Earnings
Deckers tops profit forecasts as tariff refunds add $0.28 a share, but sales trail estimates
The Hoka and Ugg owner grew sales 3.5% to $1.481 billion as direct-to-consumer sales slipped, and its full-year profit guidance includes about $0.52 a share of refunds.
HedgeWeekly News Desk ·
Deckers Brands reported diluted earnings of $2.31 a share for its fiscal second quarter on Thursday, up 27% from $1.82 a year earlier and ahead of the $1.79 consensus cited by 24/7 Wall St. Net sales for the three months to September 30 rose 3.5% to $1.481 billion, short of the roughly $1.51 billion analysts had expected.
Hoka sales grew 6.8% to $677.2 million and Ugg sales 3.5% to $786.4 million. Wholesale revenue rose 5.5% to $1.093 billion, but direct-to-consumer sales fell 1.8% to $387.5 million, with comparable DTC sales down 6.4%. International sales climbed 9.0% to $644.7 million while domestic sales slipped 0.4% to $835.8 million.
The quarter included $46.0 million of net refunds of tariffs levied under the International Emergency Economic Powers Act, plus $3.0 million of interest. Deckers said the refunds added about 310 basis points to gross and operating margins and about $0.28 to earnings per share. Gross margin was 60.5%, up from 56.2%; without the refunds, earnings would have been about $2.03 a share and gross margin about 57.4%, by HedgeWeekly's calculation. The company repurchased about 3.2 million shares for $299.3 million in the quarter.
Why it matters: the headline beat is narrower than it looks once the one-off refunds are stripped out, and the sales miss came alongside falling comparable direct-to-consumer sales and flat US revenue. For the year to March 2027, Deckers guided to sales of $5.700 billion to $5.725 billion and earnings of $7.80 to $7.95 a share, including about $0.52 from refunds received through October 8 and no further refunds, with $1.0 billion of buybacks assumed. Investors will want to watch whether Hoka's expected high-single-digit growth and the DTC trend hold up without that support.