Slowing HOKA and UGG Demand Weighs on Deckers as Lower Sales Outlook Raises Growth Concerns

Record Revenue Fails to Offset a Weaker Sales Outlook

Deckers Outdoor (DECK), the footwear company behind HOKA, UGG, and Teva, came under selling pressure on Friday, October 23, after lowering its fiscal 2027 revenue forecast. The company reported record quarterly sales and better-than-expected earnings, but slowing growth across its two largest brands raised concerns about consumer demand.

DECK stock initially dropped approximately 8% following the announcement before recovering part of its losses. The reaction reflects a shift in investor attention from past earnings performance to the company's ability to sustain growth as consumers become more selective and promotional activity increases across the footwear industry.

Key Points

• Sales outlook lowered: Deckers reduced its fiscal 2027 revenue forecast as expected growth at HOKA and UGG slowed, despite reporting record quarterly revenue.
• Consumer spending becomes more selective: Weaker U.S. online sales and increased industry discounting pressured direct-to-consumer revenue, while wholesale and international sales remained stronger.
• Margins remain a priority: Deckers continues emphasizing full-price selling to protect profitability, although tariff refunds contributed significantly to reported earnings and margin improvements.

Deckers Cuts Sales Forecast as HOKA and UGG Growth Slows

Deckers reported record fiscal second-quarter revenue of $1.48 billion, an increase of 3.5% from a year earlier. Earnings reached $2.31 per share, exceeding expectations, although the results included a benefit from tariff refunds.

Despite those gains, quarterly revenue missed analysts' estimates, and management lowered its full-year sales forecast to approximately $5.7 billion to $5.73 billion, compared with its previous outlook of $5.86 billion to $5.91 billion.

The reduction reflects slower expected growth at the company's two largest brands.

HOKA, known for its performance running shoes and cushioned footwear, is now expected to deliver high-single-digit annual sales growth, down from the previous forecast of low-double-digit growth.

UGG, whose footwear business is particularly important during the colder months, is expected to grow at a low-single-digit rate rather than the previously projected mid-single-digit pace.

Both brands continued expanding during the quarter, but at a slower rate.

HOKA revenue increased 6.8% to approximately $677 million, while UGG revenue rose 3.5% to about $786 million.

The results suggest that demand has not disappeared, but the pace of growth is becoming more difficult to sustain.

U.S. Demand Weakens as International Sales Expand

Deckers also reported a growing difference between its domestic and international businesses.

U.S. sales declined slightly, while international revenue increased 9%.

The contrast indicates that international markets continued providing growth even as American consumers became more cautious.

Chief Executive Stefano Caroti described the environment as challenging and said the company is taking steps to strengthen its connection with consumers while focusing resources on its strongest opportunities.

The updated outlook reflects those pressures, particularly in the U.S. footwear market.

Why Did Deckers Stock Fall Despite Strong Earnings?

The decline in DECK stock reflects concerns about slowing sales momentum and the sustainability of earnings growth.

While Deckers exceeded earnings expectations, its direct-to-consumer business showed a notable reversal.

Direct-to-consumer revenue, which includes purchases through company-operated websites and stores, declined 1.8% after growing 13% in the previous quarter.

Comparable sales in that channel fell 6.4%, reversing the growth reported earlier in the year.

The weakness was particularly evident in U.S. e-commerce, where consumers increasingly sought discounted products.

At the same time, competing footwear brands expanded promotional activity, putting pressure on companies that rely on premium pricing.

Deckers has chosen not to match aggressive industry discounting, maintaining its emphasis on selling products at full price.

That approach helped protect profitability but also made it harder to capture demand from price-sensitive shoppers.

Stronger Wholesale Sales Provide Some Support

The slowdown was not uniform across the business.

Wholesale revenue increased 5.5%, supported by demand from retail partners and international markets.

This suggests that HOKA and UGG continue attracting customers through third-party retailers, even as the company's own sales channels face greater pressure.

Management also noted a change in shopping behavior.

Consumers are increasingly waiting until they need footwear before making purchases, rather than buying well ahead of the season.

That pattern is especially relevant for UGG, where seasonal demand plays an important role.

Tariff Refunds Boost Reported Profitability

Deckers raised its full-year earnings forecast to $7.80–$7.95 per share, compared with its previous guidance of $7.35–$7.50.

However, the revised outlook includes approximately $0.52 per share in tariff-related refunds.

Excluding that benefit, the underlying earnings outlook is slightly below the company's previous forecast.

The distinction helps explain why higher earnings guidance did not reassure investors.

Gross margin, which measures the percentage of sales remaining after product costs, also improved significantly during the quarter.

But much of that improvement came from tariff refunds.

Excluding those benefits, gross margin still expanded by approximately 1.2 percentage points, supported by disciplined pricing and a favorable product mix.

The underlying improvement shows that Deckers maintained some pricing strength despite the more promotional retail environment.

Nevertheless, investors remained focused on the weaker sales outlook and the possibility of continued pressure on growth.

What Comes Next for HOKA and UGG?

Deckers enters the second half of fiscal 2027 with two priorities: preserving the premium positioning of its brands and improving sales momentum.

Management has made clear that it does not intend to pursue growth through aggressive discounting.

Instead, the company is concentrating on product development, pricing discipline, and stronger execution.

HOKA Expands Its Product Range

HOKA is adjusting its footwear lineup to reach a broader range of consumers.

Management outlined plans to expand its pricing structure, including more accessible models alongside higher-priced performance footwear.

The strategy is intended to broaden the brand's appeal while maintaining its premium identity.

However, the company also faces challenges involving product transitions and inventory.

Piper Sandler downgraded Deckers to Underweight and lowered its price target to $75 from $100, citing weaker sales expectations and concerns about HOKA's product performance.

The firm also highlighted inventory challenges involving the Clifton 10 and uncertainty surrounding the transition to the Bondi 10.

These developments place additional attention on HOKA's upcoming product launches and the brand's ability to restore stronger demand.

UGG Faces an Important Holiday Season

For UGG, the upcoming holiday shopping period represents an important test.

The brand continues benefiting from customer loyalty and strong wholesale relationships, but consumers are increasingly delaying purchases until closer to when they need products.

Management has also indicated that holiday reorders may be more modest than last year.

That creates uncertainty around how much seasonal demand will translate into additional sales.

Deckers expects low-single-digit revenue growth during the December quarter, reflecting a more cautious outlook for both HOKA and UGG.

Pricing Discipline Remains Central

Deckers continues emphasizing full-price selling rather than participating in widespread industry discounting.

The strategy supports brand positioning and helps protect margins, but it also creates a trade-off when consumers become more price-sensitive.

Management's challenge is to maintain that discipline while improving product demand and customer engagement.

The company also continues returning capital to shareholders through share repurchases, buying back approximately $299 million of stock during the latest quarter.

However, the immediate focus remains on whether sales growth can stabilize across its core brands.

What It Means for Investors

Deckers' latest earnings highlight a broader challenge facing premium consumer brands: maintaining growth when shoppers become more selective and competitors increasingly rely on discounts.

HOKA and UGG remain substantial businesses with continued international demand and healthy wholesale relationships.

However, the decline in direct-to-consumer sales suggests that consumer behavior is changing, particularly in the United States.

The company's decision to preserve full-price selling has supported underlying margins, but it has also limited its participation in promotional demand.

Another important distinction is the contribution of tariff refunds to reported profitability. Although earnings guidance increased, the underlying outlook is less encouraging after removing those benefits.

For investors following DECK stock, the central question is whether slower sales growth represents a temporary adjustment to consumer spending patterns or a more persistent challenge for the company's premium brands.

The holiday season, HOKA's product launches, and future direct-to-consumer trends will provide additional evidence about the direction of the business.

Conclusion

Deckers' quarterly results reveal a company balancing strong brand recognition with a more difficult consumer environment. Record revenue, international expansion, and disciplined pricing remain encouraging, but slowing HOKA and UGG growth prompted management to lower its annual sales outlook. Rising industry promotions and weaker U.S. direct-to-consumer demand have added pressure, while tariff refunds boosted reported profitability. The next test will be whether Deckers can stabilize demand and maintain its premium positioning without relying on aggressive discounting.

FAQs

Why did Deckers stock fall after its earnings report?

Deckers shares declined after the company lowered its fiscal 2027 sales outlook and reported quarterly revenue below analysts' expectations. Slower HOKA and UGG growth, weaker U.S. direct-to-consumer sales, and increased footwear discounting contributed to investor concerns.

How did Deckers perform in its fiscal second quarter?

Deckers reported record revenue of $1.48 billion, up 3.5% year over year, and earnings of $2.31 per share. Although earnings exceeded expectations, revenue missed estimates, and reported profitability benefited from tariff refunds.

Are HOKA and UGG sales still growing?

Yes. HOKA revenue increased 6.8% during the quarter, while UGG sales rose 3.5%. However, Deckers lowered its full-year growth expectations for both brands because of softer consumer demand and a more promotional footwear market.

Why did Deckers raise earnings guidance while lowering its sales forecast?

Deckers raised its fiscal 2027 earnings guidance to $7.80–$7.95 per share, partly because of tariff refunds worth approximately $0.52 per share. Excluding that benefit, the underlying earnings outlook is slightly below the company's previous forecast.

What should investors watch next for Deckers?

Important developments include UGG's performance during the holiday season, HOKA's upcoming product launches, U.S. direct-to-consumer sales, and the company's ability to maintain margins while competitors offer more discounts.

This article was created with AI assistance and reviewed by an editor. For details, please refer to our Terms of Use.

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