TLDR
- Telsey Advisory reduced DECK price target to $105 from $120 following mixed Q2 results
- Direct-to-consumer sales fell for only the second time in five and a half years
- HOKA brand demonstrates strong growth while UGG faces declining DTC trends
- Company beat Q2 earnings with $1.82 EPS but disappointed with full-year sales guidance
- Tariff impact lowered to $150 million with plans to offset $75-95 million through pricing
Deckers Outdoor delivered a solid earnings beat but couldn’t escape a wave of analyst downgrades. The footwear company posted $1.82 per share in fiscal Q2, well above the $1.58 consensus.
Revenue reached $1.43 billion, edging past the $1.42 billion forecast. Yet multiple analysts have cut their price targets on the stock.
Telsey Advisory dropped its target to $105 from $120 while keeping a Market Perform rating. Evercore ISI went even lower at $90, citing slowing growth concerns.
Deckers Outdoor Corporation, DECK
Stifel reduced its target to $117 and Needham pulled back to $113. The downgrades reflect worries about the company’s growth trajectory.
Both major brands showed sequential deceleration. UGG exceeded expectations but still slowed down from previous quarters.
HOKA met projections without surpassing them. The athletic brand remains the growth driver but momentum has moderated.
Direct-to-consumer sales dropped during the quarter. This marks just the second DTC decline in five and a half years for the company.
Domestic sales have now contracted for three consecutive quarters. The U.S. market continues presenting headwinds.
Brand Performance Creates Divide
UGG’s direct-to-consumer performance is weakening. The decline has dampened investor enthusiasm for the brand.
HOKA tells a more positive story. Direct-to-consumer trends are accelerating for the athletic line.
Wholesale order books for HOKA remain strong. This strength prompted Needham analyst Tom Nikic to maintain his Buy rating.
TD Cowen also kept a Buy rating with a $124 target. These bullish calls contrast sharply with the broader negative sentiment.
The company’s financials show resilience. Gross margin stands at 57.63% with revenue growth of 15.49% over twelve months.
Tariffs and Future Outlook
Deckers lowered its tariff impact estimate to $150 million from $185 million. Management plans to offset $75-95 million through price increases and factory cost-sharing.
The previous offset target was only $75 million. The expanded mitigation strategy should help protect margins.
The company resumed annual guidance but disappointed on sales. Full-year revenue forecasts came in below analyst expectations.
Fiscal 2026 EPS guidance brackets consensus estimates. However, this implies softer performance in the second half.
The company beat Q2 earnings by about $0.30. This makes the full-year outlook appear conservative given the strong start.
BTIG maintained a Neutral rating, pointing to mixed brand results. The firm sees both opportunities and challenges ahead.
Stifel expressed specific concerns about HOKA’s growth pace. Despite this, the firm held onto its Hold rating.
The stock trades at a PEG ratio of 0.62. This valuation metric suggests potential value relative to growth expectations.
Deckers exceeded gross margin expectations in Q2. Strong margin performance helped cushion concerns about sales growth.
The current ratio sits at 2.94 with minimal debt. The balance sheet provides flexibility for navigating current market challenges.
Deckers posted revenue of $1.43 billion in fiscal Q2, with the company now forecasting tariff impacts of $150 million for the full year.
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