Deckers Brands Shares Plummet 15% After Lowered Sales Outlook
Shares of Deckers Brands, the parent company of footwear labels Hoka and Ugg, dropped sharply by 15% on Friday. The decline followed the firm’s announcement of reduced sales growth forecasts for its two leading brands, citing tariff-related challenges that are dampening consumer demand.
Revised Growth Forecasts Signal Slowing Momentum
Deckers now expects Hoka, its rapidly expanding running shoe brand, to grow by a low-teens percentage in fiscal 2026. This is a marked slowdown from the 24% growth seen in the prior year and a downgrade from the mid-teens growth previously projected in May. Similarly, Ugg, the company’s iconic boots label, is forecasted to grow in the low- to mid-single-digit range, down from an earlier expectation of mid-single-digit growth and a 13% increase recorded last year.
“As U.S. consumers are beginning to see some price increases, it is impacting their purchase behavior within the consumer discretionary space,” said Steven Fasching, Deckers’ CFO, during the company’s fiscal second-quarter earnings call.
Fasching highlighted that while the company’s earlier guidance anticipated tariff impacts mainly on costs, the current environment has revealed a clearer effect on consumer demand, particularly in the U.S. market.
Tariffs and Inflation Weigh on Consumer Spending
Deckers estimates that tariff-related expenses could reach approximately $150 million in the current fiscal year. The company plans to mitigate about half of these costs through price increases and cost-sharing with manufacturing partners. The combined pressures of tariffs and inflation are contributing to more cautious consumer behavior, particularly in discretionary categories like footwear, which has led to the lowered sales guidance.
Full-Year Revenue Guidance Falls Short of Expectations
For fiscal 2026, Deckers projects total revenue of around $5.35 billion, falling short of Wall Street’s consensus estimate of $5.45 billion. Earnings per share guidance ranges from $6.30 to $6.39, aligning closely with analyst forecasts. Despite the revenue miss, the company’s leadership remains optimistic about its long-term prospects.
“While tariffs and inflation are creating near-term pressure, Hoka and Ugg continue to lead in brand heat and market share gains across their categories,” stated CEO Dave Powers.
Powers emphasized confidence in the enduring strength and growth trajectory of Deckers’ portfolio, reassuring investors amid recent volatility.
Market Reaction and Investor Concerns
Deckers’ stock has declined more than 55% year to date, reflecting investor apprehension about the sustainability of demand for its marquee brands. The recent guidance revision has intensified concerns about a potential deceleration in growth momentum.
FinOracleAI — Market View
Deckers Brands faces a challenging near-term outlook due to tariff-induced cost pressures and shifting consumer spending patterns. While Hoka and Ugg remain strong brands with loyal followings, the company’s lowered growth forecasts suggest caution is warranted.
- Opportunities: Continued brand strength in core categories; potential to offset tariff costs through pricing and operational efficiencies; long-term market share gains.
- Risks: Persistent inflation and tariffs could further suppress demand; competitive pressures in the footwear market; potential margin erosion if costs cannot be fully passed on.
Impact: The revised guidance and tariff-related concerns weigh negatively on Deckers’ near-term growth prospects, leading to downward pressure on the stock. However, sustained brand equity provides a foundation for recovery once macroeconomic pressures ease.
