Deckers Brands Posts Strong Q3 Growth Led by HOKA's Surge, UGG Steady

Deckers Brands (NYSE: DECK) delivered a robust third-quarter performance, with net sales climbing 7.1% year-over-year to $1.95 billion for the period ending December 31, 2025. The results underscore the company's successful bet on its high-performance running label HOKA, which continues to outpace the broader market.

On a constant currency basis, sales increased 6.8%. Diluted earnings per share saw a notable jump to $3.33, up from $3.00 in the prior-year quarter. The quarter's narrative was one of stark contrast between its star performers and legacy segments. HOKA revenue skyrocketed 18.5% to $628.9 million, capturing the sustained demand for technical running gear. The flagship UGG brand, while growing at a more modest 4.9% to $1.305 billion, demonstrated resilience in its core market. However, the company's "Other Brands" segment, which includes the phased-out Koolaburra, plummeted 55.5% to $23.2 million.

Geographically, international markets were a standout, with sales soaring 15% to $756.7 million, compared to a 2.7% domestic increase to $1.2 billion. The direct-to-consumer (DTC) channel, a key strategic focus, outperformed wholesale, growing 8.1% to $1.093 billion.

While operating income improved to $614.4 million from $567.3 million, the company navigated some headwinds. Gross margin slightly contracted to 59.8% from 60.3%, and selling expenses rose, partly reflecting strategic investments. The balance sheet remained strong with over $2 billion in cash and no debt, though inventories rose to $633.5 million, a move management attributed to planning for incremental tariffs.

In a sign of confidence, Deckers aggressively bought back $348.5 million worth of its shares in Q3. For the full fiscal year 2026, the company raised its outlook, projecting net sales between $5.400 billion and $5.425 billion.

"Our disciplined marketplace management is fueling balanced, profitable growth," stated CEO Stefano Caroti on the earnings call. "Both UGG and HOKA are achieving high levels of full-price selling, which speaks to the strength and differentiation of these brands."

CFO Steven J. Fasching highlighted the company's strategic inventory management and DTC leverage as buffers against macroeconomic uncertainties, including shifting consumer confidence and currency fluctuations. He projected a full-year operating margin around 22.5% and EPS in the range of $6.80 to $6.85.

Market Voices: Analysts and Observers Weigh In

Michael Torres, Retail Analyst at Crestwood Advisors: "This is a textbook case of portfolio management. Deckers is wisely milking the cash cow that is UGG to fund the meteoric rise of HOKA, which is now the undisputed growth engine. Their DTC strength provides crucial margin insulation."

Sarah Chen, Portfolio Manager: "The international numbers are phenomenal. It shows HOKA isn't just a U.S. fad; it's a global phenomenon. The buyback program is substantial and signals the board sees significant undervaluation, which is a powerful message to the street."

David R. Miller, Editor of 'The Skeptical Investor' Blog: "Let's not get carried away. A 55% collapse in their 'other brands' is a glaring red flag they're hoping you'll ignore. They're becoming a two-trick pony in a brutally fickle industry. What's the plan after the HOKA wave crests? And that inventory build-up smells like trouble if demand softens."

Priya Sharma, Independent Brand Consultant: "The real story here is brand heat. HOKA has achieved cult status through grassroots community building in running. UGG's modest growth is actually impressive given its maturity; it shows successful category expansion beyond classic boots. Their full-price selling metric is the holy grail in today's promotional environment."

This analysis is based on the financial report and earnings call of Deckers Brands. Investors are advised to conduct their own research.