Q3 2025 Earnings Summary
- Strong consumer demand and global resonance of DECK's key brands, UGG and HOKA, are driving double-digit growth across all genders and categories, with UGG being stronger than it's ever been and HOKA having the potential to become a major player in the performance space.
- DECK sees significant long-term growth potential, with aspirations to reach $7 to $8 billion in sales over time, driven by the brands' expansion into new categories and markets, and no limitations to their growth.
- The company's disciplined marketplace management and scarcity model support high gross margins, contributing to an operating margin profile that is the highest among sector peers, allowing DECK to maintain strong profitability even as the brands grow.
- Deckers anticipates gross margin headwinds in Q4 due to increased markdowns and closeouts, with closeout promotions impacting margins by up to 100 basis points and foreign exchange headwinds of approximately 50 basis points. , ,
- Inventory constraints and potential stock-outs in Q4, particularly for popular UGG styles, may limit sales growth as sales were pulled forward into Q3, leading to lower anticipated growth rates in Q4. ,
- Maintaining current high margin levels may be challenging as the brands grow larger, due to inflationary pressures and foreign exchange headwinds impacting profitability in the months and year to come.
| Metric | YoY Change | Reason |
|---|---|---|
UGG Revenue (Q2 2024 vs. Q2 2023) | +28.1% | Pull-forward of wholesale orders boosted Q2 sales and strong direct-to-consumer (DTC) demand drove growth; however, this may reduce upcoming quarterly performance due to earlier order fulfillment. |
HOKA Revenue (Q2 2024 vs. Q2 2023) | +27.3% | Effective marketing campaigns and heightened brand awareness led to strong DTC and wholesale results; macroeconomic uncertainty remains a watchpoint for the second half of the fiscal year. |
Total Revenue (Q2 2025 vs. Q2 2024) | +20% | Continued global demand for both UGG and HOKA, with investments in brand-building and careful inventory management supporting higher sales; market dynamics and stock split logistics also influenced reported figures. |
HOKA Revenue (Q2 2025 vs. Q2 2024) | +34.7% | Significant brand momentum and expanded distribution accelerated growth; forward-looking product launches remain weighted toward later quarters, potentially moderating near-term growth. |
UGG Revenue (Q2 2025 vs. Q2 2024) | +13.0% | Solid DTC and wholesale performance continued after previous pull-forward gains, aided by broad brand appeal; economic shifts may impact consumer spending but the company emphasizes full-year management. |
Gross Margin (Q2 2025 vs. Q2 2024) | 55.9% vs. 53.4% | Product and brand mix improvements (especially from HOKA) and operational efficiencies boosted margin; the company remains cautious about inflationary pressures and macroeconomic headwinds in the longer term. |
SG&A Expenses (Q2 2025 vs. Q2 2024) | $428.2M vs. $358.4M | Increased investment in marketing, brand development, and supply chain initiatives supported revenue growth; managing expense levels is crucial to maintain profitability amid dynamic consumer environments. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | FY 2025 | 12% YoY (~$4.8B) | ~15% YoY (just above $4.9B) | raised |
HOKA brand revenue growth | FY 2025 | 24% YoY | 24% YoY | no change |
Gross margin | FY 2025 | 55%–55.5% | At or slightly better than 57% | raised |
SG&A | FY 2025 | ~35% of revenue | ~35% of revenue | no change |
Operating margin | FY 2025 | 20%–20.5% | ~22% | raised |
Effective tax rate | FY 2025 | 23%–23.5% | ~23.5% | no change |
EPS | FY 2025 | $5.15–$5.25 | $5.75–$5.80 | raised |
FX impact | Q4 2025 | No prior guidance | 50 bps headwind to gross margin | no prior guidance |
Closeout promotions | Q4 2025 | No prior guidance | Up to 100 bps impact on gross margin | no prior guidance |
Freight costs | Q4 2025 | No prior guidance | 150 bps headwind to gross margin | no prior guidance |
Inventory constraints | Q4 2025 | No prior guidance | Expected to limit UGG's Q4 growth | no prior guidance |
Clifton 10 launch impact | Q4 2025 | No prior guidance | Some revenue shifts into Q1 FY 2026 | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Total Revenue YoY | Q3 2025 | ~+12% YoY | +17.1% YoY (1,827.000M in Q3 2025Vs. 1,560.31M in Q3 2024) | Beat |
HOKA Revenue YoY | Q3 2025 | +24% YoY | +23.6% YoY (530.900M in Q3 2025Vs. 429.27M in Q3 2024) | Met |
UGG Revenue YoY | Q3 2025 | Mid-single-digit YoY growth | +16% YoY (1,244.000M in Q3 2025Vs. 1,071.85M in Q3 2024) | Beat |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Strong brand momentum for HOKA and UGG | Q2 2025: HOKA +35% YoY to $571M, UGG +13% YoY. Q1 2025: HOKA +30% YoY to $545M, UGG +14% YoY. Q4 2024: HOKA +34% YoY to first $0.5B quarter, UGG +16% YoY. | HOKA at +24% YoY growth to $531M and UGG at +16% YoY to $1.24B, driven by innovation, global marketing, and full-price selling. | Continues to show strong multi-quarter momentum. |
Margin management and promotional environment | Q2 2025: 55.9% GM (+250 bps YoY), expecting a more normalized promo environment in 2H. Q1 2025: 56.9% GM (+560 bps), with more normalized promotions ahead. Q4 2024: 55.6% GM (+530 bps), not expected to repeat amid more standard promos. | Gross margin at 60.3%, up 160 bps YoY; freight costs and some discounting for HOKA partially offset gains; brand health prioritized over promotions. | Consistently mentioned, with caution toward more typical promotional levels. |
Freight, foreign exchange, and cost headwinds | Q2 2025: ~70 bps freight headwind, limited FX impact. Q1 2025: Freight rates helped Q1 but expected to be a headwind rest of year. Q4 2024: Higher freight costs and FX remeasurement expected for FY25. | Facing ~150 bps freight hit in Q4 and FX headwinds due to a stronger USD; minor FX benefit in Q3 reversed moving forward. | Ongoing headwinds, consistently cited across periods. |
Tariffs no longer cited in recent calls | Q2 2025: Called “too early to assess,” not in guidance. Q1 2025: Not mentioned. Q4 2024: Not mentioned. | No mention in Q3 2025. | Previously noted uncertainty; no recent discussion. |
Inventory constraints and stock-out risks | Q2 2025: Less concern than prior year; earlier shipments helped avoid stock-outs. Q1 2025: Healthy position, controlled supply. Q4 2024: Holiday stock-outs for UGG, replenished in Q1. | Some UGG stock-outs in Q3 due to earlier demand, aligning with a scarcity model; manageable but limits Q4 potential. | Continues to appear, managed via tight inventory strategy. |
Aspirations for $7–$8 billion in long-term sales | Not mentioned in Q2 2025, Q1 2025, or Q4 2024. | Management expressed confidence in brands’ ability to reach this aspirational range, citing no brand limitations. | Newly discussed goal in current period. |
Evolving margin outlook with brand scale growth | Q2 2025: Margin benefits from HOKA’s premium mix; operating margin guided at 20%–20.5%. Q1 2025: Gross margin at 56.9%, raising FY guide to ~54%. Q4 2024: FY25 GM guided at ~53.5% (down 210 bps YoY) amid normalized promos. | Emphasized pressures from costs, FX, and freight but expect continued strong margins with some near-term headwinds. | Repeated focus on preserving margin amid growth and cost pressures. |
HOKA’s potential to become a major performance footwear brand | Q2 2025: Surpassed $2B TTM; premium products and global expansion fueling growth. Q1 2025: +30% YoY, launching innovative product lines. Q4 2024: $1.8B in FY24, rising awareness in the U.S. and internationally. | Described as transformational, poised for major athletic market share gains, supported by innovation and marketplace discipline. | Sustained optimism and strong progress toward mainstream performance leadership. |
DTC expansion and international market opportunities | Q2 2025: DTC +22%, international revenue +28% with brand expansions. Q1 2025: DTC +24% globally, emphasizing EMEA and China. Q4 2024: DTC +27% for FY24, with Europe, Asia key regions. | Strong Q3 DTC growth (HOKA +27%); aiming for international to outpace U.S. long-term; focus on Europe and Asia. | Consistent pursuit of direct sales growth and global reach. |
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Future Growth Prospects
Q: Will double-digit growth return in fiscal '26?
A: Management believes that demand for their brands remains strong and continues to see incredible performance with consumers. While they aren't providing guidance for next year, they emphasize that their confidence in the brands remains unchanged. They've increased their outlook for the year based on current performance and will manage the business accordingly. -
Gross Margin Outlook
Q: Can high margins be maintained amidst pressures?
A: Maintaining current margin levels will be challenging due to inflationary pressures, foreign exchange impacts, and increased freight costs. Management anticipates pressures in Q4, including a freight headwind of about 150 basis points and FX impact around 50 basis points. Despite these challenges, the brands continue to deliver incredible margins. , , -
HOKA Brand Growth
Q: Is HOKA still expected to deliver 20% annual growth?
A: HOKA is seen as a transformational brand with potential to become a major player in athletic footwear. While no specific growth targets are provided, the focus is on building the brand for long-term sustainable growth rather than chasing short-term numbers. They continue to build global market share with a strong lineup of innovative products. -
International Expansion
Q: How will international growth compare to the U.S.?
A: International growth is expected to outpace the U.S., with the goal of international sales reaching 50% of total sales over time. In Q3, the international business performed strongly, and this trend is expected to continue into Q4 and fiscal '26. -
Q4 Growth Expectations
Q: Why is Q4 growth lower than previous quarters?
A: The lower growth rate in Q4 is due to product flow timing and tough comparisons to the prior year when there was significant wholesale expansion. Some sales expected in Q4 occurred earlier, leading to inventory constraints and stock-outs on popular styles. This is not indicative of a change in demand but a result of managing the marketplace and inventory levels. , , -
Margin Impact Factors
Q: What are the specific headwinds impacting gross margin?
A: Gross margin in Q4 will be impacted by a 150 basis point freight headwind due to higher freight rates compared to last year's unusually low rates. There is also a 50 basis point FX headwind due to a stronger dollar. Additionally, increased closeout promotions, including the transition from Clifton 9 to Clifton 10, could impact margins by up to 100 basis points. Mix shifts provide a tailwind but less than 50 basis points. , , -
Product Launches
Q: What new HOKA products are launching?
A: HOKA has a strong lineup of innovative products launching, including the Bondi 9, which has had a very positive early response; the Cielo X1 launching in February; and the Clifton 10 launching in April, their biggest franchise. They are also introducing the Mafate X in May and the Arahi 8, one of their biggest franchises. These products are booked well and expected to drive growth. , , -
Distribution Strategy
Q: How is HOKA managing its distribution expansion?
A: HOKA is being very selective and thoughtful in expanding distribution, focusing on building presence in key cities through owned stores and partner stores, especially internationally. While they are opening a few more doors, they are managing the environment to drive a pull model and maintain brand scarcity. Plans include opening a flagship in Shanghai on May 7 next year. , -
Inventory and Stock-outs
Q: How are inventory levels affecting sales?
A: Some sales expected in Q4 occurred earlier, leading to stock-outs of popular styles and inventory constraints in Q4. This limits the ability to meet all the demand but helps drive brand heat and demand. Management is controlling the marketplace and inventory to maintain brand equity and margins. , -
UGG Brand Performance
Q: How is the UGG brand performing?
A: UGG is stronger than ever, expanding beyond boots and slippers into sneakers, clogs, and sandals. All genders are growing in double digits. The brand continues to resonate with consumers, with popular styles selling out, contributing significantly to the company's performance. , -
Competitive Dynamics
Q: What is the competitive landscape for HOKA?
A: While competitors are offering better products, HOKA has the advantage of a strong lineup of innovation stories expected to perform well in the marketplace. Early reads on the Bondi 9 are very positive, and upcoming launches are booking well in wholesale for Q4 and the first half of next year. -
Gross Margin Components
Q: Can you detail the expected gross margin impacts in Q4?
A: Expected gross margin headwinds in Q4 include approximately 150 basis points from higher freight costs, 50 basis points from unfavorable FX, and up to 100 basis points from increased closeout promotions, particularly due to product changeovers like the Clifton 9 to Clifton 10 transition. Positive impacts from mix and channel are less than 50 basis points. , , -
Clifton 10 Launch Impact
Q: How will the Clifton 10 launch affect sales and margins?
A: The Clifton 10 will begin flowing into the market, with some sales in Q4 and continuing into Q1. The transition from Clifton 9 to Clifton 10 involves closeouts of the older model, which are embedded in the expected margin impacts. The impact on margins from sunsetting the Clifton 9 is included in the anticipated 100 basis points from closeout promotions. -
Wholesale Channel Performance
Q: How is HOKA performing in specialty running wholesale?
A: HOKA continues to perform well in the specialty running channel, though the company doesn't disclose the percentage of business by channel. Exclusive offerings like the Skyflow have performed exceptionally well in this channel.