerformanceImage Source: Zacks Investment ResearchDECK’s Financial SnapshotCash and cash equivalents were $1.41 billion as of Sept. 30, 2025. The company ended the quarter with total stockholders’ equity of $2.47 billion and reported no outstanding borrowings.In the fiscal second quarter, the company repurchased 2.6 million shares of its common stock for $282 million at an average price of $109.31 per share. As of Sept. 30, 2025, $2.2 billion remained under the company’s stock repurchase authorization.Q3 Outlook for DECKFor the third quarter of fiscal 2026, Deckers anticipates a more cautious revenue performance, reflecting the impacts of higher tariffs, continued macroeconomic uncertainty, and a more measured U.S. consumer environment.Management expects greater pressure in the fiscal third quarter, followed by stronger growth in the fourth quarter, supported by holiday demand and improved DTC momentum. From a brand perspective, HOKA is projected to deliver low-double-digit growth in the second half of the year. Despite these short-term pressures, Deckers remains confident in the resilience of its HOKA and UGG brands, the strength of its international business, and its ability to maintain top-tier profitability within the footwear and apparel sector.Sneak Peek Into FY26For fiscal 2026, Deckers projects net sales of $5.35 billion, indicating continued growth in HOKA and solid performance in UGG. From a revenue perspective, HOKA is expected to increase by a low-teens percentage, while UGG is projected to grow in the low to mid-single-digit range. International revenues are forecast to outpace domestic sales, and wholesale is expected to grow faster than DTC in the near term.The gross margin is expected to be 56%, suggesting tariff-related headwinds that will likely become more pronounced in the second half of the fiscal year. These pressures are expected to be partially offset by ongoing mitigation efforts, including strategic pricing actions and a more normalized promotional environment amid a challenging macroeconomic backdrop.SG&A expenses are expected to represent 34.5% of revenues, consistent with management’s continued investment in brand building.The operating margin for fiscal 2026 is expected to be 21.5%. Earnings per share are projected to be $6.30-$6.39, excluding any potential impacts of future share repurchases. Shares of the Zacks Rank #3 (Hold) company have lost 12.2% in the past three months as compared with the industry’s 2.8% decline.Key Picks in RetailSome better-ranked stocks in the retail space are Genesco Inc. GCO, Urban Outfitters Inc. URBN and Tilly's, Inc. TLYS.Genesco is a Nashville-based specialty retail and branded company that sells footwear and accessories in retail stores. It currently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for GCO’s fiscal 2026 earnings and sales implies growth of 71.3% and 3.7%, respectively, from the year-ago actuals. Genesco delivered a trailing four-quarter average earnings surprise of 28.1%.Urban Outfitters is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home decor and gift items. It sports a Zacks Rank #1 at present.The Zacks Consensus Estimate for Urban Outfitters’ current fiscal-year earnings and sales indicates growth of 29.1% and 9.7%, respectively, from the year-ago actuals. URBN delivered a trailing four-quarter average earnings surprise of 24.8%.Tilly's is a specialty retailer in the action sports industry, selling clothing, shoes and accessories. It has a Zacks Rank of 2 (Buy) at present.The Zacks Consensus Estimate for Tilly's current fiscal-year earnings indicates growth of 8.8% from the year-ago actual. TLYS delivered a trailing four-quarter average earnings surprise of 60.7%.Zacks Names #1 Semiconductor StockThis under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Deckers Outdoor Corporation (DECK): Free Stock Analysis Report Urban Outfitters, Inc. (URBN): Free Stock Analysis Report Genesco Inc. (GCO): Free Stock Analysis Report Tilly's, Inc. (TLYS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks