Deckers Defies Skeptics: HOKA and UGG Powerhouse Stuns Market with Blowout Quarter, Fueling Rally in 'Forgotten' Growth Stock

While the "Magnificent Seven" tech stocks dominate headlines, one of the most remarkable multi-decade growth stories has been quietly unfolding in the footwear aisle. Deckers Outdoor (NYSE: DECK), the parent company of HOKA and UGG, has seen its stock appreciate nearly 10,000% since its 1993 IPO—a return that more than doubles Nike's over the same period.

Yet, recent quarters told a different tale. Like its peers, Deckers grappled with the dual headwinds of tariff pressures and squeezed consumer spending, leading to a 46% plunge over the past year and fostering deep skepticism on Wall Street. That narrative was abruptly upended last Friday.

The company's third-quarter earnings report was a masterclass in execution during adversity. Deckers smashed analyst estimates, posting revenue of $1.96 billion (up 7.1%) against a consensus of $1.87 billion. The star was HOKA, with sales skyrocketing 18.5% to $628.9 million. UGG, in its seasonally strongest quarter, held firm with a 4.9% increase to $1.31 billion. Profitability remained robust, with operating margin at a healthy 31% and EPS climbing 11% to $3.33, well ahead of the $2.76 forecast.

"The numbers speak to a brand strength that the market had completely discounted," said Marcus Chen, a portfolio manager at Horizon Capital. "HOKA's momentum is secular, not cyclical. They're taking share in performance running, and UGG has successfully diversified beyond its classic boot. This isn't a one-quarter story; it's a validation of their brand-building playbook."

The strength was broad-based. Direct-to-consumer channels improved, domestic sales returned to growth, and international sales jumped 15%. Management, emboldened by the results, raised full-year revenue guidance to a range of $5.4-$5.425 billion and boosted EPS outlook to $6.80-$6.85 from $6.30-$6.39.

Not everyone is convinced. Sarah Fitzpatrick, an independent market analyst known for her bearish takes, offered a sharp rebuttal. "Let's not get carried away. This is a dead-cat bounce in a dying discretionary spend cycle. They beat laughably lowballed estimates. Consumers are tapped out, and HOKA is a fad waiting for the next hot sneaker to come along. The 19% pop is a short-covering gift, not an all-clear signal."

However, the data suggests a pattern of underappreciation. Deckers has now exceeded earnings estimates by an average of 26% over the last four consecutive quarters. Trading at a P/E ratio of 17—a significant discount to the S&P 500's 28—the stock appears to price in continued gloom rather than the resilient growth on display.

"The valuation gap is hard to justify," noted David Park, a retail sector specialist at The Benton Group. "You have a company with two category-leading brands, demonstrably savvy management that acquired and scaled both HOKA and UGG, and now clear operational momentum. The tariff headwinds that cost them $110 million are rolling off. This quarter showed they can grow efficiently even in a tough environment."

Looking ahead to fiscal 2027, the successful launch of new products like the UGG Quill line provides additional tailwinds. For investors, Deckers presents a compelling case: a proven long-term compounder, currently out of favor, demonstrating that its fundamental engine is far from sputtering.

Disclosure: The author owns shares of Nike. This article is for informational purposes only and does not constitute financial advice.