Executive Summary

Record quarter: revenue $1.83B (+17.1% YoY), gross margin 60.3% (+160 bps YoY), diluted EPS $3.00 (+19% YoY) driven by strong UGG and HOKA demand and high full-price sell-through .
Guidance raised: FY25 net sales to ~15% ($4.9B), gross margin to at/above 57%, operating margin to ~22%, EPS to $5.75–$5.80; SG&A maintained at ~35%, tax ~23.5% .
Mix and execution were the positive surprise: UGG’s higher-margin products and reduced wholesale closeouts plus disciplined marketplace management lifted margins; management cautioned these high full-price levels are “abnormal” and freight/FX will be Q4 headwinds .
Near-term setup: UGG demand was pulled into Q3 due to better inventory positioning, implying a softer Q4 for UGG; HOKA’s Q4 to be largest ever on Bondi 9 and model transitions, but with more normalization in promotions/closeouts and FX/freight pressure .

What Went Well and What Went Wrong

What Went Well

UGG momentum: $1.244B brand revenue (+16.1% YoY) with exceptional full-price sell-through, strong international growth, and successful collaborations (e.g., Gallery Dept., Palace) elevating brand heat .
HOKA growth: $530.9M (+23.7% YoY) with DTC +27% and wholesale +21%; Bondi 9 launch underway with strong early response; pipeline includes Clifton 10, Cielo X1 2.0, and trail innovations .
Margin execution: Gross margin 60.3% benefited from favorable product mix (UGG), lower closeouts, and full-price selling, partially offset by freight and anticipated HOKA discounting tied to model upgrades .

What Went Wrong

Q4 headwinds: Management flagged freight (~150 bps), FX (~50 bps), and normalized promotions/closeouts (up to ~100 bps) as near-term gross margin headwinds .
Channel/inventory dynamics: UGG demand capture earlier in Q3 (vs Q4 last year) limits inventory left to sell in Q4 and creates adverse quarterly comp dynamics despite healthy brand heat .
Teva/Other brands softness: Teva down 6% and Other down 16.6% YoY in Q3; Koolaburra to be phased out over CY2025, indicating portfolio rationalization and focus on top opportunities .

Financial Results

Consolidated P&L trends

Metric	Q1 FY25	Q2 FY25	Q3 FY25
Revenue ($USD Billions)	$0.825	$1.311	$1.827
Gross Margin (%)	56.9%	55.9%	60.3%
Operating Income ($USD Millions)	$132.8	$305.1	$567.3
Diluted EPS ($USD)	$0.75 (derived from 6M EPS $2.34 less Q2 $1.59)	$1.59	$3.00

Notes: Q1 EPS shown split-adjusted via documents for six months and Q2; Q3 EPS and margins adjusted for 6-for-1 split .

Segment revenue

Brand Net Sales ($USD Billions unless noted)	Q1 FY25	Q2 FY25	Q3 FY25
UGG	$0.223	$0.690	$1.244
HOKA	$0.545	$0.571	$0.531
Teva	$0.046	$0.022	$0.024
Other (primarily Koolaburra)	$0.004	$0.026	$0.028

Channel/geography KPIs

KPI	Q1 FY25	Q2 FY25	Q3 FY25
DTC Net Sales ($USD Billions)	$0.311	$0.398	$1.011
DTC Comparable Net Sales (%)	21.9%	17.0%	18.3%
Wholesale Net Sales ($USD Billions)	$0.515	$0.914	$0.816
Domestic Net Sales ($USD Billions)	$0.516	$0.854	$1.169
International Net Sales ($USD Billions)	$0.310	$0.457	$0.658

Estimates vs actuals: Wall Street consensus via S&P Global was unavailable at the time of this analysis due to API access limits; therefore, “vs estimates” comparisons are not provided.

Guidance Changes

Metric	Period (Update)	Previous Guidance	Current Guidance	Change
Net Sales Growth (%) / Level	Q2 FY25 update	~10% to $4.7B (Q1 guide)	~12% to $4.8B	Raised
Gross Margin	Q2 FY25 update	~54% (Q1 guide)	55–55.5%	Raised
SG&A as % of Net Sales	Q2 FY25 update	34–34.5%	~35%	Raised
Operating Margin	Q2 FY25 update	19.5–20%	20–20.5%	Raised
Effective Tax Rate	Q2 FY25 update	22–23%	23–23.5%	Raised
Diluted EPS	Q2 FY25 update	$29.75–$30.65 (pre-split)	$5.15–$5.25 (post-split)	Raised (post-split)
Net Sales Growth (%) / Level	Q3 FY25 update	~12% to $4.8B (Q2 guide)	~15% to $4.9B	Raised
Gross Margin	Q3 FY25 update	55–55.5%	At or slightly better than 57%	Raised
SG&A as % of Net Sales	Q3 FY25 update	~35%	~35%	Maintained
Operating Margin	Q3 FY25 update	20–20.5%	~22%	Raised
Effective Tax Rate	Q3 FY25 update	23–23.5%	~23.5%	Maintained/Refined
Diluted EPS	Q3 FY25 update	$5.15–$5.25	$5.75–$5.80	Raised

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 FY25)	Previous Mentions (Q2 FY25)	Current Period (Q3 FY25)	Trend
Brand momentum (UGG/HOKA)	Robust full-price demand across UGG/HOKA; YoY revenue +22%	UGG +13%, HOKA +34.7%; strong consumer demand	Record quarter; UGG +16%, HOKA +24%	Strengthening
International growth focus	International +20.8%	International +33.0%	International +28.5%; expected to outpace U.S. into FY26	Sustained outperformance
Marketplace discipline	Full-price, pull model emphasized	Continued disciplined marketplace management	“Abnormal” full-price levels; caution on Q4 normalization	Discipline maintained; caution near term
Product pipeline (HOKA)	Not detailed	Door expansion in FY25; wholesale dynamics	Bondi 9 launch; Clifton 10, Cielo X1 2.0; trail innovations	Accelerating innovation
Freight/FX	Not highlighted	Not highlighted	Q4 headwinds: freight ~150 bps, FX ~50 bps	Emerging macro headwinds
Portfolio actions	Sanuk divest announced	Sanuk sale completed Aug 15	Koolaburra wind-down in CY2025	Ongoing rationalization

Management Commentary

“Deckers posted exceptional results in the third quarter, delivering record quarterly revenue, gross margin, and earnings.” — Stefano Caroti, CEO .
“Gross margin for the third quarter was 60.3%... benefited from favorable product mix... reduced closeouts... higher levels of full price selling... I would caution that the extremely high levels of full price selling... are abnormal and not something we would normally expect to repeat.” — Steve Fasching, CFO .
“We are raising our full year revenue expectations to just above $4.9 billion... gross margin at or slightly better than 57%... operating margin ~22%... EPS $5.75 to $5.80.” — Steve Fasching .

Q&A Highlights

Long-term HOKA growth and innovation cadence: Management aims for sustainable share gains via selective distribution and innovation (Bondi 9, Clifton 10, Arahi 8) rather than “chasing numbers” .
International vs domestic: International expected to outpace the U.S. into FY26; Q3 saw strong international contribution, with U.S. still performing to expectations .
Margin sustainability: Sector-leading margins face pressures from inflation, FX, and freight; expect Q4 headwinds despite brand strength .
Q4 growth profile: UGG demand pulled forward into Q3 due to better inventory, limiting Q4 supply; HOKA Q4 volume largest ever, with wholesale sell-in timing and model changeovers impacting gross margin .
Distribution strategy: Continued selective door additions, especially internationally; emphasis on controlled, brand-protective expansion .

Estimates Context

Consensus estimates via S&P Global were unavailable at the time of this analysis due to API access limits; as a result, explicit “vs estimates” comparisons (Revenue, EPS, margins) are not shown. The absence of this data may necessitate later revisions to buy-/sell-side models once consensus can be retrieved.

Key Takeaways for Investors

Q3 was a high-quality beat operationally: record revenue, gross margin, and EPS, powered by UGG’s high-margin mix and HOKA’s disciplined growth; guidance raised across revenue, margins, and EPS .
Expect near-term normalization: freight and FX headwinds plus more typical promotions/closeouts could compress Q4 margins; UGG quarterly comp dynamics are distorted by demand pull-forward .
HOKA pipeline is a catalyst: Bondi 9 launch is broad and global; Clifton 10 and Cielo X1 2.0 extend innovation runway; Q4 volume set to be largest ever for HOKA .
International remains the growth lever: outsized growth vs domestic and a stated objective to increase the international mix over time .
Portfolio focus improves capital allocation: continued repurchases ($44.7M in Q3; $640.7M authorization remaining) and wind-down of Koolaburra concentrate resources on UGG and HOKA .
Margin profile stays elite but not static: management warns Q3’s full-price/sell-through levels are “abnormal”; investors should model more normalized closeouts and macro headwinds .
FY25 trajectory: on track for double-digit revenue growth for the fifth consecutive year, with top-tier operating profitability; updates to FY26 outlook expected at May call .

DECKERS OUTDOOR CORP (DECK)·Q3 2025 Earnings Summary