HOKA and UGG parent company Deckers Brands delivered strong third-quarter results for fiscal year 2026, driven by gains in the U.S. market, which were under pressure in the last quarter.
“Deckers produced record revenue and earnings per share in the third quarter, driven by the significant global demand for UGG and HOKA,” said Stefano Caroti, Deckers president and CEO, on the company’s earnings call Thursday. “Our strategic marketplace management fueled balanced growth in DTC and wholesale, inclusive of continued international momentum as well as healthy growth in the U.S. across both channels.”
Overall:
- Deckers’ domestic net sales increased 2.7% to $1.201 billion.
- Deckers reported a 7.1% increase in net sales (6.8% in constant currency), reaching a record $1.958 billion compared to $1.827 billion in the same period last year.
- Diluted earnings per share (EPS) increased 11% to a record $3.33, up from $3 in the prior year, exceeding expectations.
- Operating income increased to $614.4 million from $567.3 million, while gross margin was 59.8%, exceeding expectations but down from 60.3% last year.
Deckers attributed the better-than-expected gross margin to several factors, including a lower impact from tariffs than anticipated, favorable pricing actions, primarily within the UGG brand, and a lower level of promotional activity than planned.
Brand-by-Brand Breakdown
While HOKA and UGG reported strong results, smaller brands in the portfolio such as Teva faced headwinds.
- HOKA’s net sales increased 18.5% to $628.9 million, adding nearly $100 million in incremental revenue compared to the prior year ($530.9 million). HOKA reported double-digit increases across both wholesale and DTC channels. The Gaviota 5 and Cielo X1, as well as updates to core franchises like the Clifton and Bondi, resonated with consumers. In addition to its success in the run specialty channel, HOKA is focused on growing its lifestyle consumers, who are increasingly choosing the brand as part of their active lifestyle wardrobe rather than performance only, Caroti said.
“HOKA is present in roughly half of the targeted stores we consider potential distribution points,” Caroti said. “We also see more opportunities to expand shelf space and market share in existing doors as we continue to diversify our product offering. The biggest opportunity for HOKA’s expansion in the U.S. lies within the athletic specialty segment, where we’re currently represented in only about a quarter of the stores we believe will be relevant for the brand moving forward.”
- UGG’s net sales increased 4.9% to $1.305 billion, up from $1.244 billion year-over-year. Deckers executives said efforts to grow men’s sales and reduce seasonality are working, and the Lowmel sneaker and the Tasman weather hybrid contributed meaningfully to the quarter’s success.
- Net sales for other brands such as Teva decreased 55.5% to $23.2 million compared to $52.1 million. This drop includes the impact of the phase-out of the Koolaburra brand’s standalone operations, as Deckers focuses its resources on its biggest opportunities.
Wholesale and DTC Channels See Balanced Growth
Both wholesale and DTC net sales grew.
- DTC net sales increased 8.1% to $1.093 billion, with comparable DTC sales up 7.3%.
- Wholesale net sales grew 6% to $864.6 million. The company successfully managed inventory flow, ensuring key partners were in stock for the holiday rush without flooding the market.
Geographic Performance
While the U.S. remains the largest market, international regions are outpacing domestic growth.
- International net sales increased 15% to $756.7 million.
- U.S. net sales increased 2.7% to $1.201 billion.
The international growth is particularly encouraging for HOKA, which is still in the early stages of expansion in Europe and Asia compared to its U.S. penetration.
Financial Outlook
Deckers raised its full-year guidance for fiscal year 2026. The company now expects net sales to be in the range of $5.4 billion to $5.425 billion.
- HOKA revenue is expected to increase in the mid-teens percentage range.
- UGG revenue is expected to increase in the mid-single-digits percentage range.
- Diluted EPS was raised to a range of $6.80 to $6.85.
- Gross margin is expected to be approximately 57%.
- The company now estimates the unmitigated tariff impact for fiscal year 2026 to be approximately $110 million. However, due to favorable timing of inventory sales and successful pricing actions, the net impact is expected to be much lower, at approximately $25 million.
“We are on track to deliver another incredible year, with profitable growth at two premium and differentiated brands that operate in expanding segments of the global marketplace,” Caroti said.
